[Federal Register Volume 70, Number 9 (Thursday, January 13, 2005)]
[Proposed Rules]
[Pages 2520-2540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-579]



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Part III





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 927



Winter Pears Grown in Oregon and Washington; Recommended Decision and 
Opportunity To File Written Exceptions to Proposed Amendments to 
Marketing Agreement and Order No. 927; Proposed Rule

  Federal Register / Vol. 70, No. 9 / Thursday, January 13, 2005 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 927

[Docket No. AO-F&V-927-A1 FV04-927-1 PR]


Winter Pears Grown in Oregon and Washington; Recommended Decision 
and Opportunity To File Written Exceptions to Proposed Amendments to 
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 (order) for 
winter pears grown in Oregon and Washington. The amendments are jointly 
proposed by the Winter Pear Control Committee and the Northwest Fresh 
Bartlett Marketing Committee, which are responsible for local 
administration of orders 927 and 931, respectively. Marketing Agreement 
and Order No. 931 regulates the handling of fresh Bartlett pears grown 
in Oregon and Washington. The amendments would combine the winter pear 
and fresh Bartlett orders into a single program under marketing order 
927, and would add authority to assess pears for processing. All of the 
proposals are intended to streamline industry organization and improve 
the administration, operation, and functioning of the program.

DATES: Written exceptions must be filed by February 14, 2005.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, room 1081-S, Washington, DC 20250-9200, 
Facsimile number (202) 720-9776 or www.regulations.gov. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register. Comments will be made available for 
public inspection in the Office of the Hearing Clerk during regular 
business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, Agricultural 
Marketing Service, USDA, Post Office Box 1035, Moab, UT 84532, 
telephone: (435) 259-7988, fax: (435) 259-4945.
    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: Prior documents in this proceeding: Notice 
of Hearing issued on March 24, 2004, and published in the March 30, 
2004, issue of the Federal Register (69 FR 16501).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore 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 amendment of 
Marketing Agreement and Order 927 regulating the handling of winter 
pears grown in Oregon and Washington, and the opportunity to file 
written exceptions thereto. Copies of this decision can be obtained 
from Melissa Schmaedick, whose address is listed above.
    This recommended decision 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 amendments are based on the record of a public hearing 
held on April 13 and 14, 2004, in Yakima, Washington and on April 16, 
2004, in Portland, Oregon. Notice of this hearing was published in the 
Federal Register on March 30, 2004 (69 FR 16501). The notice of hearing 
contained order changes proposed by both the Winter Pear Control 
Committee and the Northwest Fresh Bartlett Marketing Committee, which 
are responsible for local administration of orders 927 and 931, 
respectively. Marketing order 927 regulates the handling of winter 
pears grown in Oregon and Washington. Marketing order 931 regulates the 
handling of Bartlett pears in the same production area.
    At a joint meeting of the Winter Pear Control Committee and the 
Northwest Fresh Bartlett Pear Marketing Committee on November 13, 2003, 
both Committees voted unanimously to recommend amendments to Marketing 
Order 927. The amendments are intended to streamline industry and 
program organization by placing both Marketing Order 927, regulating 
the handling of winter pears, and Marketing Order 931, regulating the 
handling of Bartlett pears, under one program: Marketing Order 927. If 
this proposal were implemented, Marketing Order 931 would be 
terminated. The amendments would also add pears for processing to the 
order, and would update various provisions of the order.
    The Committees proposed amendments to marketing order 927 include:
    1. Expanding the definition of pears to include all varieties of 
pears classified as summer/fall pears in addition to winter pears; 
adding Concorde, Packham, and Taylor s Gold pears to the current list 
of winter pear varieties; and adding a third category of pears which 
would include varieties not classified as summer/fall or winter pears. 
This amendment would extend program coverage to all pears grown in 
Oregon and Washington.
    2. Revising the definition of size to include language currently 
used within the industry.
    3. Extending the order's coverage to pears for processing by 
revising the definition of handle, and adding definitions of processor 
and process.
    4. Establishing districts for pears for processing. This amendment 
would divide the order s production area into two districts for pears 
for processing: one being the State of Oregon and the other being the 
State of Washington.
    5. Dissolving the current Winter Pear Control Committee and 
establishing two new administrative committees: the Fresh Pear 
Committee and the Processed Pear Committee (Committees). This proposal 
would add a public member and public alternate member seat to both of 
the newly established Committees and would remove Section 927.36, 
Public advisors. The Committees would coordinate administration of 
Marketing Order 927, with each Committee setting assessments and 
administering program functions specific to their commodity. 
Coordinated administration would allow each Committee to make decisions 
on behalf of the commodity they represent, yet combine administrative 
functions, when applicable, to maximize efficiencies and minimize 
program costs.
    Additionally, related changes would be made to order provisions 
governing nomination and selection of members and their alternates, 
terms of office, eligibility for membership, and quorum and voting 
requirements, to reflect the proposed dual committee structure.
    6. Authorizing changes in the number of Committee members and 
alternates, and allowing reapportionment of committee membership among 
districts and groups (i.e., growers, handlers, and

[[Page 2521]]

processors). Such changes would require a Committee recommendation and 
approval by the Department.
    7. Adding authority to establish assessment rates for each category 
of pears, including: Summer/fall pears, winter pears, and all other 
pears. In addition, rates of assessment could be different for fresh 
pears and pears for processing in each category, and could include 
supplemental rates on individual varieties.
    8. Adding authority for container marking requirements for fresh 
pears.
    9. Removing the order provision allowing grower exemptions from 
regulation. This is a tool no longer used by the industry and, thus, is 
considered obsolete.
    10. Amending Sec.  927.70, Reports, to update order language 
regarding confidentiality requirements to conform to language under the 
Act.
    11. Clarifying inspection requirements and adding authority to 
eliminate those requirements if an alternative, adequate method of 
ensuring compliance with quality and size standards in effect under the 
order can be developed.
    12. Eliminating the current exemptions for pears for processing and 
for pears shipped to storage warehouses.
    13. Providing that separate continuance referenda be held every 6 
years for fresh pears and processing pears.
    14. Adding the authority for the Committees to conduct post-harvest 
research, in addition to production research and promotion (including 
paid advertising).
    15. Updating several order provisions to make them more current.
    16. Revising order provisions to reflect the two-committee 
structure being recommended for administration of the program.
    Twenty-one industry witnesses testified at the hearing. These 
witnesses represented fresh winter and summer/fall pear producers and 
handlers, and processors of summer/fall pears in the production area. 
All witnesses supported the Committees recommended changes; no 
opposition was present at the hearing.
    Witnesses addressed the need to simplify the operations of the 
Northwest pear industry by combining the activities of the fresh winter 
pear, the fresh summer/fall pear and the processed pear industries 
under a single federal marketing order. Witnesses stated that the 
proposed amendments would streamline pear industry activities, 
including assessment collection, administration, regulation, promotion, 
and research. The three industries are currently regulated under two 
Federal marketing orders and two State commissions. If this proposal 
were implemented, the two federal programs would be combined under one 
federal program that would also assume functions similar to those under 
the current state programs. Witnesses stated that the state programs 
would likely be dissolved if this proposal were implemented.
    Witnesses explained that the proposal would require expanding the 
definition of pears under 927 to include all varieties of pears grown 
in the production area. The proposed amendments would also include 
revising the definition of handle, and adding definitions for process 
and processor.
    Witnesses stated that expanding the scope of the order to include 
pears for processing would require a restructuring of the order s 
administrative committee. The new committee structure would include one 
committee with oversight for all fresh pear activities, and a second 
committee with oversight for all activities related to pears for 
processing. Additionally, witnesses spoke in favor of amending order 
provisions governing nomination and selection of members and their 
alternates, terms of office, eligibility for membership, and quorum and 
voting requirements to reflect the proposed dual committee structure.
    The order's production area, the States of Oregon and Washington, 
would remain the same under the proposed amendments. However, the 
subdivision of the production area into districts would be different 
for pears for processing than for fresh pears. While four districts 
would be established for fresh pears, pears for processing would only 
have two districts: the State of Oregon and the State of Washington.
    Witnesses also proposed adding a public member and public alternate 
member seat to both of the newly established committees. The public 
member and his or her alternate would be residents of the production 
area, and would have no financial ties to the production, handling or 
processing of pears. Witnesses stated that this proposal would also 
result in the removal of Sec.  927.36, Public advisors, as unnecessary, 
since the public advisors would be replaced by public members of the 
committees.
    Witnesses favored adding authority to the order to allow the 
committees, each independently, to recommend changes in the number of 
committee members and alternates of each committee, as well as 
recommend reapportionment of committee membership among districts and 
groups (i.e., growers, handlers, and processors). Witnesses stated that 
this authority would allow the committees more flexibility in 
responding to industry changes over time that may merit adjustments in 
committee structure. These recommendations would be based on an 
assessment of several industry indicators and would require approval by 
the Department.
    Witnesses stated that the order's assessment structure should also 
be revised. Specifically, witnesses advocated adding authority to 
establish assessment rates for each category of pears, including: 
Summer/fall pears, winter pears, and all other pears. In addition, 
rates of assessment could be different for fresh pears and pears for 
processing in each category, and could include supplemental rates on 
individual varieties. The Fresh Pear Committee would recommend 
assessment rates for fresh pears and the Processed Pear Committee would 
recommend assessment rates for pears for processing.
    Proponents of this amendment stated that authority to establish 
assessment rates by category would allow the committees to maintain 
different assessment levels for each category of Northwest pears (based 
on different budget needs), as well as providing the committees with 
additional flexibility through the ability to apply supplemental rates 
of assessments for individual varieties within each category. 
Supplemental rates would be used to fund specific research or 
promotional efforts for individual varieties, whereas categorical 
assessment rates would be used to fund activities for an entire 
category of pears.
    Witnesses explained that authority for production research and 
promotion, including paid advertising, currently exists under marketing 
order 927. Expanding the order's definition of pears to include summer/
fall varieties and pears for processing would extend those authorities 
to all Northwest pears.
    In addition, witnesses stated their support for adding the 
authority to conduct post-harvest research. Post-harvest research could 
include activities such as storage and treatment of pears between the 
field and the marketplace. Proponents stated that the authority for 
production and post-harvest research, and promotion activities 
including paid advertising, would enhance the order's ability to 
support Northwest pear growers, handlers and processors.
    In discussing the order's authority to regulate fresh pears, 
witnesses supported adding authority to establish container marking 
regulations. Witnesses stated that this authority, which could include 
the use of generic industry logos, would provide the

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industry with a marketing tool to enhance the presentation of fresh 
Northwest pears in the marketplace.
    Witnesses also advocated adding authority to recommend modification 
or elimination of inspection requirements provided that an alternative 
method of ensuring compliance with quality and size standards were 
developed. Any alternative system would have to be approved by the 
Department through the rulemaking process.
    Witnesses stated their approval of the Committees' recommendations 
to: Eliminate the current exemption for pears for processing and for 
pears shipped to storage warehouses as this provision is considered 
obsolete; remove the order provision allowing grower exemptions from 
regulation as this tool is also no longer used by the industry; and, 
amend Sec.  927.70, Reports, to add confidentiality provisions of the 
order concerning the handling of information provided to the Committees 
and to specify in the order provisions that handlers maintain records 
for at least two years.
    Finally, witnesses supported requiring continuance referenda as a 
means of determining grower sentiment on the order's operations. As 
proposed, separate continuance referenda would be held every 6 years 
for the fresh pear and processing pear provisions of the order (each 
independently).
    At the conclusion of the hearing, the Administrative Law Judge 
stated that 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 would be June 1, 2004. The deadline 
was subsequently extended to June 16, 2004. One brief on behalf of the 
joint Winter Pear Control Committee and the Northwest Fresh Bartlett 
Marketing Committee was filed. The brief contained an overview of the 
industry's proposals and reiterated support for amending the order.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to amend the definition of ``pears'' to include all 
varieties of pears grown in the production area;
    (2) Whether to revise the definition of ``size'' to reflect current 
industry usage of the term;
    (3) Whether to add authority to regulate pears for processing, by 
revising the definition of ``handle'', and adding definitions of 
``processor'' and ``process'';
    (4) Whether to establish districts for pears for processing;
    (5) Whether to terminate the current Winter Pear Control Committee, 
to establish two new administrative committees (the Fresh Pear 
Committee and the Processed Pear Committee), to add a public member and 
public alternate member seat to both of the newly established 
committees, to remove Sec.  927.36, Public advisors, and to make 
related changes to order provisions governing nomination and selection 
of members and their alternates, terms of office, eligibility for 
membership, and quorum and voting requirements;
    (6) Whether to add authority for the proposed committees to 
recommend changes in the number of committee members and alternates, 
and the allocation of membership among groups and districts;
    (7) Whether to add authority for the committees to recommend rates 
of assessment for pears by category (summer/fall pears, winter pears, 
and all other pears) and supplemental rates of assessment by variety;
    (8) Whether to add authority for container marking requirements for 
fresh pears;
    (9) Whether to remove Sec.  927.54, Exemption Certificates, which 
allows grower exemptions from regulations;
    (10) Whether to amend Sec.  927.70, Reports, to add confidentiality 
provisions concerning the handling of information provided to the 
Committees and to specify in the order provisions that handlers 
maintain records for at least two years;
    (11) Whether to add authority to recommend modification or 
elimination of inspection requirements, provided that an alternative, 
USDA approved method of ensuring compliance with order quality and size 
standards could be used;
    (12) Whether to eliminate current exemptions for pears for 
processing and for pears shipped to storage warehouses;
    (13) Whether to provide that separate continuance referenda be held 
every 6 years for fresh pears and processing pears;
    (14) Whether to add authority for the proposed committees to 
conduct post-harvest research, in addition to production research and 
promotion (including paid advertising); and
    (15) Whether to update several order provisions to make them more 
current.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Revision of the Definition of Pears

    Section 927.4 of the order should be amended to include all 
varieties of pears grown in the States of Oregon and Washington. This 
amendment would entail adding a category for all pear varieties 
characterized as summer/fall varieties, and would add the Concorde, 
Packham and Taylor s Gold varieties to the current list of pear 
varieties characterized as winter pear varieties. In addition, a third 
category of pears should be added that would include all varieties not 
classified as summer/fall or winter pears, that are grown within the 
production area.
    The winter pear order currently defines pears as any and all of the 
Beurre D'Anjou, Beurre Bosc, Winter Nelis, Doyenne du Comice, Forelle, 
and Seckel varieties of pears. It also includes any other varieties or 
subvarieties characterized as winter pears that are grown in the 
production area and are recognized by the committee and approved by the 
Department.
    The proposed amendment would broaden the scope of Federal marketing 
order 927 to cover all pears produced within the production area. 
Witnesses stated that without this proposed change in the definition of 
pears covered by marketing order 927, all other proposed amendments 
would not be possible as they entail bringing the fresh winter and 
summer/fall pear industries and the processed pear industry under one 
Federal regulatory program.
    According to the record, there are eight principal varieties of 
pears grown in the States of Washington and Oregon. These pear 
varieties are split into categories of summer/fall and winter pears. 
These references stem from the differences in the crop harvest and 
marketing cycles of the different varieties.
    Winter pears, such as the red and green Anjou, Bosc, Comice, 
Seckel, Forelle, Concorde, Packham and Taylor's Gold varieties, are 
typically harvested in early September. Winter pear varieties are 
generally able to be stored longer than summer/fall varieties, and thus 
can be sold throughout the winter, spring and summer. The marketing 
season for Comice, Seckel, and Forelle generally runs through April. 
The marketing season for Bosc pears extends into May, and Anjou pears 
can be available into July or later.
    Summer/fall varieties include the Bartlett and Starkrimson pear 
varieties. Summer/fall pears are harvested in late summer and are 
marketed throughout the fall, sometimes into January. Bartlett

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pears can either be red or green, with the green Bartlett being more 
prevalent in the marketplace. Bartlett pears are also the variety of 
pear that is most commonly used for processing. The Starkrimson variety 
is a summer/fall variety that has recently become more important in the 
overall volume of pear production in Oregon and Washington.
    Witnesses also indicated that establishing an ``other'' category 
would be prudent in the event that future varieties of pears were 
developed that do not fall into the other established categories. The 
industry would gain flexibility in responding to new developments in 
the Oregon and Washington pear industry by providing for the structure 
to classify such pears appropriately for program purposes. This would 
allow the industry to avoid having to pursue amendment of the marketing 
order in the future, if new varieties of pears are developed that are 
not considered winter or summer/fall pears.
    USDA is also recommending that Sec.  927.4, the definition of pears 
proposed by industry, be revised to include language stating that all 
pears with the genus name ``Pyrus'' produced within the production area 
would be included under the order. This language was also included in 
the brief filed by the joint Winter Pear Control Committee and the 
Northwest Fresh Bartlett Marketing Committee in support of the proposed 
amendments to marketing order 927. Accordingly, USDA recommends 
revising Sec.  927.4, Pears, to include the genus name ``Pyrus'' in the 
definition.
    Witnesses stated that this proposed amendment would provide the 
basis for many of the other proposed amendments discussed later in this 
document. The industry intends to expand the scope of Federal marketing 
order 927 to include all varieties of pears grown in Oregon and 
Washington, to regulate both fresh pears and pears for processing, as 
well as to establish two administrative committees for local oversight 
and administration of the order. In order to effectuate these changes, 
the definition of pears needs to be amended to provide authority to 
regulate all pears under one order. This would be accomplished by 
amending the order's definition of pears.
    Witnesses explained that the winter, summer/fall, fresh and 
processed pear industries are closely inter-related. Growing, 
harvesting, packing, processing and marketing activities of all of 
these industries impact each other to the extent that regulating them 
under one Federal marketing order would be logistically beneficial for 
the Oregon and Washington pear industry. Proponents of this amendment 
stated that this amendment, in conjunction with the proposed amendments 
discussed in later material issues, would help to improve the orderly 
marketing of product within the industry.
    To illustrate the interaction of the different pear industries, 
witnesses used the example of a large crop of Bartlett pears. In this 
example, communication between the fresh and processing sides of the 
pear industry would be helpful in assuring timely movement of a 
perishable product and maximizing returns for that product. Crop 
estimates and harvest information, for example, could be shared between 
the fresh and processed committees to anticipate market distribution 
strategies for the large crop. The committees would facilitate 
information sharing at the administrative, grower and handler levels to 
enhance coordination of fresh and processed industry activities. For 
example, potential overflow from the fresh market needs to be able to 
move efficiently to the processed industry in order to prevent loss of 
product. Timely movement of a perishable product is essential to 
securing the highest grower return for that product.
    Similarly, witnesses stated that regulating all varieties of pears 
(winter and summer/fall) under one marketing order would synchronize 
activities and facilitate inter-industry discussions and decision-
making.
    There was no opposition testimony on this issue. For the above 
reasons, it is recommended that section 927.4 be amended to include all 
pears characterized as winter and summer/fall varieties and 
subvarieties grown within the production area. A category for all pears 
not classified as either winter or summer/fall pears should also be 
established. USDA recommends including a reference to the genus name 
``Pyrus'' as part of this definition.
    A conforming change is needed in the title of 7 CFR Part 927. It is 
proposed to be revised to ``Pears Grown in Oregon and Washington'' to 
reflect the fact that the program no longer would cover only winter 
pears.

Material Issue Number 2--Revision of the Definition of Size

    Section 927.5, Size, should be revised to reflect contemporary 
definition of the term as used by the industry today.
    Witnesses explained that the current definition of ``size'' in the 
order is outdated as it defines size according the number of pears that 
can be packed in a standard western pear box. A standard western pear 
box is described as a box that is 18 inches long, 11\1/2\ inches wide 
and 8\1/2\ inches deep. At the time marketing order 927 was 
established, the standard western pear box was the common receptacle 
used for packing fresh pears. Over time, different forms of packing 
containers with different dimensions have evolved. Thus, this 
definition no longer accurately reflects the variety of containers used 
within the industry.
    Alternatively, witnesses proposed that the definition be revised to 
include language describing a 44-pound net weight standard box or 
container equivalent. According to the record, industry currently 
describes a 44-pound box as a standard container, and uses this 
definition to measure crop size and changes in crop volumes from year 
to year.
    Witnesses also explained that, given the proposal to add authority 
to regulate pears for processing to the order, a size definition solely 
based on a fresh pear packing box would not be appropriate. Witnesses 
proposed a size definition that would also include a physical 
measurement: The greatest transverse diameter of the pear taken at 
right angles to a line running from the stem end. Proponents of the 
revised definition stated that a diameter-based definition would 
accurately describe pear sizes in both the fresh and processed pear 
industries, and would more accurately reflect current sizing procedures 
and technology. As one witness stated, the physical description for 
measuring pears provides the basis for determining what size actually 
goes into a box. Representatives from the pear processing industry also 
explained that processors require a minimum-diameter size of 2\1/4\ 
inches for pears for processing. Thus, the revised definition of size 
would better reflect current practices of both industries.
    There was no opposition testimony on this issue. For the above 
reasons, it is recommended that Sec.  927.5, Size, be revised to more 
accurately reflect the contemporary definition used within the 
industry.

Material Issue Number 3--Adding Authority to Regulate Pears for 
Processing

    Federal marketing order 927 should be amended to include authority 
to regulate pears for processing by revising Sec.  927.7, Handler, and 
Sec.  927.8, Ship or handle. These terms should be amended to include 
persons receiving pears for processing. In addition, definitions of 
``processor'' and ``process'' should be added to the order to further 
clarify the amended terms ``handler'' and ``ship or handle.''
    The order currently does not include authority to regulate pears 
for

[[Page 2524]]

processing. However, the regulation of pears for processing is 
authorized under the Act and, therefore, can be added as a provision of 
marketing order 927. Given the proposal described in Material Issue 1, 
revising the definition of ``pears,'' the authority to regulate pears 
for processing would apply to all pear varieties grown in the states of 
Oregon and Washington.
    There are five processing plants in the production area, with one 
in Oregon and four in Washington. Seventy five percent of the 
processing tonnage produced within the production area originates from 
the State of Washington, with 73 percent of the total located in the 
Yakima area. Processed pear production totaled 842.2 million pounds in 
the 2001/2002 crop year, compared to 1086.3 million pounds of fresh 
pear production in the same year.
    According to the hearing record, adding authority to regulate pears 
for processing would complement the Oregon and Washington pear 
industries' desire to coordinate and streamline industry-wide research, 
promotion, and administrative activities. To accomplish this, the 
definition of ``handle'' should be expanded to include receiving pears 
for processing. Processing would be defined as canning, reducing to 
concentrate, freezing, dehydrating, pressing or pureeing pears, or in 
any other way converting pears commercially into a processed product. A 
processor would be any person who commercially processes pears.
    Most pear producers within the production area produce both winter 
and summer/fall pear varieties for both the fresh and processed product 
markets. Record evidence indicates that the fresh and processed product 
markets compliment each other, as the latter provides a market for 
product that cannot be profitably distributed in the fresh market. 
Combining the activities of the fresh and the processed pear industries 
under a single Federal marketing order would facilitate communication 
among industry participants and would allow for more efficient 
marketing and research.
    Representatives of the processed pear industry testifying at the 
hearing stated their support for adding authority to regulate pears for 
processing under the order. Witnesses stated that a Federal marketing 
order would provide a stable, unified, and constant vehicle to 
accomplish industry production and marketing objectives, mainly 
promoting consumption of fresh and processed Northwest pears, and 
increasing grower returns. Witnesses expanded on the many benefits they 
believed would result from collective industry action, and stated that 
coordination of marketing and research efforts is essential to 
maintaining market share in an increasingly competitive marketplace. 
Moreover, witnesses explained that combining fresh and processed pear 
activities under one program would represent a natural progression of 
the long-existing cooperation between the two industries.
    According to the record, pear growers in Oregon and Washington have 
a 50-year history of dedicated funding to promote canned pears to 
consumers and foodservice users. Formal support of the processed pear 
industry began in 1954 with the establishment of the Pacific Northwest 
Canned Pear Service (PNCPS), a non-profit marketing organization funded 
through voluntary grower assessments.
    The PNCPS continues to operate under the direction of growers from 
Washington and Oregon through two State grower organizations: the 
Washington State Fruit Commission and the Oregon Bartlett Pear 
Commission. The two State organizations annually approve a budget based 
on a per-ton assessment on pears delivered to processors. This 
mandatory assessment is collected from shippers and processors by both 
organizations, and provides the funds for the PNCPS to operate through 
an annually approved contract.
    Due to the mandatory collection of marketing dollars from 
Washington and Oregon Bartlett pear growers who sell their tonnage for 
processing, all of those growers are members of the PNCPS. Each of the 
two State grower organizations appoints board members to the PNCPS 
board of directors.
    In addition, processor members pay an annual associate membership 
fee and pay assessments on pears transported to the Northwest for 
processing from California, Idaho, or Canada. Associate processor 
members include all five pear processors operating in the production 
area.
    Witnesses testified, if implemented, the proposal to include 
regulatory authority for pears for processing could lead to the 
dissolution of the two State commissions. Collection of assessments and 
administration of the marketing order program would become the 
responsibility of the proposed Processed Pear Committee, described and 
discussed under Material Issue 5.
    Witnesses did not expect the proposed change in the structure of 
processed pear organizations to result in a change to the combined 
federal and state assessments that handlers are currently paying. The 
proposed amendment is expected to result in a reorganization of 
entities representing processed pear interests, reducing the number of 
regulatory entities from two to one. Assessment collection would be 
simplified, but the level of assessment is not expected to increase or 
decrease significantly. According to the hearing record, current 
assessments equal roughly $5 per ton of pears received for processing.
    Handler assessments would be levied on the first individual 
receiving pears from the producer for packing or processing. For 
example, if a producer were to transport pears directly to a processor, 
that processor would be considered the first handler and would be 
responsible for submitting the appropriate assessment to the 
administrative committee. If a producer delivers pears to a 
packinghouse, where pre-sizing or grading for fresh market may take 
place prior to selecting tonnage to be directed to the processor, then 
the packinghouse would be considered the first handler and would be 
responsible for the assessment amount due. If a producer were to 
deliver pears to a packinghouse or processing facility outside of the 
production area, then the producer would be considered the first 
handler. The definition of handler would exclude any person receiving 
pears solely for the purpose of transporting them to a packinghouse or 
processor, such as a contract carrier.
    Subject to approval by the Department, Federal processed pear 
assessments could be allocated to a promotional organization to conduct 
promotional activities on a contract basis, much like the current 
contractual arrangement between the PNCPS and the State commissions. 
Record evidence demonstrated that promotional activities, such as 
consumer education campaigns, distributor rebate programs, and other 
marketing, such as recipe development, have helped to sustain a stable 
market share for processed pears. In spite of increasing competition 
from imported pears and a growing preference among consumers for take-
out or fast food meal service, demand for processed pear products has 
remained relatively stable over the past three decades.
    The record evidence shows that over the last three years, imported 
canned pears have become an increasingly competitive challenge to the 
Northwest canned pear industry. Witnesses cited imports from China, 
South Africa and Australia as the industry's top three foreign 
competitors, with imported product accounting for nearly 10 percent of 
domestic canned pear sales. Promotional activities geared towards

[[Page 2525]]

large-volume end users, including school foodservice, health care, and 
other on-site foodservice operators and distributors, have helped the 
Northwest processed pear industry to maintain a stable share of these 
market sectors. Witnesses stated that incorporating processed pears 
under the Federal marketing order for Oregon and Washington pears would 
assist the industry and assure that promotional activities continue to 
receive coordinated industry support.
    Information presented at the hearing suggests that over the past 
century a number of factors have converged to change consumer food 
consumption patterns and encourage the emerging dominance of food 
service over the retail sector. In an increasingly demanding work-life 
environment, many consumers are becoming increasingly dependent on 
dining out or purchasing prepared foods. With consumers turning to 
foodservice with their food dollars, canned pear consumption has moved 
away from the home and into foodservice operations.
    As a result, representatives from the PNCPS explained that current 
promotional activities related to this sector are largely oriented 
towards consumer education and public relations efforts via food 
editors and nutrition professionals, and consumer retail promotion. 
According to the record, consumer promotion efforts, including 
lifestyle brochures, newspaper recipe releases and consumer 
newsletters, have helped to stabilize home consumption.
    While witnesses stated that promotional activities are essential to 
the continued vitality of the processed pear industry, they also 
expressed their view that grade and size regulatory authority for 
processed pears should not be included under the order. In other words, 
supporters of this proposal only favored regulatory oversight of the 
collection of assessments on pears for processing for the use of 
funding research and promotion. This amendment would not include 
authority to establish grade and size regulations for pears for 
processing.
    Representatives from the processed pear industry stated that during 
the drafting of the proposal to amend marketing order 927 to include 
pears for processing, processors were polled by members of the Winter 
Pear Control Committee regarding support for grade and size regulatory 
authority. Given that the processed pear industry currently operates 
under established USDA grades and standards, processors opted against 
including this authority in the proposed amendment. When asked at the 
hearing if such authority might be desirable at some point in the 
future, processors responded that they would be prepared to pursue 
amendment of the order at such time. Thus, authority for grade and size 
regulation is not included as part of this proposal.
    Based on the record testimony and the reasons outlined above, Sec.  
927.7, Handler, and Sec.  927.8, Ship or handle, should be amended to 
include the activity of receiving pears for processing. In addition, 
two new definitions should be added to the order: Sec.  927.14, 
Processor, and Sec.  927.15, Process. No opposition to these proposed 
amendments was presented at the hearing.

Material Issue Number 4--Districts

    Section 927.11, Districts, should be amended to include two sets of 
representative districts: one for fresh pear production and one for 
processed pear production. This section of the order needs to be 
revised to reflect the proposed establishment of two administrative 
committees: the Fresh Pear Committee and the Processed Pear Committee, 
discussed in Material Issue 5. The geographic boundaries of the total 
production area under Marketing Order 927, which includes the states of 
Oregon and Washington, would not change.
    Marketing order 927 currently defines four districts for fresh 
winter pear production. Given the proposal to expand marketing order 
coverage to all varieties of pears produced and handled in the fresh 
and processed pear industries of Oregon and Washington, these 
representative districts need to be adjusted. The proposed amendment 
would retain a four-district division of the production area for fresh 
pear production, but would slightly modify the current district 
boundaries to reflect the addition of summer/fall pear varieties. In 
addition, two districts for processed pears would be established. These 
would be defined along State boundary lines, with Oregon as one 
district and Washington as the other.
    The current Winter Pear Control Committee consists of 12 members 
allocated among 4 geographic districts: Medford, Yakima, Mid-Columbia 
and Wenatchee. The Medford and Yakima Districts each have one grower 
and one handler member, and the Mid-Columbia and Wenatchee Districts 
each have two grower and two handler members. There is also a non-
voting public advisor.
    The current Northwest Fresh Bartlett Marketing Committee, which 
represents Oregon and Washington summer/fall fresh production, has 14 
members allocated among 4 districts: Medford, Yakima, Mid-Columbia and 
Wenatchee. The Medford and Yakima Districts each have two grower and 
two handler members, and the Mid-Columbia and Wenatchee Districts each 
have two grower and one handler members. There is also one non-voting 
public advisor.
    Geographically, these districts are nearly identical to the winter 
pear districts, with the exception of the division of production along 
the Columbia River Gorge and southern Oregon. The differences in 
district committee representation reflect the regional differences in 
summer/fall pear production and winter pear production.
    According to the record, the proposed Fresh Pear Committee 
districts are based on the existing structure of the Winter Pear 
Control Committee, which has been updated several times and which 
accurately represents the interests of the fresh summer/fall pear 
industry. The proposed fresh district structure also borrows from the 
Northwest Fresh Bartlett Marketing Committee in that it divides the 
State of Washington along a more logical division of County lines.
    The proposed districts for the Fresh Pear Committee are as follows: 
The Medford District would include all of the Counties in the State of 
Oregon except for Hood River and Wasco Counties; the Mid-Columbia 
District would include Hood River and Wasco Counties in the State of 
Oregon and the Counties of Skamania and Klickitat in the State of 
Washington; the Wenatchee District would include the Counties of King, 
Chelan, Okanogan, Douglas, Grant, Lincoln, and Spokane in the State of 
Washington, and all other Counties in Washington lying north thereof; 
and, the Yakima District would include all of the State of Washington 
not included in the Wenatchee District or in the Mid-Columbia District.
    Record evidence indicates that the most significant change in the 
proposed fresh pear district structure occurs in Oregon, with fresh 
pear representation being shifted from the Mid-Columbia District to the 
Medford District. Witnesses explained that growers from this area 
specifically asked to be included in Medford instead of Mid-Columbia to 
better reflect the distribution of fresh production in Oregon. The 
shift in district boundaries would also result in more opportunities 
for industry members from this region to participate as members of the 
committee.
    According to the record, there are roughly 350 fresh pear producers 
in Hood River County, Oregon, and less than 40 fresh pear producers in 
Medford County, Oregon. The area subject to the proposed shift in 
district boundaries is

[[Page 2526]]

known as the Willamette Valley region and has less than 40 fresh pear 
producers. Given the distribution of fresh pear producers in Oregon, 
the proposal to merge Willamette Valley producers into the Medford 
District would improve representation of that area on the committee. 
The Medford Districts average annual production of winter pears has 
decreased over the past five years by approximately 10.8 percent, or 
from 1.127 million boxes (10 year average) to 1 million boxes (five 
year average). Average annual production of summer/fall pear varieties 
over the same time period has fallen 13 percent, from 269 thousand 
boxes (10 year average) to 234 thousand boxes (five year average). At 
the time, average annual production of summer/fall varieties in the 
Mid-Columbia District have increased by nearly 10 percent, growing from 
868 thousand boxes (10 year average) to 951 thousand boxes (5 year 
average). Mid-Columbia average annual production of winter pears has 
remained fairly stable over this period, decreasing by only one half of 
a percent. Thus, expanding the Medford District would allocate a 
portion of the current Mid-Columbia District production to that 
district, and would expand the pool of Medford District industry 
representatives eligible to serve on the committee.
    The proposal to redefine Wenatchee District to include King, Grant 
and Lincoln Counties, and all other Counties in Washington lying north 
thereof, is also the result of a shift in boundary lines. The total 
amount of commercial fresh production represented in this district 
would not significantly change. However, the re-designation would allow 
for a better division of production between districts in Washington if 
production in the northern part of the State were to grow in the 
future. Witnesses stated that under the proposed district boundaries 
the State of Washington would be divided geographically into two 
districts.
    The proposed fresh pear district boundaries and corresponding 
allocation of committee member representation, discussed in Material 
Issue 5, are also validated by seasonal production summaries. A review 
of production statistics by district covering 10 years presented at the 
hearing indicate that the Wenatchee and Mid-Columbia Districts are the 
largest producers of both fresh winter and summer/fall varieties, and 
therefore merit a larger committee representation than the Medford and 
Yakima Districts. The proposed district boundaries offer a more 
accurate geographical representation of fresh pear production in the 
States of Oregon and Washington and more fairly gauge regional 
production differences.
    According to the record, processed pear production has historically 
been identified by Oregon and Washington State boundaries. 
Representation of processed pear industry interests and collection of 
mandatory State assessments have been conducted by respective State 
commissions: the Oregon Bartlett Pear Commission in Oregon and the 
Washington Stone Fruit Commission in Washington.
    The proposed Processed Pear Committee, further discussed under 
Material Issue 5, would initially be made up of 10 members allocated 
between 2 districts. One district would encompass the entire State of 
Washington. Because processed pear production in this district would 
represent 75 percent of total processed pear production in the 
production area, committee member representation would include two 
grower members, two handler members and two processor members.
    The other district would encompass the State of Oregon and would be 
allocated committee representation of one grower member, one handler 
member, and one processor member. (The public member would represent 
the production area at-large.) This proposed structure meets the 
existing language in the Act, which requires representation of 
processors and producers to be equal.
    Growers and processors testifying at the hearing stated their 
support for the proposed processed pear districts and indicated that 
representation by State offered an equitable division of production 
interests on the proposed administrative committee. While Oregon only 
represents 25 percent of total production area production, witnesses 
agreed that the entire State should be included in the same district to 
provide the Oregon processed pear industry a separate district.
    Given the record evidence and the reasons outlined above, USDA 
recommends that Sec.  927.11, Districts, be amended as proposed. This 
amendment would create two sets of representative districts under the 
order: one for fresh pears and one for processed pears. The proposed 
amendment reflects current industry operations and ensures equitable 
representation of producers, handlers and processors of pears in the 
States of Oregon and Washington. No opposition to this proposal was 
given at the hearing.

Material Issue Number 5--Termination of the Winter Pear Control 
Committee and Establishment of the Fresh Pear Committee and the 
Processed Pear Committee

    The marketing order should be amended to create two administrative 
committees: the Fresh Pear Committee and the Processed Pear Committee. 
Conforming changes should be made for all sections related to committee 
establishment, nomination, selection, voting, eligibility and tenure. 
These changes should all reflect a two-committee structure, where each 
committee has authority to act independently.
    The order is currently structured around the Oregon and Washington 
fresh winter pear industry, with the Winter Pear Control Committee 
responsible for local administration of the program. The proposal to 
expand order coverage to all pear varieties produced within the 
production area, and to both the fresh and processed product 
industries, necessitates modification of this structure.
    All witnesses at the hearing supported including both winter and 
summer/fall pears, in addition to all pear varieties not classified as 
either, under marketing order 927. Witnesses explained that 
consolidation would eliminate a confusing and inefficient system 
currently comprised of two Federal marketing orders and two State 
commissions. These four programs would be replaced with an updated 
single marketing program, which would benefit producers, handlers, and 
processors.
    Witnesses also advocated the establishment of two administrative 
bodies: One for the fresh industry and one for the processed industry. 
Witnesses explained that while the two industries were both dependent 
on the same production of pears, the administrative needs of the two 
industries were different. Managing the two sides of the pear industry, 
fresh and processed, would require two differing approaches. From 
promotional activities to customers, trade factors to shelf life, and 
consumer trends to cultural practices in the orchards, pears for the 
fresh market differ from pears for processing.
    According to the record, the ability for the fresh and processed 
industries to recommend assessment levels, maintain separate financial 
records, and establish reserves independently based on specific 
promotional objectives, is very important. However, the two committees 
would have the ability to work together in many areas, such as

[[Page 2527]]

funding of research that benefits all pears, and compiling statistical 
reports. Witnesses stated that the proposed amendments to the marketing 
order would provide a unified program for all pears under one marketing 
order, yet recognizes the differences in the objectives of the two 
industries. For these reasons, Sec.  927.20, Establishment and 
membership, should be amended to create a Fresh Pear Committee and a 
Processed Pear Committee.
    The proposed Fresh Pear Committee should consist of 13 members of 
whom 6 should be growers, 6 should be handlers and 1 should be a public 
member. For each member there should be two alternates, designated as 
the ``first alternate'' and the ``second alternate,'' respectively. 
Each fresh pear district, described in Material Issue 4, should be 
represented by one grower member and one handler member, except that 
the Mid-Columbia District and the Wenatchee District, which should be 
represented by two grower members and two handler members. The 
committee should recommend a public member to the Department once the 
industry representatives are nominated and appointed by the Department.
    The proposed Processed Pear Committee should consist of 10 members 
of whom 3 should be growers, 3 should be handlers, 3 members shall be 
processors, and 1 should be a public member. For each member there 
should be two alternates, designated as the ``first alternate'' and the 
``second alternate,'' respectively. District 1, the State of 
Washington, should be represented by two grower members, two handler 
members and two processor members. District 2, the State of Oregon, 
should be represented by one grower member, one handler member and one 
processor member. The committee should recommend a public member to the 
Department once the industry representatives are nominated and 
appointed by the Department.
    The proposal to add a voting public member to each administrative 
committee is new to the order. Prior to the proposed amendments, the 
Winter Pear Control Committee did have the authority to appoint a 
public advisor. However, the public advisor did not have voting rights. 
Witnesses supported the addition of a voting public member as they 
anticipated that a non-industry perspective would contribute the 
committee discussions and decision-making. Under the proposed 
amendments, the public member would not be allowed to have financial 
interests in the pear industry. Thus, the public member would be better 
able to represent consumer interests.
    Sections 927.21 and 927.22, which outline provisions for the 
nomination and selection of committee members, should be amended to 
include language specific to the two proposed administrative 
committees. Nomination and selection of Fresh and Processed Pear 
Committee members and their respective alternates would operate 
similarly to the current nomination and selection system for the Winter 
Pear Control Committee. Committee members would be elected for 
nomination at a meeting of their peers. This means that growers would 
be elected at growers' meetings, handlers would be elected at meetings 
of handlers, and processors would be elected at meetings attended by 
processors.
    Advance notices of these meetings would be placed in the local 
media, and all eligible members of that peer group could be nominated 
for selection to the committees. After an individual is nominated, and 
accepts that nomination, a statement containing background information 
and acknowledgement of their willingness to serve would be submitted to 
the USDA. Ultimately, committee member nominees would be selected and 
appointed as committee members by USDA.
    Sections 927.23 and 927.24 govern voting and eligibility 
requirements for committee members. Again, these sections are based on 
the language currently in place for the Winter Pear Control Committee. 
These sections should be revised to reflect the proposed dual committee 
structure. Voting guidelines stipulate that only growers, handlers or 
processors, respectively, should vote for their peers.
    Moreover, an individual should participate only in the election 
held in the district in which he or she produces, handles or processes 
pears. Individuals would be entitled to cast only one vote on behalf of 
his or her self, his or her agents, partners, affiliates, subsidiaries, 
and representatives. While each person may vote as a grower, handler or 
processor, they would not be able to vote as a combination thereof. 
Thus, if a person were a pear producer, handler and processor, he or 
she would have to choose whether to participate in the producer, 
handler or processor member nominations. Likewise, a producer who grows 
pears in more than one district would have to choose the district in 
which he or she wishes to participate.
    In order to be eligible to serve as a committee member, a grower, 
handler or processor must conduct their respective business in the 
district that they represent. Officers or employees of a corporate or 
limited liability corporation should be eligible to serve as 
representatives of their employer.
    Section 927.27, Term of office, should be amended to replace all 
references to the Winter Pear Control Committee with the Fresh Pear and 
Processed Pear Committee. The terms of office of members and alternates 
should be for 2 years beginning on July 1. About one-half of committee 
membership of each committee ends each June 30. This provision would 
allow for staggered terms of office and would ensure that only one-half 
of each committee rotates tenure each year, thus providing for a 
continuation of experience among committee members.
    Tenure limitations should be the same under the revised order as 
they currently are for the winter pear committee members. This section 
states that no member should serve more than three consecutive 2-year 
terms unless specifically exempted by the Department. Members and 
alternate members should continue to serve until their respective 
successors are qualified to serve on the committee and are selected.
    Section 927.33, Procedure, describes quorum and voting requirements 
for committee action at meetings. The language in this section should 
be revised to reflect the proposed Fresh and Processed Pear Committees 
and should provide for a 75-percent attendance rate for a quorum for 
each committee. All decision-making at committee meetings should 
require the concurring vote of at least 75 percent of those members 
present, including alternates serving in the place of any members.
    When asked how procedural aspects of the order would be impacted 
given a change in a committee size, witnesses stated that 
administration of the order should continue to be conducted as 
currently outlined. If a committee size were to change in terms of 
total number of members, witnesses felt that the 75 percent requirement 
for both quorum and committee action should be maintained.
    According to the hearing record, witnesses supported the use of 
current marketing order 927 language as a model for the administrative 
functioning of the proposed Fresh and Processed Pear Committees. 
Witnesses noted that marketing order 927 has a long history of 
effectively meeting the needs of the Oregon and Washington fresh winter 
pear industry. Therefore, few changes to the provisions of the

[[Page 2528]]

above-described sections were proposed.
    Record evidence supports the proposed changes in Sec. Sec.  927.20 
to 927.24, 927.27, and 927.33 described above. No opposition to these 
amendments was offered at the hearing.
    Numerous conforming changes are needed to reflect the proposed dual 
committee structure. These proposed revisions would, for the most part, 
replace all references to the ``Winter Pear Control Committee'' or 
``Control Committee'' with references to the ``Fresh Pear Committee,'' 
the ``Processed Pear Committee,'' or both. Another change needed in 
several sections is adding reference to processor committee members in 
addition to producer and handler members. Such conforming changes are 
needed in Sec. Sec.  927.9 Fiscal period; 927.26 Qualifications; 927.28 
Alternates for members; 927.29 Vacancies; 927.30 Compensation and 
expenses; 927.31 Powers; 927.32 Duties; 927.34 Right of the Secretary; 
927.35 Funds and other property; 927.40 Expenses; 927.43 Use of funds; 
927.45 Contributions; 927.50 Marketing policy; 927.52 Prerequisites to 
recommendations; 927.53 Notification; 927.75 Liability; 927.79 
Proceedings after termination; and 927.80 Amendments. Additionally one 
heading should be changed from ``Control Committee'' to 
``Administrative Bodies.''

Material Issue Number 6--Adding Authority for Changes in Committee Size 
and Membership Allocation

    Section 927.20 of the order should be revised to add authority for 
the committees, each individually, to recommend changes in committee 
size and structure. The intent of this proposal is to provide the 
committees with a tool to more efficiently respond to the changing 
character of the Oregon and Washington State pear industry. In 
recommending any such changes, the following would be considered: (1) 
Shifts in acreage within districts and within the production area 
during recent years; (2) the importance of new production in its 
relation to existing districts; (3) equitable relationship between 
Committee membership and the various districts; (4) economies to result 
from more efficient administration due to redistricting or 
reapportionment of members within districts; and (5) other relevant 
factors.
    Testimony indicates that significant changes have occurred in both 
the production base and industry demographics of the pear industry 
since the order was implemented. These changes suggest that flexibility 
in adapting to the changing character of the Oregon and Washington pear 
industry is important to the administration of the order. Witnesses 
stated that, ultimately, the order's ability to remain effective over 
time would be reliant on its ability to change with the needs of the 
industry. In this regard, witnesses proposed adding authority to the 
order that would allow for committee size and structure to be 
considered, and recommendations for change to be made.
    Witnesses testified that careful industry analysis would lead to 
sound recommendations to USDA regarding any change in committee size or 
structure. If the authority to change the size of the committees were 
added to the order, the committees could, at regular meetings, review 
the current structure of the committees using the points of 
consideration mentioned above. Upon completing this analysis, the 
committees could make a recommendation to USDA for a change in the size 
of the committee. Recommendations would be made by each committee 
individually for the segment of the industry that they represent. 
Implementation of this authority would allow such changes to be pursued 
through the informal rulemaking process.
    Given the changes that the Oregon and Washington pear industry has 
seen over time, flexibility to change the size of the committees in 
step with the evolving needs of the industry would be an important 
tool. It would allow the committees to focus on the increasing 
competitiveness in the market while minimizing costs and maximizing 
efficiency.
    Record evidence supports amending the order to add authority to 
change committee size and structure. This amendment would allow each 
committee, given due analysis and consideration of key factors and USDA 
approval, to more quickly adapt to changes within the industry. There 
was no opposition to the above proposal. Accordingly, USDA is proposing 
that Sec.  927.20 be amended.

Material Issue Number 7--Assessment and Supplemental Assessment Rates

    Section 927.41, Assessments, should be amended to allow the Fresh 
Pear and Processed Pear Committees to recommend rates of assessment for 
each category of pears, including summer/fall pears, winter pears, and 
all other pears. In addition, rates of assessment could be different 
for fresh pears and pears for processing in each category, and could 
include supplemental rates on individual varieties.
    Currently, the order provides for an assessment rate for winter 
pears, and supplemental assessment rates for individual varieties and 
subvarieties of winter pears, to be established. Rates of assessment 
are recommended to the Department for approval. If authority to 
establish rates of assessment for summer/fall and other pear varieties, 
as well as supplemental rates of assessment, were incorporated under 
the order, they, too, would be subject to approval by USDA. Assessments 
are used to fund the administrative functions of the committee, in 
addition to any research and promotional activities authorized under 
the order. According to the record, supplemental rates of assessment 
would be used for expenses specific to an individual variety or 
subvariety of pear.
    Witnesses stated that three different base assessments would best 
serve the industry. Historically, fresh winter pear varieties have paid 
higher assessments than fresh summer/fall pears. Pears for processing 
have been assessed at yet a different level, and could feasibly have 
differential assessments for winter, summer/fall or other varieties 
over time.
    Moreover, while the proposed amendments would result in unifying 
the programs for winter pears and summer/fall pears varieties under one 
marketing order, (and one, combined fiscal year) separate base 
assessment rates would allow for differences in the budget requirements 
for each category. Winter pears have a distinct season from summer/fall 
pears, and thus present distinct, identifiable costs. The operational 
differences of each category reflect the need for maintaining 
differences in base assessment rates in order to generate adequate 
funds cover category-specific costs.
    According to the record, the base assessment for pears classified 
as ``other'' is intended for the future needs of the industry as new 
varieties or subvarieties of the genus Pyrus are developed that do not 
fit under either ``winter pear'' or ``summer/fall pear.''
    Besides the differences between fresh and processed pears, 
witnesses stated that it would be important to provide each committee 
with the authority to establish varying rates of assessment on a 
variety-specific basis. This authority would provide the committees 
with flexibility to ensure that variety-specific projects could be 
undertaken as special promotional or research needs develop. Having the 
ability to add a supplemental rate of assessment to a specific variety, 
without raising assessments for all other pears, would allow the 
committee to address those needs without requiring funding by

[[Page 2529]]

entities not involved with the production or handling of that variety.
    According to the record, a supplemental rate of assessment for 
Anjou pears currently exists under marketing order 927. Funds generated 
by this supplemental assessment are used to address research and 
production issues specific to ethoxyquin use to stop scald, a defect 
found almost exclusively in Anjou pears. Anjou growers testifying at 
the hearing indicated their support of this supplemental assessment and 
stated that without the resulting extra revenue, research and 
registration of ethoxyquin chemicals essential to the industry would be 
unavailable. Without the flexibility of a supplemental assessment, 
witnesses stated that the lack of funding and loss in investments of 
Anjou production could have resulted in an industry crisis.
    Record evidence supports amending the marketing order to authorize 
establishment of rates of assessment for each category of pears, 
including summer/fall pears, winter pears, and all other pears. In 
addition, rates of assessment could be different for fresh pears and 
pears for processing in each category, and could include supplemental 
rates on individual varieties or subvarieties. There was no opposition 
to the above proposal. Accordingly, the Department is proposing that 
Sec.  927.41 be amended.

Material Issue Number 8--Adding Authority for Container Marking 
Requirements

    Section 927.51, Issuance of regulations and modification, 
suspension, or termination thereof, should be amended to provide 
authority for container marking regulations for fresh pears. This 
authority would allow the Fresh Pear Committee to recommend mandatory 
marking or labeling requirements on containers used in the packing or 
handling of fresh pears grown in Oregon and Washington. Any committee 
recommendation would be subject to review and approval of the 
Secretary.
    The order currently authorizes the establishment of grade, size and 
quality regulations, but does not include container-marking authority. 
Witnesses stated that this authority, which would include the use of 
generic industry logos, would provide the industry with a marketing 
tool to enhance the presentation of fresh Northwest pears in the 
marketplace.
    According to the record, the industry's ability to deliver a 
consistently graded, sized, weighed, and marked product has become 
steadily more important. The growing presence of imported pears and 
other like products have caused increased competition for the 
consumer's attention in the marketplace. Pear supply and utilization 
figures from the USDA's Economic Research Service show that imports 
have accounted for between 20 and 23 percent of U.S. domestic fresh 
pear consumption in recent years. Imports from Argentina and Chile are 
the most prevalent. Use of a generic pear logo, by the Northwest Pear 
Bureau, the promotional organization representing Oregon and Washington 
fresh pears, has been helpful in promoting pears to consumers. If the 
proposed container marking authority were implemented, the Fresh Pear 
Committee could expand the use of this logo or develop similar 
promotional marking requirements.
    Witnesses also explained that handlers, in packing to the varying 
demands of their customers, are using an increasing number of different 
types of containers. Pear sizes have traditionally been associated with 
the number of pears that fit into a western standard box (see Material 
Issue 2). However, since the western standard box is no longer 
``standard'', determining the size of pear packed cannot be simply 
calculated by counting the number of pears in the container. For this 
reason, handlers testifying at the hearing stated that container 
marking would be helpful in reducing confusion in the marketplace. If 
pear size were required to be marked on all containers packed, 
regardless of the container size or shape, this information would be 
more readily available to consumers. This information would also allow 
for easier price comparisons between differing containers holding the 
same size pear.
    Witnesses offered the following example of regulating 180-size 
pears to describe how container-marking authority could be beneficial 
to the fresh pear industry:
    If the Fresh Pear Committee were to determine that, for example, 
size 180 pears are not profitable to the grower, a regulation 
eliminating that size from the marketplace could be implemented. The 
committee could also implement a container-marking requirement 
mandating the marking of product size on all fresh pear containers. In 
this case, container marking would facilitate better identification of 
the size of pears in containers and better communication of size of 
product to customers.
    Testimony indicated that fresh packing facilities are already 
configured for labeling and container marking. Witnesses noted that 
there would be little, if any, need for equipment changes or additions. 
Thus, the proposed change is not expected to negatively affect the 
costs associated with handling fresh pears. The proposed amendment 
would only authorize container marking specifications; it would not 
impose any new regulatory requirements on Oregon or Washington fresh 
pear handlers. Authority to regulate container pack or size is also not 
included as part of this proposal. Any specific recommendation by the 
Committee to implement this authority would be subject to analysis 
through the informal rulemaking process.
    Record evidence supports amending the order to include container 
marking authority. This amendment would allow the Fresh Pear Committee 
to recommend, and USDA to implement, container marking requirements 
through the informal rulemaking procedure. No opposition to the above 
proposal was voiced at the hearing. Accordingly, USDA proposes that 
Sec.  927.51 be amended.

Material Issue Number 9--Removal of Grower Exemption Certificates

    Section 927.54, Exemption certificates, should be removed from the 
order as it is obsolete and no longer used by the industry. This 
section provides authority for the issuance of exemption certificates 
to growers who would be prevented from shipping product under a grade 
or size regulation implemented under the order. A grower receiving such 
an exemption certificate would be allowed to ship a quantity of the 
variety being regulated equal to the average shipping quantity of that 
variety for the district in which he or she produces.
    According to the record, grade and size regulations for pears other 
than the Anjou pear variety have only been implemented once in the 
history of marketing order 927, in 1977. Witnesses stated that the 
practical use of this exemption clause at that time was deemed 
ineffective. Consequently, it was recommended by the committee that 
this authority be eliminated.
    For the above reasons, the Department agrees that Sec.  927.54 
should be removed from the order.

Material Issue Number 10--Confidentiality and Record Retention 
Requirements

    The Fresh Pear Committee and the Processed Pear Committee should, 
each independently, have authority to establish handler reporting 
requirements, subject to USDA approval. Section 927.70, Reports, should 
be further revised to include language spelling out confidential

[[Page 2530]]

treatment of handler information submitted to the committees under the 
mandatory reporting requirements of this section.
    Confidentiality would help protect handlers against any disclosure 
of information that might adversely affect or reveal a handler's 
competitive position. The proposed amendment would also add language 
providing that handlers must retain shipping and disposition records of 
pears handled for two years. The record retention requirement would 
allow the committees access to information in the event that handler 
reports need to be verified.
    According to the record, Oregon and Washington winter and summer/
fall pear handlers currently submit reports under marketing orders 927 
and 931. Information submitted in accordance with reporting 
requirements provides the data necessary for such things as annual 
production by variety, shipment volumes during the season, and historic 
comparisons. In turn, the committees use industry reports to determine 
promotion, sales and marketing activities. Information gathered from 
these reports is also used to calculate assessments and conduct 
compliance audits.
    Witnesses stated that adding the requirement for record retention 
for two years would formalize current industry practices and would 
update order language to conform to the Act.
    For the reasons described above, Sec.  927.70, Reports, should be 
amended to include confidentiality and record retention requirements. 
No opposition to this proposal was voiced at the hearing.

Material Issue Number 11--Inspection Requirements

    Section 927.60, Inspection and certification, should be amended to 
clarify current inspection requirements and add authority for the Fresh 
Pear Committee to recommend elimination of those requirements under 
certain circumstances.
    Section 927.51 of the order authorizes the establishment of grade, 
size and quality requirements for fresh shipments of pears. Section 
927.60 requires that each shipment of fresh pears be inspected and 
certified by the Federal-State Inspection Service. The primary purpose 
of the inspection and certification requirement is to ensure compliance 
with any regulations in effect under the authority of Sec.  927.51.
    Traditionally, the pear industry has used end-line inspection 
procedures. Under this scenario, samples of packed pears are examined 
at the end of the production process, and the results are certified by 
Federally licensed inspectors. The record shows that in recent years, 
the Federal-State Inspection Service has developed effective, less 
costly alternatives to the end-line inspection program. One alternative 
is the ``Partners in Quality'' program, a documented quality assurance 
system. Under this program, individual packing houses must demonstrate 
and document their ability to pack product that meets all relevant 
quality requirements. Effectiveness of the program is verified through 
periodic, unannounced audits of each packer's system by USDA-approved 
auditors.
    Another program recently developed is the Customer Assisted 
Inspection Program (CAIP). Under CAIP, USDA inspectors oversee the in-
line sampling and inspection process performed by trained company 
staff. USDA oversight ranges from periodic visits throughout the day to 
a continuous on-site presence.
    Witnesses at the hearing testified that the fresh pear industry 
should be able to utilize any method of inspection acceptable to the 
Federal-State Inspection Service. These alternative methods have been 
developed by USDA as a means of reducing costs to industry. Individual 
pear handlers could choose the method of inspection best suited to 
their operations. The language of Sec.  927.60 is proposed to be 
revised to make this clarification.
    Witnesses also testified that the Committee should be authorized to 
recommend modification or elimination of the inspection requirement if 
it is able to devise an alternative means of ensuring compliance with 
any quality and size standards in effect under the order. Any 
alternative system would have to be approved by the Department through 
the informal rulemaking process. Additionally, it would have to provide 
adequate assurance that handlers under the program were in compliance 
with program requirements.
    The Agricultural Marketing Service is responsible for ensuring that 
all handlers regulated under a marketing order program are in 
compliance with any regulations that are in effect. Marketing order 
administrative committees have the responsibility of locally 
administering marketing order programs, which includes monitoring 
industry s compliance with order requirements, and reporting any 
violations to the Department for enforcement measures.
    While the Department supports and encourages innovation and 
development of cost-saving procedures, it is important that the program 
maintain its integrity and that any quality or size regulation in 
effect are not compromised.
    Witnesses at the hearing did not provide specific examples of any 
alternatives. However, they supported maximum flexibility in the order 
to allow the industry to take advantage of any innovative procedures 
that may be available in the future. As previously discussed, such 
procedures would require USDA approval.
    According to the hearing record, the integrity of the industry s 
commitment to comply with grade and size regulations would not be 
compromised. The authority to recommend alternatives to mandatory 
inspection would be a practical tool for the industry. It would allow 
grade and size standards to be maintained, yet could allow for time and 
cost-saving opportunities.
    One witness offered the example of current quality regulations in 
effect for Anjou pears. All Anjou pears shipped domestically prior to 
November 1st must have a pressure reading of 14 pounds or below and 
have been cooled to at least 35 degrees. This regulation requires that 
the fruit be inspected. Handlers currently pay 12\1/2\ cents per 
hundredweight for this inspection. At times, they lose time due to 
delays in the inspection process. Handler witnesses also indicated that 
delays could be longer for smaller shippers that do not have inspectors 
stationed at their warehouses. Witnesses explained that if alternative 
forms of inspection were allowed, grade and size regulation could be 
more economically implemented.
    Record evidence supports amending Sec.  927.60 to clarify that any 
inspection program developed by the Federal-State Inspection Service 
may be utilized by fresh pear handlers under the order. Additionally, 
that section should be amended to add authority for the Fresh Pear 
Committee to recommend modification or elimination of the inspection 
requirement provided that an adequate method of ensuring compliance 
with quality and size requirements can be developed. This amendment 
would allow the Fresh Pear Committee to recommend, and USDA to 
implement, time and cost-saving mechanisms for handlers without 
compromising product quality in the marketplace.
    The proposed language of 927.60, Inspection and certification, has 
been revised somewhat from what appeared in the Notice of Hearing to 
clarify the intent of the pear industry, as testified at the hearing.

[[Page 2531]]

Material Issue Number 12--Elimination of Obsolete Exemption Provisions

    Section 927.65, Exemption from regulation, allows pears shipped for 
certain purposes to be exempt from handling regulations in effect under 
the order as well as from assessments. This section should be amended 
by deleting obsolete provisions.
    Currently pears shipped for consumption by charitable institutions, 
distribution by relief agencies, or conversion into by-products are 
exempt from regulation. Since this decision recommends extending 
program coverage to pears for processing, the third purpose listed 
needs to be deleted.
    Additionally, paragraph (c) of Sec.  927.65 provides authority for 
the committee, with the approval of USDA, to designate storage 
warehouses within the production area. Pears shipped to those storage 
warehouses would be exempt from any regulatory provisions in effect 
under the order. This authority has never been used. As such, the 
record supports deleting this provision as unnecessary. The 
administrative committees would retain the authority (provided in Sec.  
927.65(b)) to designate types of shipments that should be exempt from 
regulations (including payment of assessments). Such exemptions could 
only be implemented with USDA approval through informal rulemaking.
    This proposal also recommends revising the language in Sec.  927.64 
paragraphs (a) and (b), to reflect the dual committee structure 
described in Material Issue 5. The amended language would replace all 
references to the ``Winter Pear Control Committee'' in this section 
with ``the Fresh Pear Committee or the Processed Pear Committee.''
    Given the above-described reasons, the Department agrees that Sec.  
927.64 should be amended by removing paragraph (c) from the order and 
updating language in paragraphs (a) and (b) to reflect to the proposed 
dual committee structure. No opposition to this proposal was presented 
at the hearing.

Material Issue Number 13--Continuance Referenda

    Section 927.78, Termination, should be amended to provide for 
separate continuance referenda for fresh pears and pears for processing 
every 6 years. A vote to discontinue the program with respect to fresh 
pears would not result in discontinuance of the order with respect to 
pears for processing, and vice versa.
    Marketing order 927 currently requires that continuance referenda 
be held every 6 years. Witnesses supported the need for maintaining the 
referendum process and stated that this practice should be extended to 
both fresh and processed pears.
    The record shows that producers should have an opportunity to 
periodically vote on whether a marketing order should continue. 
Continuance referenda provide an industry with a means to measure 
producer support for the program. Experience has shown that programs 
need significant industry support to operate effectively. Continuance 
would require a favorable vote of at least two-thirds of those voting, 
or at least two-thirds of the volume represented in the referendum. 
This is the same as that for issuance and amendment of an order.
    The USDA believes that producers should have an opportunity to 
periodically vote on whether the marketing order should continue, and 
that the costs in time and money are well worth the periodic producer 
feedback afforded by such referenda. Accordingly, the record evidence 
supports the requirement that such referenda be conducted.
    Record evidence supports the amendment of Sec. Sec.  927.78 to 
require separate continuance referenda for fresh and processed pears. 
No opposition to this proposal was received at the hearing.

Material Issue Number 14--Adding Authority for Post-Harvest Research

    Section 927.47, Research and development, should be amended to 
include authority for post-harvest research. In addition, the language 
in this section should be revised to reflect the proposed dual 
committee structure. All references to the Winter Pear Control 
Committee should be revised to reference the proposed Fresh and 
Processed Pear Committees.
    The order currently contains authority for production research and 
marketing research, but does not contain specific authority for post-
harvest research. Examples of post-harvest research include developing 
improved storage, handling and packaging technologies. Witnesses 
supported the need for research in this area and discussed the benefits 
currently brought to the industry through production and market 
research.
    Witnesses stated that research and promotion have been beneficial 
in assisting the pear industry to improve crop yields and enhance 
marketability and market distribution of their product. As a result, 
pears have been able to retain a viable role in an increasingly 
competitive market. Post-harvest research would complement the already 
existing authorities, as it would focus on a section of the pear crop 
to market flow that, until now, has not benefited from research 
activities. For example, improved storage techniques could benefit the 
pear industry by decreasing the loss of product due to storage, or by 
increasing the storability of product to help prolong the marketing 
season. Funding for these activities would come from assessments and 
would be subject to approval by the Department.
    Authority for promotion, including paid advertising, also currently 
exists under the order. Given the proposal to add summer/fall pear 
varieties to the scope of the order, the already existing authority for 
paid advertising would be applied to these varieties if the proposed 
amendments were implemented. Witnesses stated that these promotional 
activities, including paid generic advertising, have historically been 
beneficial in boosting sales and maintaining market share.
    Witnesses also expressed that research and promotion activities 
were likely to be more effective and cost-efficient under the proposed 
dual-committee structure as the industry would be able to better 
coordinate needs and resources. Promotional authority for both 
commodities, fresh and processed pears, should include market research 
and development projects, as well as marketing promotion, including 
paid advertising. In the absence of this proposed change, the 
effectiveness of the total pear marketing program would be limited by 
the inability to use all available tools when promoting pears grown in 
the Northwest.
    Record evidence indicates that, in the past, pear-related research 
has been supported by a number of industry organizations, State 
commissions, and Federal marketing orders. With the proposed 
consolidation of all pears under one marketing order, it is essential 
that both committees have the authority to collect and allocate 
research assessment dollars to ensure that the necessary funding 
continues to be available for specific projects supported by the 
industry. To this end, witnesses stated that research benefits 
everyone. As an example, research that leads to improved pack-outs or 
improved storability would likely increase grower returns and provide a 
better product on store shelves, to the benefit of the consumer.
    Given the reasons outlined above, Sec.  927.47, Research and 
promotion, should be amended to include authority for post-harvest 
research. In addition, changes should be made in the language of this 
section to reflect the proposed

[[Page 2532]]

dual-committee structure representing both fresh and processed pears. 
No opposition to this proposal was voiced at the hearing.

Material Issue Number 15--Updating of Order Provisions

    Marketing order 927 contains several sections that should be 
amended to better reflect current industry operations. These amendments 
are largely considered housekeeping changes, as they are intended to 
simply update language rather than alter the meaning of order 
provisions in any way.
    Section 927.1, Secretary, should be revised to include the modern 
definition of this term. The revised definition recognizes officers or 
employees of the Department of Agriculture as delegates of the 
Secretary of Agriculture.
    Section 927.3, Person, should be revised to make this definition 
consistent with that in the Act.
    Section 927.6, Grower, should be revised to recognize the term 
``producer'' as a synonymous term.
    Section 927.44, Collection of assessments, should be removed as 
being obsolete and inconsistent with USDA policy.
    Section 927.77, Effective time, should be revised by removing the 
date ``August 26, 1939'' as obsolete.
    No opposition to these amendments was voiced at the hearing. 
Accordingly, USDA proposes that the above-described sections be 
amended.

Small Business Consideration

    Pursuant to the 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 so that small businesses will not be 
unduly or disproportionately burdened. 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.
    Small agricultural producers have been defined by the Small 
Business Administration (SBA)(13 CFR 121.201) as those having annual 
receipts of less than $750,000. 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 to the order on small businesses. The record evidence is 
that most of the proposed amendments are designed to enhance industry 
efficiencies and reduce costs, thereby improving grower returns.
    The record indicates that there are approximately 1,850 pear 
growers in Oregon and Washington. Of that total, 1,345 growers report 
Bartlett or other summer/fall pear production, and 1,753 growers report 
winter pear production. Two-year average NASS figures (the 2002 crop 
year and preliminary figures for 2003) provides the following 
production profile for Washington and Oregon, respectively: bearing 
acres, 24,800 and 17,600; yield per acre, 16.8 tons and 11.8 tons; 
annual production, 417,500 tons and 207,500 tons. Total acres planted 
in pears for Washington and Oregon (including non-bearing acres) in 
2002 were 26,586 and 22,822, respectively. Average Washington and 
Oregon pear pack-out for the 10-year period from 1993/94 to 2002/03 was 
14,639,225 standard boxes, compared to 13,476,829 standard boxes for 
1989/90-1998/99.
    Summing average Washington and Oregon pear acreage for 2002 and 
2003, and dividing by the number of growers (1,850), the estimated 
average acreage per grower in the two-state area is 26.7 total acres 
and 22.9 bearing acres. According to the 1997 Agricultural Census, the 
average Oregon and Washington pear grower had approximately 23 and 15 
total acres, respectively. The sum of average Washington and Oregon 
pear production for 2002 and 2003, divided by the number of growers, 
yields an estimated average production per grower in the two-state area 
of 338 tons (676,000 pounds).
    The average fresh market grower return for the two States has been 
between 20 and 22 cents per pound in recent years, and between 10 and 
12 cents per pound for processing. Estimated 2-year average pear sales 
revenue per grower in the production area is approximately $101,000, 
which is between \1/7\ and \1/8\ of the revenue that would qualify a 
grower to be a large grower according to the SBA definition (if based 
on pear sales alone). According to the hearing record, roughly 75 
percent of the fresh pear producers in the States of Oregon and 
Washington qualify as small producers. One witness stated that a 1,000-
acre farm represents the threshold between a small and a large producer 
(a substantially different definition from what the SBA uses).
    There are 55 handlers that handle fresh pears produced in Oregon 
and Washington; 73 percent of these fall into the SBA definition of 
``small business. There are five processing plants in the production 
area, with one in Oregon and four in Washington. All five processors 
are larger than the SBA's definition of small business. According to 
information presented by processors testifying at the hearing, roughly 
90 percent of pears received for processing come from small grower 
entities.
    The proposals put forth at the hearing would streamline industry 
organization, but would not result in a significant change in industry 
production, harvest or distribution activities. In discussing the 
impacts of the proposed amendments on small growers and handlers, 
witnesses indicated that the changes are expected to result in lower 
costs.
    If implemented, the amendments would result in the consolidation of 
marketing orders 927 and 931, regulating fresh winter pears and summer/
fall pears, respectively. Program coverage would also be extended to 
pears for processing. The combined programs would be administered by 
two new administrative committees, one for fresh pears and one for 
pears for processing. Cost savings could occur as a result of more 
efficient coordination of administrative activities between the two 
proposed committees.
    Record evidence indicates the proposal to revise the order s 
inspection provisions may result in cost savings for handlers. Handlers 
within the production area typically have about 75 percent of their 
product inspected on a voluntary basis. The remaining 25 percent 
represents the amount of additional product that would be required to 
be inspected if regulations were in effect.
    Handler witnesses also reported that inspection costs average 12\1/
2\ cents per hundredweight, with a $9.00 minimum fee. In addition to 
paying the inspection fee, handlers may also experience delays in 
shipments while waiting for inspection to be completed. Handlers 
indicated that such delays could be longer for smaller shippers that do 
not have inspectors regularly stationed at their warehouses. This 
proposal seeks to reduce these costs by allowing alternatives to 
mandatory inspection.
    Traditionally, the pear industry has used end-line inspection 
procedures. Under this scenario, samples of packed pears are examined 
at the end of the production process, and the results are certified by 
Federally licensed

[[Page 2533]]

inspectors. The record shows that in recent years, the Federal-State 
Inspection Service has developed effective, less costly alternatives to 
the end-line inspection program. One alternative is the Partners in 
Quality program, a documented quality assurance system. Under this 
program, individual packing houses must demonstrate and document their 
ability to pack product that meets all relevant quality requirements. 
Effectiveness of the program is verified through periodic, unannounced 
audits of each packer's system by USDA-approved auditors.
    Another program recently developed is the Customer Assisted 
Inspection Program (CAIP). Under CAIP, USDA inspectors oversee the in-
line sampling and inspection process performed by trained company 
staff. USDA oversight ranges from periodic visits throughout the day to 
a continuous on-site presence. Witnesses at the hearing testified that 
the fresh pear industry should be able to utilize any method of 
inspection acceptable to the Federal-State Inspection Service. These 
alternative methods have been developed by USDA as a means of reducing 
costs to industry. If this amendment were implemented, individual pear 
handlers could choose the method of inspection best suited to their 
operations, thereby possibly reducing costs associated with inspection.
    Additionally, the authority to eliminate inspection requirements 
could have handler cost implications. However, any increase or decrease 
in costs could not be determined until specific alternative methods are 
developed to assure compliance with any quality and size standards in 
effect.
    The proposal to authorize container marking requirements is not 
expected to result in significant cost increases for fresh pear 
handlers. Testimony indicated that packing facilities are already 
configured for labeling and container marking. Witnesses noted that 
there would be little, if any, need for equipment changes or additions. 
Thus, the proposed change is not expected to have any adverse financial 
impact related to handling fresh pears. It should be noted that the 
proposed amendment would only grant the committees authority to 
recommend container markings; implementation of this authority could be 
done through informal rulemaking in the future. The amendment itself 
would therefore not impose any new regulatory requirements on Oregon or 
Washington fresh pear handlers.
    Witnesses explained that the winter, summer/fall, fresh and 
processed pear industries are closely inter-related. Growing, 
harvesting, packing, processing and marketing activities of these 
industries all impact each other. Thus, bringing all industry segments 
together under a single marketing program would be beneficial for the 
Oregon and Washington pear industry. Proponent witnesses stated that 
the combined amendments, if implemented, would help to improve the 
orderly marketing of product within the industry.
    Similarly, coordinated marketing and distribution efforts for fresh 
varieties that appear in the marketplace simultaneously would assist in 
maximizing grower returns from each variety. While the industries 
currently undertake coordinated marketing and promotional activities, 
witnesses stated that combining these industries would further 
synchronize activities and facilitate industry discussions and 
decision-making.
    The amendments would add authority to assess summer/fall pear 
handlers and undertake promotional activities on their behalf in a 
manner similar to that done currently for winter pears. When asked if 
assuming this authority would be acceptable to the summer/fall pear 
industry, witnesses supported promotional activities, including paid 
generic advertising, as a way to boost sales and maintain market share.
    Post-harvest research would also benefit the pear industries by 
focusing on a section of the pear crop-to-market flow that, until now, 
has not benefited from research activities. Improved storage techniques 
resulting from industry-funded post-harvest research could benefit the 
pear industry by decreasing the loss of product due to storage, or by 
increasing the storability of product to help prolong the marketing 
season.
    A significant market-facilitating function carried out by the 
current marketing order committees is the collection of statistical 
data. That function would continue under the amended marketing order 
and the authority to collect information would extend to additional 
varieties that are currently produced. Flexibility is provided for 
including other varieties in the future. Witnesses emphasized the 
importance and value of collecting and disseminating accurate 
statistical information to enable industry participants to make 
economic and marketing decisions.
    The proposal to establish two administrative committees also 
includes the addition of a public member to each of those committees. 
The benefit of adding a non-industry, consumer perspective to committee 
deliberations and decision-making could prove very beneficial. 
Witnesses stated that this additional perspective would improve the 
committees understanding of the consumer in the marketplace and could 
enhance committee activities aimed at increasing consumer demand for 
Oregon and Washington pears.
    The addition of a public member to each committee is not expected 
to result in any substantial cost increases. While these members would 
be entitled to reimbursement for certain expenses allowed for under the 
order, this expense is neither different nor any more burdensome than 
the current reimbursement arrangement for committee members.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impact of the proposed 
amendments to the order on small entities. The record evidence is that 
most of the amendments are designed to reduce costs. While some of the 
proposals could impose some minimal costs, those costs would be 
outweighed by the benefits expected to accrue to the Oregon and 
Washington pear industry.
    Current information collection requirements for Part 927 are 
approved by OMB under OMB number 0581-0089. Any changes in those 
requirements as a result of this proceeding would be submitted to OMB 
for approval. Witnesses stated that existing forms could be adequately 
modified to serve the needs of the proposed fresh and processed pear 
committees. While conforming changes to the forms would need to be made 
(such as changing the name of the committee), the functionality of the 
forms would remain the same.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. These amendments are 
designed to enhance the administration and functioning of the marketing 
order to the benefit of the industry.
    Committee meetings regarding these proposals as well as the hearing 
dates were widely publicized throughout the Oregon and Washington fresh 
and processed pear industries, and all interested persons were invited 
to attend the meetings and the hearing and participate in deliberations 
on all issues.

[[Page 2534]]

All committee meetings (both of the Winter Pear Committee and the 
Northwest Bartlett Pear Committee) and the hearing were public forums 
and all entities, both large and small, were able to express views on 
these issues. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate so that 
this rulemaking may be completed prior to the beginning of the 2005 
crop year, beginning July 1, 2005. All written exceptions timely 
received will be considered and a grower referendum will be conducted 
before these proposals are implemented.

Civil Justice Reform

    The amendments to Marketing Agreement and Order 927 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 this proposal.
    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 USDA 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, USDA 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 USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.

Rulings on Briefs of Interested Persons

    Briefs, proposed findings and conclusions, and the evidence in the 
record were considered in making the findings and conclusions set forth 
in this recommended decision. To the extent that the suggested findings 
and conclusions filed by interested persons are inconsistent with 
thefindings and conclusions of this recommended decision, the requests 
to make such findings or to reach such conclusions are denied.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) 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;
    (2) 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 agreement and order upon which a hearing has 
been held;
    (3) 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 subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    (4) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, prescribe, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of pears grown in the production area; and
    (5) All handling of pears grown in the production area as defined 
in the marketing agreement and order, is in the current of interstate 
or foreign commerce or directly burdens, obstructs, or affects such 
commerce.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate so that 
this rulemaking may be completed prior to the 2005-2006 season. All 
written exceptions timely received will be considered and a grower 
referendum will be conducted before these proposals are implemented.

List of Subjects in 7 CFR Part 927

    Marketing agreements, Winter pears, Reporting and recordkeeping 
requirements.

Recommended Further Amendment of the Marketing Agreement and Order

    For the reasons set out in the preamble, 7 CFR part 927 is proposed 
to be amended as follows:

PART 927--PEARS GROWN IN OREGON AND WASHINGTON

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

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

    2. Revise the heading of part 927 to read as set forth above.
    3. Revise Sec.  927.1 to read as follows:


Sec.  927.1  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department of Agriculture who has 
been delegated, or to whom authority may hereafter be delegated, the 
authority to act for the Secretary.
    4. Revise Sec.  927.3 to read as follows:


Sec.  927.3  Person.

    Person means an individual partnership, corporation, association, 
legal representative, or any other business unit.
    5. Revise Sec.  927.4 to read as follows:


Sec.  927.4  Pears.

    (a) Pears means and includes any and all varieties or subvarieties 
of pears with the genus Pyrus that are produced in the production area 
and are classified as:
    (1) Summer/fall pears including Bartlett and Starkrimson pears;
    (2) Winter pears including Beurre D, Anjou, Beurre Bosc, Doyenne du 
Comice, Concorde, Forelle, Winter Nelis, Packham, Seckel, and Taylor's 
Gold pears; and
    (3) Other pears including any or all other varieties or 
subvarieties of pears not classified as summer/fall or winter pears.
    (b) The Fresh Pear Committee and/or the Processed Pear Committee, 
with the approval of the Secretary, may recognize new or delete 
obsolete varieties or subvarieties for each category.
    6. Revise Sec.  927.5 to read as follows:


Sec.  927.5  Size.

    Size means the number of pears which can be packed in a 44-pound 
net weight standard box or container equivalent, or as ``size'' means 
the greatest transverse diameter of the pear taken at right angles to a 
line running from the stem to the blossom end, or such other 
specifications more specifically defined in a regulation issued under 
this part.
    7. Revise Sec.  927.6 to read as follows:

[[Page 2535]]

Sec.  927.6  Grower.

    Grower is synonymous with producer and means any person engaged in 
the production of pears, either as owner or as tenant.
    8. Revise Sec.  927.7 to read as follows:


Sec.  927.7  Handler.

    Handler is synonymous with shipper and means any person (except a 
common or contract carrier transporting pears owned by another person) 
who, as owner, agent, broker, or otherwise, ships or handles pears, or 
causes pears to be shipped or handled by rail, truck, boat, or any 
other means whatsoever.
    9. Revise Sec.  927.8 to read as follows:


Sec.  927.8  Ship or handle.

    Ship or handle means to sell, deliver, consign, transport or ship 
pears within the production area or between the production area and any 
point outside thereof, including receiving pears for processing: 
Provided, That the term ``handle'' shall not include the transportation 
of pear shipments within the production area from the orchard where 
grown to a packing facility located within the production area for 
preparation for market or delivery for processing.
    10. Revise Sec.  927.9 to read as follows:


Sec.  927.9  Fiscal period.

    Fiscal period means the period beginning July 1 of any year and 
ending June 30 of the following year or such may be approved by the 
Secretary pursuant to a joint recommendation by the Fresh Pear 
Committee and the Processed Pear Committee.
    11. Revise Sec.  927.11 to read as follows:


Sec.  927.11  District.

    District means the applicable one of the following--described 
subdivisions of the production area covered by the provisions of this 
subpart:
    (a) For the purpose of committee representation, administration and 
application of provisions of this subpart as applicable to pears for 
the fresh market, districts shall be defined as follows:
    (1) Medford District shall include all the counties in the State of 
Oregon except for Hood River and Wasco counties.
    (2) Mid-Columbia District shall include Hood River and Wasco 
counties in the State of Oregon, and the counties of Skamania and 
Klickitat in the State of Washington.
    (3) Wenatchee District shall include the counties of King, Chelan, 
Okanogan, Douglas, Grant, Lincoln, and Spokane in the State of 
Washington, and all other counties in Washington lying north thereof.
    (4) Yakima District shall include all of the State of Washington, 
not included in the Wenatchee District or in the Mid-Columbia District.
    (b) For the purpose of committee representation, administration and 
application of provisions of this subpart as applicable to pears for 
processing, districts shall be defined as follows:
    (1) The State of Washington.
    (2) The State of Oregon.
    (c) The Secretary, upon recommendation of the Fresh Pear Committee 
or the Processed Pear Committee, may reestablish districts within the 
production area.
    12. Revise Sec.  927.13 to read as follows:


Sec.  927.13  Subvariety.

    Subvariety means and includes any mutation, sport, or other 
derivation of any of the varieties covered in Sec.  927.4 which is 
recognized by the Fresh Pear Committee or the Processed Pear Committee 
and approved by the Secretary. Recognition of a subvariety shall 
include classification within a varietal group for the purposes of 
votes conducted under Sec.  927.52.
    13. Add a new Sec.  927.14 to read as follows:


Sec.  927.14  Processor.

    Processor means any person who as owner, agent, broker, or 
otherwise, commercially processes pears in the production area.
    14. Add a new Sec.  927.15 to read as follows:


Sec.  927.15  Process.

    Process means to can, concentrate, freeze, dehydrate, press or 
puree pears, or in any other way convert pears commercially into a 
processed product.
    15. Revise the undesignated center heading preceding Sec.  927.20 
to read as follows:

Administrative Bodies

    16. Revise Sec.  927.20 to read as follows:


Sec.  927.20  Establishment and membership.

    There are hereby established two committees to administer the terms 
and provisions of this subpart as specifically provided in Sec. Sec.  
927.20 through 927.35:
    (a) A Fresh Pear Committee, consisting of 13 individual persons as 
its members is established to administer order provisions relating to 
the handling of pears for the fresh market. Six members of the Fresh 
Pear Committee shall be growers, six members shall be handlers, and one 
member shall represent the public. For each member there shall be two 
alternates, designated as the ``first alternate'' and the ``second 
alternate,'' respectively. Each district shall be represented by one 
grower member and one handler member, except that the Mid-Columbia 
District and the Wenatchee District shall be represented by two grower 
members and two handler members.
    (b) A Processed Pear Committee consisting of 10 members is 
established to administer order provisions relating to the handling of 
pears for processing. Three members of the Processed Pear Committee 
shall be growers, three members shall be handlers, three members shall 
be processors, and one member shall represent the public. For each 
member there shall be two alternates, designated as the ``first 
alternate'' and the ``second alternate'', respectively. District 1, the 
State of Washington, shall be represented by two grower members, two 
handler members and two processor members. District 2, the State of 
Oregon, shall be represented by one grower member, one handler member 
and one processor member.
    (c) The Secretary, upon recommendation of the Fresh Pear Committee 
or the Processed Pear Committee may reapportion members among 
districts, may change the number of members and alternates, and may 
change the composition by changing the ratio of members, including 
their alternates. In recommending any such changes, the following shall 
be considered:
    (1) Shifts in pear acreage within districts and within the 
production area during recent years;
    (2) The importance of new pear production in its relation to 
existing districts;
    (3) The equitable relationship between membership and districts;
    (4) Economies to result for growers in promoting efficient 
administration due to redistricting or reapportionment of members 
within districts; and
    (5) Other relevant factors.
    17. Revise Sec.  927.21 to read as follows:


Sec.  927.21  Nomination and selection of members and their respective 
alternates.

    Grower members and their respective alternates for each district 
shall be selected by the Secretary from nominees elected by the growers 
in such district. Handler members and their respective alternates for 
each district shall be selected by the Secretary from nominees elected 
by the handlers in such district. Processor members and their 
respective alternates shall be selected by the Secretary from nominees 
elected by the processors. Public members for each committee shall be 
nominated by the Fresh Pear Committee and the Processed Pear Committee, 
each independently, and selected by the Secretary. The Fresh Pear 
Committee and the Processed Pear

[[Page 2536]]

Committee may, each independently, prescribe such additional 
qualifications, administrative rules and procedures for selection for 
each candidate as it deems necessary and as the Secretary approves.
    18. Revise Sec.  927.22 to read as follows:


Sec.  927.22  Meetings for election of nominees.

    (a) Nominations for members of the Fresh Pear Committee and their 
alternates shall be made at meetings of growers and handlers held in 
each of the districts designated in Sec.  927.11 at such times and 
places designated by the Fresh Pear Committee.
    (b) Nominations for grower and handler members of the Processed 
Pear Committee and their alternates shall be made at meetings of 
growers and handlers held in each of the districts designated in Sec.  
927.11 at such times and places designated by the Processed Pear 
Committee. Nominations for processor members of the Processed Pear 
Committee and their alternates shall be made at a meeting of processors 
at such time and place designated by the Processed Pear Committee.
    19. Revise Sec.  927.23 to read as follows:


Sec.  927.23  Voting.

    Only growers in attendance at meetings for election of nominees 
shall participate in the nomination of grower members and their 
alternates, and only handlers in attendance at meetings for election of 
nominees shall participate in the nomination of handler members and 
their alternates, and only processors in attendance for election of 
nominees shall participate in the nomination of processor members and 
their alternates. A grower may participate only in the election held in 
the district in which he or she produces pears, and a handler may 
participate only in the election held in the district in which he or 
she handles pears. Each person may vote as a grower, handler or 
processor, but not a combination thereof. Each grower, handler and 
processor shall be entitled to cast one vote, on behalf of himself, his 
agents, partners, affiliates, subsidiaries, and representatives, for 
each nominee to be elected.
    20. Revise Sec.  927.24 to read as follows:


Sec.  927.24  Eligibility for membership.

    Each grower member and each of his or her alternates shall be a 
grower, or an officer or employee of a corporate or LLC grower, who 
grows pears in the district in which and for which he or she is 
nominated and selected. Each handler member and each of his or her 
alternates shall be a handler, or an officer or employee of a handler, 
handling pears in the district in and for which he or she is nominated 
and selected. Each processor member and each of their alternates shall 
be a processor, or an officer or employee of a processor, who processes 
pears in the production area.
    21. Revise Sec.  927.26 to read as follows:


Sec.  927.26  Qualifications.

    Any person prior to or within 15 days after selection as a member 
or as an alternate for a member of the Fresh Pear Committee or the 
Processed Pear Committee shall qualify by filing with the Secretary a 
written acceptance of the person's willingness to serve.
    22. Revise Sec.  927.27 to read as follows:


Sec.  927.27  Term of office.

    The term of office of each member and alternate member of the Fresh 
Pear Committee and the Processed Pear Committee shall be for two years 
beginning July 1 and ending June 30: Provided, That the terms of office 
of one-half the initial members and alternates shall end June 30, 2006; 
and that beginning with the 2005-2006 fiscal period, no member shall 
serve more than three consecutive two-year terms unless specifically 
exempted by the Secretary. Members and alternate members shall serve in 
such capacities for the portion of the term of office for which they 
are selected and have qualified and until their respective successors 
are selected and have qualified. The terms of office of successor 
members and alternates shall be so determined that one-half of the 
total committee membership ends each June 30.
    23. Revise Sec.  927.28 to read as follows:


Sec.  927.28  Alternates for members.

    The first alternate for a member shall act in the place and stead 
of the member for whom he or she is an alternate during such member's 
absence. In the event of the death, removal, resignation, or 
disqualification of a member, his or her first alternate shall act as a 
member until a successor for the member is selected and has qualified. 
The second alternate for a member shall serve in the place and stead of 
the member for whom he or she is an alternate whenever both the member 
and his or her first alternate are unable to serve. In the event that a 
member of the Fresh Pear Committee or the Processed Pear Committee and 
both that member's alternates are unable to attend a meeting, the 
member may designate any other alternate member from the same group 
(handler, processor, or grower) to serve in that member's place and 
stead.
    24. Revise Sec.  927.29 to read as follows:


Sec.  927.29  Vacancies.

    To fill any vacancy occasioned by the failure of any person 
selected as a member or as an alternate for a member of the Fresh Pear 
Committee or the Processed Pear Committee to qualify, or in the event 
of death, removal, resignation, or disqualification of any qualified 
member or qualified alternate for a member, a successor for his or her 
unexpired term shall be nominated and selected in the manner set forth 
in Sec. Sec.  927.20 to 927.35. If nominations to fill any such vacancy 
are not made within 20 days after such vacancy occurs, the Secretary 
may fill such vacancy without regard to nominations.
    25. Revise Sec.  927.30 to read as follows:


Sec.  927.30  Compensation and expenses.

    The members and alternates for members shall serve without 
compensation, but may be reimbursed for expenses necessarily incurred 
by them in the performance of their respective duties.
    26. Revise Sec.  927.31 to read as follows:


Sec.  927.31  Powers.

    The Fresh Pear Committee and the Processed Pear Committee shall 
have the following powers to exercise each independently:
    (a) To administer, as specifically provided in Sec. Sec.  927.20 to 
927.35, the terms and provisions of this subpart:
    (b) To make administrative rules and regulations in accordance 
with, and to effectuate, the terms and provisions of this subpart; and
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart.
    27. Revise Sec.  927.32 to read as follows:


Sec.  927.32  Duties.

    The duties of the Fresh Pear Committee and the Processed Pear 
Committee, each independently, shall be as follows:
    (a) To act as intermediary between the Secretary and any grower, 
handler or processor;
    (b) To keep minutes, books, and records which will reflect clearly 
all of the acts and transactions. The minutes, books, and records shall 
be subject at any time to examination by the Secretary or by such 
person as may be designated by the Secretary;
    (c) To investigate, from time to time, and to assemble data on the 
growing, harvesting, shipping, and marketing conditions relative to 
pears, and to furnish to the Secretary such available information as 
may be requested;
    (d) To perform such duties as may be assigned to it from time to 
time by the Secretary in connection with the

[[Page 2537]]

administration of section 32 of the Act to amend the Agricultural 
Adjustment Act, and for other purposes, Public Act No. 320, 74th 
Congress, approved August 24, 1935 (49 Stat. 774), as amended;
    (e) To cause the books to be audited by one or more competent 
accountants at the end of each fiscal year and at such other times as 
the Fresh Pear Committee or the Processed Pear Committee may deem 
necessary or as the Secretary may request, and to file with the 
Secretary copies of any and all audit reports made;
    (f) To appoint such employees agents, and representatives as it may 
deem necessary, and to determine the compensation and define the duties 
of each;
    (g) To give the Secretary, or the designated agent of the 
Secretary, the same notice of meetings as is given to the members of 
the Fresh Pear Committee or the Processed Pear Committee;
    (h) To select a chairman of the Fresh Pear Committee or the 
Processed Pear Committee and, from time to time, such other officers as 
it may deem advisable and to define the duties of each; and
    (i) To submit to the Secretary as soon as practicable after the 
beginning of each fiscal period, a budget for such fiscal year, 
including a report in explanation of the items appearing therein and a 
recommendation as to the rate of assessment for such period.
    28. Revise Sec.  927.33 to read as follows:


Sec.  927.33  Procedure.

    (a) Quorum and voting. A quorum at a meeting of the Fresh Pear 
Committee or the Processed Pear Committee shall consist of 75 percent 
of the number of committee members, or alternates then serving in the 
place of any members, respectively. Except as otherwise provided in 
Sec.  927.52, all decisions of the Fresh Pear Committee or the 
Processed Pear Committee at any meeting shall require the concurring 
vote of at least 75 percent of those members present, including 
alternates then serving in the place of any members.
    (b) Mail voting. The Fresh Pear Committee or the Processed Pear 
Committee may provide for members voting by mail, telecopier or other 
electronic means, telephone, or telegraph, upon due notice to all 
members. Promptly after voting by telephone or telegraph, each member 
thus voting shall confirm in writing, the vote so cast.
    29. Revise Sec.  927.34 to read as follows:


Sec.  927.34  Right of the Secretary.

    The members and alternates for members and any agent or employee 
appointed or employed by the Fresh Pear Committee or the Processed Pear 
Committee shall be subject to removal or suspension by the Secretary at 
any time. Each and every regulation, decision, determination, or other 
act shall be subject to the continuing right of the Secretary to 
disapprove of the same at any time, and, upon such disapproval, shall 
be deemed null and void, except as to acts done in reliance thereon or 
in compliance therewith prior to such disapproval by the Secretary.
    30. Revise Sec.  927.35 to read as follows:


Sec.  927.35  Funds and other property.

    (a) All funds received pursuant to any of the provisions of this 
subpart shall be used solely for the purposes specified in this 
subpart, and the Secretary may require the Fresh Pear Committee or the 
Processed Pear Committee and its members to account for all receipts 
and disbursements.
    (b) Upon the death, resignation, removal, disqualification, or 
expiration of the term of office of any member or employee, all books, 
records, funds, and other property in his or her possession belonging 
to the Fresh Pear Committee or the Processed Pear Committee shall be 
delivered to his or her successor in office or to the Fresh Pear 
Committee or Processed Pear Committee, and such assignments and other 
instruments shall be executed as may be necessary to vest in such 
successor or in the Fresh Pear Committee or Processed Pear Committee 
full title to all the books, records, funds, and other property in the 
possession or under the control of such member or employee pursuant to 
this subpart.


Sec.  927.36  [Removed]

    31. Remove Sec.  927.36, Public advisors.
    32. Revise Sec.  927.40 to read as follows:


Sec.  927.40  Expenses.

    The Fresh Pear Committee and the Processed Pear Committee are 
authorized, each independently, to incur such expenses as the Secretary 
finds may be necessary to carry out their functions under this subpart. 
The funds to cover such expenses shall be acquired by the levying of 
assessments as provided in Sec.  927.41.
    33. Revise Sec.  927.41 to read as follows:


Sec.  927.41  Assessments.

    (a) Assessments will be levied only upon handlers who first handle 
pears. Each handler shall pay assessments on all pears handled by such 
handler as the pro rata share of the expenses which the Secretary finds 
are reasonable and likely to be incurred by the Fresh Pear Committee or 
the Processed Pear Committee during a fiscal period. The payment of 
assessments for the maintenance and functioning of the Fresh Pear 
Committee or the Processed Pear Committee may be required under this 
part throughout the period such assessments are payable irrespective of 
whether particular provisions thereof are suspended or become 
inoperative.
    (b)(1) Based upon a recommendation of the Fresh Pear Committee or 
other available data, the Secretary shall fix three base rates of 
assessment for pears that handlers shall pay on pears handled for the 
fresh market during each fiscal period. Such base rates shall include 
one rate of assessment for any or all varieties or subvarieties of 
pears classified as summer/fall; one rate of assessment for any or all 
varieties or subvarieties of pears, classified as winter; and one rate 
of assessment for any or all varieties or subvarieties of pears 
classified as other. Upon recommendation of the Fresh Pear Committee or 
other available data, the Secretary may also fix supplemental rates of 
assessment on individual varieties or subvarieties categorized within 
the above-defined assessment classifications to secure sufficient funds 
to provide for projects authorized under Sec.  927.47. At any time 
during the fiscal period when it is determined on the basis of a Fresh 
Pear Committee recommendation or other information that different rates 
are necessary for fresh pears or for any varieties or subvarieties, the 
Secretary may modify those rates of assessment and such new rate shall 
apply to any or all varieties or subvarieties that are shipped during 
the fiscal period for fresh market.
    (2) Based upon a recommendation of the Processed Pear Committee or 
other available data, the Secretary shall fix three base rates of 
assessment for pears that handlers shall pay on pears handled for 
processing during each fiscal period. Such base rates shall include one 
rate of assessment for any or all varieties or subvarieties of pears 
classified as summer/fall; one rate of assessment for any or all 
varieties or subvarieties of pears, classified as winter; and one rate 
of assessment for any or all varieties or subvarieties of pears 
classified as other. Upon recommendation of the Processed Pear 
Committee or other available data, the Secretary may also fix 
supplemental rates of assessment on individual varieties or 
subvarieties categorized within the above-defined assessment 
classifications to secure sufficient funds to provide for projects 
authorized under

[[Page 2538]]

Sec.  927.47. At any time during the fiscal period when it is 
determined on the basis of a Processed Pear Committee recommendation or 
other information that different rates are necessary for pears for 
processing or for any varieties or subvarieties, the Secretary may 
modify those rates of assessment and such new rate shall apply to any 
or all varieties or subvarieties of pears that are shipped during the 
fiscal period for processing.
    (c) Based on the recommendation of the Fresh Pear Committee, the 
Processed Pear Committee or other available data, the Secretary may 
establish additional base rates of assessments, or change or modify the 
base rate classifications defined in paragraphs (a) and (b) of this 
section.
    (d) The Fresh Pear Committee or the Processed Pear Committee may 
impose a late payment charge on any handler who fails to pay any 
assessment within the time prescribed. In the event the handler 
thereafter fails to pay the amount outstanding, including the late 
payment charge, within the prescribed time, the Fresh Pear Committee or 
the Processed Pear Committee may impose an additional charge in the 
form of interest on such outstanding amount. The Fresh Pear Committee 
or the Processed Pear Committee, with the approval of the Secretary, 
shall prescribe the amount of such late payment charge and rate of 
interest.
    (e) In order to provide funds to carry out the functions of the 
Fresh Pear Committee or the Processed Pear Committee prior to 
commencement of shipments in any season, handlers may make advance 
payments of assessments, which advance payments shall be credited to 
such handlers and the assessments of such handlers shall be adjusted so 
that such assessments are based upon the quantity of each variety or 
subvariety of pears handled by such handlers during such season. 
Further, payment discounts may be authorized by the Fresh Pear 
Committee or the Processed Pear Committee upon the approval of the 
Secretary to handlers making such advance assessment payments.
    34. Revise Sec.  927.42 to read as follows:


Sec.  927.42  Accounting.

    (a) If, at the end of a fiscal period, the assessments collected 
are in excess of expenses incurred, the Fresh Pear Committee or the 
Processed Pear Committee may carryover such excess into subsequent 
fiscal periods as a reserve: Provided, That funds already in the 
reserve do not exceed approximately one fiscal period's expenses. Such 
reserve may be used to cover any expense authorized under this part and 
to cover necessary expenses of liquidation in the event of termination 
of this part. Any such excess not retained in a reserve or applied to 
any outstanding obligation of the person from whom it was collected 
shall be refunded proportionately to the persons from whom it was 
collected. Upon termination of this part, any funds not required to 
defray the necessary expenses of liquidation shall be disposed of in 
such manner as the Secretary may determine to be appropriate: Provided, 
That to the extent practical, such funds shall be returned pro rata to 
the persons from whom such funds were collected.
    (b) All funds received pursuant to the provisions of this part 
shall be used solely for the purpose specified in this part and shall 
be accounted for in the manner provided in this part. The Secretary may 
at any time require the Fresh Pear Committee or the Processed Pear 
Committee and its members to account for all receipts and 
disbursements.
    35. Revise Sec.  927.43 to read as follows:


Sec.  927.43  Use of funds.

    From the funds acquired pursuant to Sec.  927.41 the Fresh Pear 
Committee and the Processed Pear Committee, each independently, shall 
pay the salaries of its employees, if any, and pay the expenses 
necessarily incurred in the performance of the duties of the Fresh Pear 
Committee or the Processed Pear Committee.


Sec.  927.44  [Removed]

    36. Remove Sec.  927.44, Collection of unpaid assessments.
    37. Revise Sec.  927.45 to read as follows:


Sec.  927.45  Contributions.

    The Fresh Pear Committee or the Processed Pear Committee may accept 
voluntary contributions but these shall only be used to pay expenses 
incurred pursuant to Sec.  927.47. Furthermore, such contributions 
shall be free from any encumbrances by the donor and the Fresh Pear 
Committee or the Processed Pear Committee shall retain complete control 
of their use.
    38. Revise Sec.  927.47 to read as follows:


Sec.  927.47  Research and development.

    The Fresh Pear Committee or the Processed Pear Committee, with the 
approval of the Secretary, may establish or provide for the 
establishment of production and post-harvest research, or marketing 
research and development projects designed to assist, improve, or 
promote the marketing, distribution, and consumption of pears. Such 
projects may provide for any form of marketing promotion, including 
paid advertising. The expense of such projects shall be paid from funds 
collected pursuant to Sec. Sec.  927.41 and 927.45. Expenditures for a 
particular variety or subvariety of pears shall approximate the amount 
of assessments and voluntary contributions collected for that variety 
or subvariety of pears.
    39. Revise Sec.  927.50 to read as follows:


Sec.  927.50  Marketing policy.

    (a) It shall be the duty of the Fresh Pear Committee to 
investigate, from time to time, supply and demand conditions relative 
to pears and each grade, size, and quality of each variety or 
subvariety thereof. Such investigations shall be with respect to the 
following:
    (1) Estimated production of each variety or subvariety of pears and 
of each grade, size, and quality thereof;
    (2) Prospective supplies and prices of pears and other fruits, both 
in fresh and processed form, which are competitive to the marketing of 
pears;
    (3) Prospective exports of pears and imports of pears from other 
producing areas;
    (4) Probable harvesting period for each variety or subvariety of 
pears;
    (5) The trend and level of consumer income;
    (6) General economic conditions; and
    (7) Other relevant factors.
    (b) On or before August 1 of each year, the Fresh Pear Committee 
shall recommend regulations to the Secretary if it finds, on the basis 
of the foregoing investigations, that such regulation as is provided in 
Sec.  927.51 will tend to effectuate the declared policy of the act.
    (c) In the event the Fresh Pear Committee at any time finds that by 
reason of changed conditions, any regulation issued pursuant to Sec.  
927.51 should be modified, suspended, or terminated, it shall so 
recommend to the Secretary.
    40. Revise Sec.  927.51 to read as follows:


Sec.  927.51  Issuance of regulations; and modification, suspension, or 
termination thereof.

    (a) Whenever the Secretary finds, from the recommendations and 
information submitted by the Fresh Pear Committee, or from other 
available information, that regulation, in the manner specified in this 
section, of the shipment of fresh pears would tend to effectuate the 
declared policy of the act, he or she shall so limit the shipment of 
such pears during a specified period or periods. Such regulation may:
    (1) Limit the total quantity of any grade, size, quality, or 
combinations

[[Page 2539]]

thereof, of any variety or subvariety of pears grown in any district 
and may prescribe different requirements applicable to shipments to 
different export markets;
    (2) Limit, during any period or periods, the shipment of any 
particular grade, size, quality, or any combination thereof, of any 
variety or subvariety, of pears grown in any district or districts of 
the production area; and
    (3) Provide a method, through rules and regulation issued pursuant 
to this part, for fixing markings on the container or containers, which 
may be used in the packaging or handling of pears, including 
appropriate logo or other container markings to identify the contents 
thereof.
    (b) Whenever the Secretary finds, from the recommendations and 
information submitted by the Fresh Pear Committee, or from other 
available information, that a regulation should be modified, suspended, 
or terminated with respect to any or all shipments of fresh pears grown 
in any district in order to effectuate the declared policy of the act, 
he or she shall so modify, suspend, or terminate such regulation. If 
the Secretary finds, from the recommendations and information submitted 
by the Fresh Pear Committee, or from other available information, that 
a regulation obstructs or does not tend to effectuate the declared 
policy of the act, he or she shall suspend or terminate such 
regulation. On the same basis and in like manner, the Secretary may 
terminate any such modification or suspension.
    41. Revise Sec.  927.52 to read as follows:


Sec.  927.52  Prerequisites to recommendations.

    (a) Decisions of the Fresh Pear Committee or the Processed Pear 
Committee with respect to any recommendations to the Secretary pursuant 
to the establishment or modification of a supplemental rate of 
assessment for an individual variety or subvariety of pears shall be 
made by affirmative vote of not less than 75 percent of the applicable 
total number of votes, computed in the manner hereinafter described in 
this section, of all members. Decisions of the Fresh Pear Committee 
pursuant to the provisions of Sec.  927.50 shall be made by an 
affirmative vote of not less than 80 percent of the applicable total 
number of votes, computed in the manner hereinafter prescribed in this 
section, of all members.
    (b) With respect to a particular variety or subvariety of pears, 
the applicable total number of votes shall be the aggregate of the 
votes allotted to the members in accordance with the following: Each 
member shall have one vote as an individual and, in addition, shall 
have a vote equal to the percentage of the vote of the district 
represented by such member; and such district vote shall be computed as 
soon as practical after the beginning of each fiscal period on either:
    (1) The basis of one vote for each 25,000 boxes (except 2,500 boxes 
for varieties or subvarieties with less than 200,000 standard boxes or 
container equivalents) of the average quantity of such variety or 
subvariety produced in the particular district and shipped therefrom 
during the immediately preceding three fiscal periods; or
    (2) Such other basis as the Fresh Pear Committee or the Processed 
Pear Committee may recommend and the Secretary may approve. The votes 
so allotted to a member may be cast by such member on each 
recommendation relative to the variety or subvariety of pears on which 
such votes were computed.
    42. Revise Sec.  927.53 to read as follows:


Sec.  927.53  Notification.

    (a) The Fresh Pear Committee shall give prompt notice to growers 
and handlers of each recommendation to the Secretary pursuant to the 
provisions of Sec.  927.50.
    (b) The Secretary shall immediately notify the Fresh Pear Committee 
of the issuance of each regulation and of each modification, 
suspension, or termination of a regulation and the Fresh Pear Committee 
shall give prompt notice thereof to growers and handlers.


Sec.  927.54  [Removed]

    42-a. Remove Sec.  927.54, Exemption Certificate.
    43. Amend Sec.  927.60 by revising paragraph (a) and adding a new 
paragraph (c) to read as follows:


Sec.  927.60  Inspection and certification.

    (a) Handlers shall ship only fresh pears inspected by the Federal-
State Inspection Service or under a program developed by the Federal-
State Inspection Service: except, that such inspection and 
certification of shipments of pears may be performed by such other 
inspection service as the Fresh Pear Committee, with the approval of 
the Secretary, may designate. Promptly after shipment of any pears, the 
handler shall submit, or cause to be submitted, to the Fresh Pear 
Committee a copy of the inspection certificate issued on such shipment.
* * * * *
    (c) The Fresh Pear Committee may, with the approval of the 
Secretary, prescribe rules and regulations modifying or eliminating the 
requirement for mandatory inspection and certification of shipments: 
Provided, That an adequate method of ensuring compliance with quality 
and size requirements is developed.
    44. Revise Sec.  927.65 to read as follows:


Sec.  927.65  Exemption from regulation.

    (a) Nothing contained in this subpart shall limit or authorize the 
limitation of shipment of pears for consumption by charitable 
institutions or distribution by relief agencies, nor shall any 
assessment be computed on pears so shipped. The Fresh Pear Committee or 
the Processed Pear Committee may prescribe regulations to prevent pears 
shipped for either of such purposes from entering commercial channels 
of trade contrary to the provisions of this subpart.
    (b) The Fresh Pear Committee or the Processed Pear Committee may 
prescribe rules and regulations, to become effective upon the approval 
of the Secretary, whereby quantities of pears or types of pear 
shipments may be exempted from any or all provisions of this subpart.
    45. Revise Sec.  927.70 to read as follows:


Sec.  927.70  Reports.

    (a) Upon the request of the Fresh Pear Committee or the Processed 
Pear Committee, and subject to the approval of the Secretary, each 
handler shall furnish to the aforesaid committee, respectively, in such 
manner and at such times as it prescribes, such information as will 
enable it to perform its duties under this subpart.
    (b) All such reports shall be held under appropriate protective 
classification and custody by the Fresh Pear Committee or the Processed 
Pear Committee, or duly appointed employees thereof, so that the 
information contained therein which may adversely affect the 
competitive position of any handler in relation to other handlers will 
not be disclosed. Compilations of general reports from data submitted 
by handlers are authorized subject to the prohibition of disclosure of 
individual handlers identities or operations.
    (c) Each handler shall maintain for at least two succeeding years 
such records of the pears received and of pears disposed of, by such 
handler as may be necessary to verify reports pursuant to this section.
    46. Revise Sec.  927.75 to read as follows:


Sec.  927.75  Liability.

    No member or alternate for a member of the Fresh Pear Committee or 
the Processed Pear Committee, nor any

[[Page 2540]]

employee or agent thereof, shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever, to any 
party under this subpart or to any other person for errors in judgment, 
mistakes, or other acts, either of commission or omission, as such 
member, alternate for a member, agent or employee, except for acts of 
dishonesty, willful misconduct, or gross negligence.
    47. Revise Sec.  927.76 to read as follows:


Sec.  927.76  Agents.

    The Secretary may name, by designation in writing, any person, 
including any officer or employee of the Government or any bureau or 
division in the Department of Agriculture to act as his or her agent or 
representative in connection with any of the provisions of this 
subpart.
    48. Revise Sec.  927.77 to read as follows:


Sec.  927.77  Effective time.

    The provisions of this subpart and of any amendment thereto shall 
become effective at such time as the Secretary may declare, and shall 
continue in force until terminated in one of the ways specified in 
Sec.  927.78.
    49. Amend Sec.  927.78 by revising paragraphs (b), (c), and (d) to 
read as follows:


Sec.  927.78  Termination.

* * * * *
    (b) The Secretary shall terminate or suspend the operation of any 
or all of the provisions of this subpart whenever he or she finds that 
such operation obstructs or does not tend to effectuate the declared 
policy of the act.
    (c) The Secretary shall terminate the provisions of this subpart 
applicable to fresh pears for market or pears for processing at the end 
of any fiscal period whenever the Secretary finds, by referendum or 
otherwise, that such termination is favored by a majority of growers of 
fresh pears for market or pears for processing, respectively: Provided, 
That such majority has during such period produced more than 50 percent 
of the volume of fresh pears for market or pears for processing, 
respectively, in the production area. Such termination shall be 
effective only if announced on or before the last day of the then 
current fiscal period.
    (d) The Secretary shall conduct a referendum within every six-year 
period beginning on the date this section becomes effective, to 
ascertain whether continuance of the provisions of this subpart 
applicable to fresh pears for market or pears for processing are 
favored by producers of pears for the fresh market and pears for 
processing, respectively. The Secretary may terminate the provisions of 
this subpart at the end of any fiscal period in which the Secretary has 
found that continuance of this subpart is not favored by producers who, 
during a representative period determined by the Secretary, have been 
engaged in the production of fresh pears for market or pears for 
processing in the production area: Provided, That termination of the 
order shall be effective only if announced on or before the last day of 
the then current fiscal period.
* * * * *
    50. Revise Sec.  927.79 to read as follows:


Sec.  927.79  Proceedings after termination.

    (a) Upon the termination of this subpart, the members of the Fresh 
Pear Committee or the Processed Pear Committee then functioning shall 
continue as joint trustees for the purpose of liquidating all funds and 
property then in the possession or under the control of the Fresh Pear 
Committee or the Processed Pear Committee, including claims for any 
funds unpaid or property not delivered at the time of such termination.
    (b) The joint trustees shall continue in such capacity until 
discharged by the Secretary; from time to time account for all receipts 
and disbursements; deliver all funds and property on hand, together 
with all books and records of the Fresh Pear Committee or the Processed 
Pear Committee and of the joint trustees, to such person as the 
Secretary shall direct; and, upon the request of the Secretary, execute 
such assignments or other instruments necessary and appropriate to vest 
in such person full title and right to all of the funds, property, or 
claims vested in the Fresh Pear Committee or the Processed Pear 
Committee or in said joint trustees.
    (c) Any funds collected pursuant to this subpart and held by such 
joint trustees or such person over and above the amounts necessary to 
meet outstanding obligations and the expenses necessarily incurred by 
the joint trustees or such other person in the performance of their 
duties under this subpart, as soon as practicable after the termination 
hereof, shall be returned to the handlers pro rata in proportion to 
their contributions thereto.
    (d) Any person to whom funds, property, or claims have been 
transferred or delivered by the Fresh Pear Committee or the Processed 
Pear Committee or its members, upon direction of the Secretary, as 
provided in this section, shall be subject to the same obligations and 
duties with respect to said funds, property, or claims as are imposed 
upon the members or upon said joint trustees.
    51. Revise Sec.  927.80 to read as follows:


Sec.  927.80  Amendments.

    Amendments to this subpart may be proposed from time to time by the 
Fresh Pear Committee or the Processed Pear Committee or by the 
Secretary.

    Dated: January 5, 2005.
Kenneth C. Clayton,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 05-579 Filed 1-12-05; 8:45 am]
BILLING CODE 3410-02-P