Pears Grown in Oregon and Washington; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would implement a recommendation from the Fresh Pear Committee (Committee) to increase the assessment rate established for the 2021-22 and subsequent fiscal periods. The proposed assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Comments must be received by December 20, 2021.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposed rule. Comments must be sent to the Docket Clerk, Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; or internet: https://www.regulations.gov. Comments should reference the document number and the date and page number of this issue of the Federal Register and will be available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: https://www.regulations.gov. All comments submitted in response to this proposed rule will be included in the record and will be made available to the public. Please be advised that the identity of individuals or entities submitting comments will be made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT:

Dale Novotny, Marketing Specialist, or Andrew Hatch, Deputy Director, Market Development Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 356-8202 or Email: dalej.novotny@usda.gov or Andrew.Hatch@usda.gov.

Small businesses may request information on complying with this regulation by contacting Richard Lower, Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, or Email: Richard.Lower@usda.gov.

SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Order No. 927, as amended (7 CFR part 927), regulating the handling of pears grown in Oregon and Washington. Part 927 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of growers and handlers of pears operating within the production area, and a public member.

The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 12866 and 13563. Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review.

This proposed rule has been reviewed under Executive Order 13175—Consultation and Coordination with Indian Tribal Governments, which requires agencies to consider whether their rulemaking actions would have tribal implications. AMS has determined this proposed rule is unlikely to have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform.

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. Such 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 no later than 20 days after the date of the entry of the ruling.

This proposed rule would increase the assessment rate from $0.463 per 44-pound standard box or equivalent of fresh “summer/fall” and “winter” pears, the rate that was established for the 2018-19 and subsequent fiscal periods, to $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears for the 2021-22 and subsequent fiscal periods.

The Order authorizes the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. Members are familiar with the Committee's needs and with costs of goods and services in their local area, and they are in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2018-19 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate of $0.463 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears. That assessment rate continues in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on June 3, 2021, and unanimously recommended 2021-22 fiscal period expenditures of $8,472,263 and an assessment rate of $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears handled for the 2021-22 and subsequent fiscal periods. In comparison, the previous fiscal period's budgeted expenditures were $8,901,114. The proposed assessment rate of $0.468 is $0.005 higher than the rate currently in effect. Due to a smaller estimated 2021-22 crop, the Committee recommended increasing the assessment rate to provide adequate income that, along with reserve funds and interest income, would cover the Committee's budgeted expenses for the 2021-22 fiscal period.

Expenditures recommended by the Committee for the 2021-22 fiscal period include $391,047 for contracted administration, $159,540 for industry development, $964,476 for production research and market development, $27,200 for miscellaneous expenses, and $6,930,000 for promotion and paid advertising for “summer/fall” and “winter” varieties of fresh pears. Budgeted expenses for these items for the 2020-21 fiscal period were $388,520, $172,000, $997,394, $28,200, and $7,315,000, respectively.

The Committee derived the recommended assessment rate by considering anticipated expenses, and an estimated 2021 crop of 18,000,000 44-pound standard boxes or equivalent of assessable fresh “summer/fall” pears and “winter” pears. Income derived from handler assessments, calculated at $8,424,000 (18,000,000 standard boxes or equivalent multiplied by $0.468 assessment rate), along with reserve funds and interest income ($48,263), should be adequate to cover budgeted expenses of $8,472,263.

The assessment rate proposed in this rule would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. Dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2021-22 fiscal period budget, and those for subsequent fiscal periods, would be reviewed and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this proposed rule 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 businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 708 growers of fresh pears in the production area and 27 handlers subject to the regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $1,000,000, and small agricultural service firms have been defined as those whose annual receipts are less than $30,000,000 (13 CFR 121.201).

According to the National Agricultural Statistics Service (NASS), the 2020 average grower price received for fresh pears produced in Oregon and Washington was $11.39 per standard 44-pound box or equivalent. Committee data indicates total production was 16,290,225 44-pound standard boxes or equivalent in the 2019-20 fiscal period. The total 2019-20 fiscal period value of assessable fresh “summer/fall” and “winter” pears grown in Oregon and Washington was $185,545,663 (16,290,225 44-pound standard boxes or equivalent times $11.39 per box equals $185,545,663). Dividing the crop value by the estimated number of growers (708) yields an estimated average receipt per grower of $262,070.

According to USDA Market News data, the reported average terminal price for 2020 Oregon and Washington fresh pears was $34.87 per 44-pound standard box or equivalent (data reported in 4/5 bushel). Multiplying the Committee-reported 2019-20 Oregon and Washington total production of 16,290,225 44-pound standard boxes or equivalent by the estimated average price per box or equivalent of $34.87 equals $568,040,146. Dividing this figure by 27 regulated handlers yields estimated average annual handler receipts of $21,038,524.

Therefore, using the above data, the majority of growers of Oregon and Washington fresh pears may be classified as small entities. Assuming a normal distribution, the majority of handlers of Oregon and Washington fresh pears may also be classified as small entities.

As noted above, the average price received by growers in 2020 was $11.39 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears. Given the Committee-estimated production of 18,000,000 44-pound standard boxes or equivalent of assessable fresh pears for the 2021-22 fiscal period, the total grower revenue is estimated to be $205,020,000. The total assessment revenue is expected to be $8,424,000 (18,000,000 boxes multiplied by $0.468 per box). Thus, the total assessment revenue compared to total grower revenue is 4.1 percent ($8,424,000 divided by $205,020,000).

This proposal would increase the assessment rate collected from handlers for the 2021-22 and subsequent fiscal periods from $0.463 to $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears. The Committee unanimously recommended 2021-22 fiscal period expenditures of $8,472,263 and an assessment rate of $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears handled. The proposed assessment rate of $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears is $0.005 higher than the current rate. The volume of assessable fresh “summer/fall” pears and “winter” pears in the production area for the 2021-22 fiscal period is estimated to be 18,000,000 44-pound standard boxes or equivalent. Thus, the $0.468 per 44-pound standard box or equivalent of assessable fresh “summer/fall” pears and “winter” pears should provide $8,424,000 in assessment income (18,000,000 multiplied by $0.468). Income derived from handler assessments, along with reserve funds and interest income, should be adequate to cover budgeted expenses of for the 2021-22 fiscal period.

Major expenditures recommended by the Committee for the 2021-22 fiscal period include $391,047 for contracted administration, $159,540 for industry development, $964,476 for production research and market development, and $6,930,000 for promotion and paid advertising for “summer/fall” and “winter” varieties of fresh pears. Budgeted expenses for these items for the 2020-21 fiscal period were $388,520, $172,000, $997,394, and $7,315,000, respectively.

Due to a smaller estimated 2021-22 crop, the Committee recommended increasing the assessment rate to provide adequate income that, along with reserve funds and interest income, would cover the Committee's budgeted expenses for the 2021-22 fiscal period. Prior to arriving at this budget and assessment rate recommendation, the Committee discussed various alternatives, including maintaining the current assessment rate and, alternatively, increasing the assessment rate by a different amount. However, the Committee determined that the recommended assessment rate, along with reserve funds and interest income, should adequately fund budgeted expenses.

This proposed rule would increase the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to growers. However, these costs would be offset by the benefits derived by the operation of the Order.

The Committee's meeting was widely publicized throughout the Oregon and Washington pear industry. All interested persons were invited to attend the meeting and encouraged to participate in Committee deliberations on all issues. Like all Committee meetings, the June 3, 2021, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue. Interested persons are invited to submit comments on this proposed rule, including regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0189, Fruit Crops. No changes in those requirements would be necessary as a result of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large Oregon and Washington pear handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 927

• Marketing agreements
• Pears
• Reporting and recordkeeping requirements

For reasons set forth 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. In § 927.236, revise the introductory text and paragraphs (a) and (b) to read as follows: