[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Rules and Regulations]
[Pages 18023-18026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9479]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 956

[FV96-956-3 FR]


Sweet Onions Grown in the Walla Walla Valley of Southeast 
Washington and Northeast Oregon; Establishment of Container Marking 
Requirements and Special Purpose Shipment Exemptions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule (1) establishes container marking requirements 
for all shipments of Walla Walla Sweet Onions, and (2) establishes 
exemptions from assessment and container marking requirements for 
certain special purpose shipments of Walla Walla Sweet Onions. This 
rule will contribute to the efficient marketing of Walla Walla Sweet 
Onions and assist in program compliance. This rule was recommended by 
the Walla Walla Sweet Onion Committee (Committee), the agency 
responsible for the local administration of the marketing order for 
sweet onions grown in the Walla Walla Valley.

EFFECTIVE DATE: This final rule becomes effective April 15, 1997.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204-2807; telephone: (503) 326-2043; or George J. 
Kelhart, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room

[[Page 18024]]

2525-S, Washington, DC 20090-6456; telephone: (202) 690-3919. Small 
businesses may request information on compliance with this regulation 
by contacting: Jay Guerber, Marketing Order Administration Branch, 
Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room 2525-S, 
Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 720-
5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 956 (7 CFR Part 956), regulating the handling 
of sweet onions grown in the Walla Walla Valley of southeast Washington 
and northeast Oregon, hereinafter referred to as the ``order.'' This 
order is authorized by the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with the rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    The Committee meets regularly throughout each season to consider 
recommendations for implementation, modification, suspension, or 
termination of the regulatory requirements for Walla Walla Sweet 
Onions. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department 
reviews Committee recommendations in conjunction with information 
submitted by the Committee and from other industry and government 
sources.
    This final rule (1) establishes container marking requirements for 
all shipments of Walla Walla Sweet Onions, and (2) establishes 
exemptions from assessment and container marking requirements for 
certain special purpose shipments of Walla Walla Sweet Onions. This 
rule will contribute to the efficient marketing of Walla Walla Sweet 
Onions and assist in program compliance, and was recommended by the 
Committee.
    The Committee met twice to recommend adding container marking 
requirements and exemption for special purpose shipments to the 
marketing order's Subpart--Rules and Regulations provisions which are 
authorized in the order. Section 956.62 provides authority for the 
Committee, with the approval of the Secretary, to establish a method 
for fixing the markings of containers used in the packaging or handling 
of Walla Walla Sweet Onions. Further, based upon recommendations 
submitted by the Committee, Sec. 956.63 provides authority for the 
Secretary to issue regulations in regard to assessment and container 
marking requirements to facilitate the handling of Walla Walla Sweet 
Onions for specified purposes.
    The Committee met October 8, 1996, and recommended that all Walla 
Walla Sweet Onions produced in the production area and shipped to the 
fresh market be packed in containers marked with the ``Genuine Walla 
Walla Sweet Onion'' logo. The Committee also recommended exemption from 
assessments for sweet onions shipped to outlets specified in 
Sec. 956.163.
    At its next regularly scheduled meeting on November 12, 1996, the 
Committee reconfirmed the recommendations to establish container 
marking requirements and exempt specified shipments from assessments. 
At that meeting, the Committee also recommended exempting shipments 
specified in Sec. 956.163 from container marking requirements. This 
rule combines the recommendations from the two Committee meetings into 
one rulemaking action.
    The first action establishes container marking requirements in 
Sec. 956.162. When the Walla Walla Sweet Onion industry began the 
process of formulating the order, a primary objective was to help 
promote product identity at wholesale, retail, and consumer levels, 
while at the same time deterring the marketing of non-sweet onions, or 
onions grown outside the production area, as Walla Walla Sweet Onions. 
The Committee is authorized to use a trademarked logo developed by the 
Walla Walla Sweet Onion Commission and the Walla Walla Area Chamber of 
Commerce. The logo was developed and patented by the Walla Walla Sweet 
Onion Commission in December 1991, and currently is widely recognized 
by the onion industry.
    The logo has been used by the Committee on promotional material and 
correspondence since the Committee obtained the license to use it on 
April 19, 1996. During both the subcommittee and the regular Committee 
meetings held to develop the recommendation for the regulation 
specified in Sec. 956.162, all participants agreed that containers of 
Walla Walla Sweet Onions should be marked with the Committee's 
registered logo. Discussion during the meetings indicated that product 
identity, just as it was during the formulation of the order, continues 
to be a primary concern for both promotional and compliance purposes, 
and that effort should be made to add specific container marking 
regulations.
    Committee members and other industry members agree that the use of 
the widely recognized logo will have a positive effect on the economic 
returns for the entire industry. One of the major problems for this 
industry has been the marketing of non-Walla Walla Sweet Onions, grown 
either in the traditional production area or outside of it, as Walla 
Walla Sweet Onions. It is the Committee's belief that, buyers, having 
purchased onions represented to them as being Walla Walla Sweet Onions, 
will rarely return to purchase more due to the lack of confidence such 
a sale fostered. This had, and still has, the effect of curtailing 
demand and reducing returns to producers.
    Some of the handler members on the Committee recommended that this 
regulation allow handlers a period of time to utilize current packaging 
inventory before being required to use containers marked with the 
Committee's logo. These individuals expressed concern that some 
handlers may have significant container inventory with pre-printed 
graphics and other markings. Comments by handlers at the meeting 
indicated that the expense and burden of disposing of their container 
inventory, or, alternatively, adding decals, stickers, or stamps to the 
existing containers would be significant. The Committee agrees that, 
although handlers should make every effort to begin using the logo on 
containers as soon as possible, a grace period of two crop years allows 
adequate time for handlers to exhaust current container inventories. 
Section 956.162(b) provides such a grace period, subject to

[[Page 18025]]

Committee verification of handler container inventories.
    The Committee recommended that the logo be clearly displayed as 
either a decal or an imprint on all containers, and that there should 
be no specific requirements for the size and color of the markings. As 
it is a common industry practice to ship onions in field pack bulk bins 
containing more than 500 pounds net weight from the field to road-side 
stands and farmers' markets where they are bagged for resale, the 
Committee recommended that the container marking requirements should 
not apply to shipments to these two small outlets. This exemption is 
specified in Sec. 956.162(b). The proposed rule on this action 
incorrectly stated that this exemption was specified in Sec. 956.163.
    The container marking requirements will contribute to the efficient 
marketing of Walla Walla Sweet Onions by ensuring better product 
identification, building buyer confidence, increasing returns to the 
industry, and enhancing Committee compliance efforts. During the 
shipping season, the Committee manager frequently visits handling 
operations to ensure that these operations are complying with marketing 
order requirements. Requiring that the registered logo be displayed on 
the container will decrease the amount of time the manager spends 
tracing and tracking these onions to ensure that they are not non-sweet 
onions, or onions from outside the production area, being sold as Walla 
Walla Sweet Onions.
    When considering Sec. 956.163, which provides exemptions for 
shipments made to certain non-fresh use outlets, Committee members 
stated that most Walla Walla Sweet Onions are shipped into the fresh 
market. However, a small percentage of the onions are utilized for 
other purposes, including relief and charitable organizations, 
livestock feed, planting and plants, salad onions, processing, disposal 
of culls, and seed. For the exemption to apply to shipments made to 
relief or charitable organizations, the Committee included a provision 
in its recommendation that such shipments must be donated and not sold.
    Section 956.163 clearly indicates which shipments are exempted from 
assessments and container marking requirements. This is intended to 
lessen the chance of confusion on the part of the regulated industry 
and alleviate potential administrative and compliance problems for the 
Committee, thereby facilitating the marketing of Walla Walla Sweet 
Onions.
    Notice of this action was published in the Federal Register (62 FR 
5933) on February 10, 1977. Interested persons were invited to submit 
written comments. The deadline for such comments ended March 12, 1997. 
No comments were received.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, the AMS 
has prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 35 handlers of Walla Walla Sweet Onions 
subject to regulation under the order and approximately 60 producers in 
the regulated production area. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those whose annual receipts are 
less than $500,000.
    The region in which Walla Walla Sweet Onions are produced is a 
relatively small production area, encompassing only a portion of 
Oregon's Umatilla County and Washington's Walla Walla County. Produced 
on an estimated 850 acres, the industry's total 1996 Walla Walla Sweet 
Onion pack-out approximated 20,106,200 pounds. Based on assessments 
collected on 50-pound cartons or sacks, Committee records for the 1996 
season show that 18 handlers shipped 500 or fewer units, eight handlers 
shipped between 500 and 5,000 units, four handlers shipped between 
5,000 and 50,000 units, and five handlers shipped between 50,000 and 
100,000 units.
    Information provided by the Department's Fresh Fruit and Vegetable 
Market News officials in Yakima, Washington, indicates that 1996 F.O.B. 
prices on jumbo Walla Walla Sweet Onions, packed in 50-pound cartons, 
ranged from a high of $16.00 early in the season to a low at the end of 
the season of $10.00. On the other end of the scale, medium Walla Walla 
Sweet Onions, packed in 50-pound mesh sacks, ranged from early season, 
high returns of $14.00 per sack down to a low at the season's 
conclusion of $6.00 per sack. Handlers have stated that packing costs 
average between $4.00 and $5.00 per 50-pound carton, and around $3.00 
per 50-pound sack. Committee records indicate that individual farms 
currently have acreage dedicated to the production of Walla Walla Sweet 
Onions in the range from 1 to 160 acres.
    About 25 of the 35 regulated handlers of Walla Walla Sweet Onions 
are also producers and generally pack their own onions in the field 
while harvesting them. These onions are usually marketed direct to 
consumers through road-side stands and farmers' markets or through mail 
order sales. Only about 10 of these handlers own and operate 
commercially sized packing facilities and market the majority of their 
onions through large wholesale and retail outlets. Based on current 
information, the majority of Walla Walla Sweet Onion handlers and 
producers may be classified as small entities.
    The only alternative to the proposal discussed at the meetings was 
to not recommend the rulemaking action at all. The Committee determined 
that such an alternative would not be acceptable to the industry 
because of the significant benefits expected as a result of these 
regulations. Without container marking requirements, the Committee 
believes that the current marketing and compliance problems, basic 
reasons behind the promulgation of the marketing order, will not be 
alleviated. As for the foregoing special purpose shipment exemptions, 
the Committee concluded that the absence of a list of shipments exempt 
from assessments and container marking requirements would perpetuate 
confusion and compliance problems, as well as increase the economic, 
reporting and recordkeeping burden on handlers.
    This final rule provides that containers of Walla Walla Sweet 
Onions for shipment to fresh markets be marked with the Committee's 
registered logo, and that specified shipments of Walla Walla Sweet 
Onions be exempt from such container marking requirements and from 
assessments. This action will not impose any additional reporting or 
recordkeeping requirements on either small or large handlers of Walla 
Walla Sweet Onions. Additionally, the benefits of this rule are not 
expected to be disproportionately greater or less for small handlers or 
producers than for larger entities.
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public

[[Page 18026]]

sector agencies. The Department has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this rule.
    The Committee's meetings were widely publicized throughout the 
production area. All interested persons were invited to attend the 
meetings. The Committee actively seeks participation in its 
deliberations at all of its meetings. Both the October 8 and November 
12, 1996, meetings were open to the public and representatives of both 
large and small entities expressed their views on these and related 
issues. The majority of the Committee, composed of six producers and 
three handlers, as well as a public member and respective alternates 
for each position, represent small entities. Additionally, in the 
proposed rule published in the Federal Register (62 FR 5933) on 
February 10, 1997, interested persons were invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses. A copy of the proposal was also made available on 
the Internet by the U. S. Government Printing Office. The comment 
period ended March 12, 1997, and no comments were received concerning 
the impacts of this action on small businesses.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because: (1) The 1997 
shipping season begins in June; (2) handlers are well aware of this 
action which was discussed at two open public meetings which were 
widely publicized in the production area; and (3) a proposed rule was 
published on this action and provided for a 30-day comment period. No 
comments were received.

List of Subjects in 7 CFR Part 956

    Marketing agreements, Onions, Reporting and record keeping 
requirements.
    For the reasons set forth in the preamble, 7 CFR Part 956 is 
amended as follows:

PART 956--SWEET ONIONS GROWN IN THE WALLA WALLA VALLEY OF SOUTHEAST 
WASHINGTON AND NORTHEAST OREGON

    1. The authority citation for 7 CFR Part 956 continues to read as 
follows:

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

    2. New sections 956.162 and 956.163 are added to Subpart--Rules and 
Regulations to read as follows:


Sec. 956.162  Container markings.

    Effective April 15, 1997, no handler shall ship any container of 
Walla Walla Sweet Onions except in accordance with the following terms 
and provisions:
    (a) Each container of Walla Walla Sweet Onions shall be 
conspicuously marked with the ``Genuine Walla Walla Sweet Onion'' logo. 
The marking may be in the form of a decal or a stamped imprint of any 
color and size: Provided, That the decal or stamped imprint must be 
placed in plain sight and easy to read.
    (b) Walla Walla Sweet Onions may be handled not subject to the 
marking requirements of this section when handlers ship such onions 
pursuant to Sec. 956.163, or ship such onions in field packed bulk bins 
containing more than 500 pounds net weight for sale to roadside stands 
and farmers' market operators for repacking and direct consumer sale: 
Provided, That subject to Committee verification of handler container 
inventories, handlers may use their existing inventories of unmarked 
containers until April 15, 1999.


Sec. 956.163  Handling for specified purposes.

    (a) Assessment and container marking requirements specified in this 
part shall not be applicable to shipments of onions for any of the 
following purposes:
    (1) Shipments of Walla Walla Sweet Onions for relief or to 
charitable institutions: Provided, That such shipments must be donated 
and not sold in order for this exemption to apply;
    (2) Shipments of Walla Walla Sweet Onions for livestock feed;
    (3) Shipments of Walla Walla Sweet Onions for planting and for 
plants;
    (4) Shipments of Walla Walla Sweet Onions as salad onions;
    (5) Shipments of Walla Walla Sweet Onions for all processing uses 
including, pickling, peeling, dehydration, juicing, or other 
processing;
    (6) Shipments of Walla Walla Sweet Onions for disposal;
    (7) Shipments of Walla Walla Sweet Onions for seed.
    (b) [Reserved]

    Dated: April 7, 1997.
Sharon Bomer Lauritsen,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-9479 Filed 4-11-97; 8:45 am]
BILLING CODE 3410-02-P