[Federal Register Volume 63, Number 64 (Friday, April 3, 1998)]
[Rules and Regulations]
[Pages 16390-16392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8786]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV98-959-1 FIR]


Onions Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, an interim final rule which decreased the 
assessment rate established for the South Texas Onion Committee 
(Committee) under Marketing Order No. 959 for the 1997-98 and 
subsequent fiscal periods. The Committee is responsible for local 
administration of the marketing order which regulates the handling of 
onions grown in South Texas. Authorization to assess Texas onion 
handlers enables the Committee to incur expenses that are reasonable 
and necessary to administer the program. The fiscal period began on 
August 1 and ends July 31. The assessment rate will remain in effect 
indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: May 4, 1998.

FOR FURTHER INFORMATION CONTACT: Cynthia Cavazos or Belinda G. Garza, 
McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, 1313 East Hackberry, McAllen, Texas 78501; telephone: (956) 682-
2833, Fax: (956) 682-5942; or George Kelhart, Technical Advisor, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 720-2491, Fax: (202) 205-6632. Small businesses may 
request information on compliance with this regulation by contacting 
Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-
6456; telephone: (202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 143 and Order No. 959, both as amended (7 CFR part 959), 
regulating the handling of onions grown in South Texas, hereinafter 
referred to as the ``order.'' The marketing agreement and order are 
effective under 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, South Texas 
onion handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as issued herein will be applicable to all assessable 
onions beginning August 1, 1997, and continue until amended, suspended, 
or terminated. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this 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. Such 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 the date of the entry of the ruling.
    This rule continues to decrease the assessment rate established for 
the Committee for the 1997-98 and subsequent fiscal periods from $0.07 
per 50-pound container or equivalent to $0.05 per 50-pound container or 
equivalent.
    The Texas onion marketing order provides authority for the 
Committee, with the approval of the Department, to formulate an annual 
budget of expenses and collect assessments from handlers to administer 
the program. The members of the Committee are producers and handlers of 
South Texas onions. They are familiar with the Committee's needs and 
with the costs of goods and services in their local area and are thus 
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 1996-97 and subsequent fiscal periods, the Committee 
recommended, and the Department approved, an assessment rate that would 
continue in effect from fiscal period to fiscal period indefinitely 
unless modified, suspended, or terminated by the Secretary upon 
recommendation and information submitted by the Committee or other 
information available to the Secretary.
    The Committee, in a telephone vote, unanimously recommended 1997-98 
administrative expenses of $100,000 for personnel, office, and the 
travel portion of the compliance budget. These expenses were approved 
in July 1997. The assessment rate and funding for research and 
promotion projects, and the road guard station maintenance portion of 
the compliance budget were to be recommended at a later Committee 
meeting.
    The Committee subsequently met on November 6, 1997, and unanimously 
recommended 1997-98 expenditures of $245,000 and an assessment rate of 
$0.05 per 50-pound container or equivalent of onions. In comparison, 
last year's budgeted expenditures were $448,000. The assessment rate of 
$0.05 is $0.02 less than the rate previously in effect. At the former 
rate of $0.07 per 50-pound container or equivalent, the assessment 
income would have exceeded anticipated expenses by about $35,000, and 
the projected reserve of $220,000 on July 31, 1998, would have exceeded 
the level the Committee believes to be adequate to administer the 
program. The Committee voted to lower its assessment rate and use more 
of the reserve to cover its expenses. The reduced assessment rate is 
expected to bring assessment income closer to the amount necessary to 
administer the program for the 1997-98 fiscal period.
    Major expenses recommended by the Committee for the 1997-98 fiscal 
period include $80,912 for personnel and administrative expenses, 
$45,000 for compliance, $33,088 for promotion, and $86,000 for onion 
breeding research. Budgeted expenses for these items in

[[Page 16391]]

1996-97 were $80,000, $120,000, $150,000, and $98,000, respectively.
    The assessment rate recommended by the Committee was derived by 
dividing anticipated expenses by expected shipments of South Texas 
onions. Onion shipments for the year are estimated at 4 million 50-
pound equivalents, which should provide $200,000 in assessment income. 
Income derived from handler assessments, along with interest income and 
funds from the Committee's authorized reserve, will be adequate to 
cover budgeted expenses. Funds in the reserve (currently $185,000) will 
be kept within the maximum permitted by the order (approximately two 
fiscal periods' expenses; Sec. 959.43).
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and information submitted by the 
Committee or other available information.
    Although this assessment rate is effective 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. The dates and 
times of Committee meetings are available from the Committee or the 
Department. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department will 
evaluate Committee recommendations and other available information to 
determine whether modification of the assessment rate is needed. 
Further rulemaking will be undertaken as necessary. The remainder of 
the Committee's 1997-98 budget was approved November 24, 1997, and 
those for subsequent fiscal periods will be reviewed and, as 
appropriate, approved by the Department.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this 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 the 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 70 producers of South Texas onions in the 
production area and approximately 38 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (SBA) (13 CFR 121.601) as 
those having annual receipts less than $500,000 and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000.
    Since the interim final rule was issued, the Department received 
additional information from the Committee on handlers and producers in 
the South Texas onion industry. This information is summarized below. 
Most of the handlers are vertically integrated corporations involved in 
producing, shipping, and marketing onions. For the 1996-97 marketing 
year, onions produced on 12,175 acres were shipped by the industry's 38 
handlers. The average acreage and median acreage handled was 310 acres 
and 177 acres, respectively. In terms of production value, total 
revenues from the 38 handlers were estimated to be $23.6 million; with 
average and median revenue being $620,000 and $146,000, respectively. 
The industry is highly concentrated as the largest 8 handlers (largest 
25 percent) controlled 62 percent of the acreage and 77 percent of 
onion production.
    The South Texas onion industry is characterized by producers and 
handlers whose farming operations generally involve more than one 
commodity, and whose income from farming operations is not exclusively 
dependent on the production of onions. Alternative crops provide an 
opportunity to utilize many of the same facilities and equipment not in 
use when the onion production season is complete. For this reason, 
typical onion producers and handlers either produce multiple crops of 
alternate crops within a single year.
    Based on the SBA's definition of small entities, the Committee 
estimates that all the 38 handlers regulated by the order would be 
considered small entities if only their spring onion revenues are 
considered. However, revenues from other productive enterprises would 
likely push a large number of these handlers above the $5,000,000 
annual receipt threshold. All of the 70 producers may be classified as 
small entities based on the SBA definition if only their revenue from 
spring onions is considered. When revenue from all sources is 
considered, a majority of the producers would not be considered small 
entities because the income of many of the producers would exceed the 
$500,000 figure.
    This rule continues in effect the assessment rate of $0.05 per 50-
pound container or equivalent established for the Committee and 
collected from handlers for the 1997-98 and subsequent fiscal periods. 
The Committee unanimously recommended 1997-98 expenditures of $245,000 
and an assessment rate of $0.05 per 50-pound container or equivalent of 
onions. In comparison, last year's budgeted expenditures were $448,000. 
The assessment rate of $0.05 is $0.02 less than the rate previously in 
effect. At the former assessment rate of $0.07 per 50-pound container 
or equivalent and an estimated 1998 onion production of 4 million 50-
pound equivalents, the projected reserve on July 31, 1998, would have 
exceeded the level the Committee believes necessary to administer the 
program. The Committee decided that an assessment rate of less than 
$0.05 would not generate the income necessary to administer the program 
with an adequate reserve.
    Major expenses recommended by the Committee for the 1997-98 fiscal 
period include $80,912 for personnel and administrative expenses, 
$45,000 for compliance, $33,088 for promotion, and $86,000 for onion 
breeding research. Budgeted expenses for these items in 1996-97 were 
$80,000, $120,000, $150,000, and $98,000, respectively.
    Onion shipments for the year are estimated at 4 million 50-pound 
equivalents, which should provide $200,000 in assessment income. Income 
derived from handler assessments, along with interest income and funds 
from the Committee's authorized reserve, will be adequate to cover 
budgeted expenses. Funds in the reserve (currently $185,000) will be 
kept within the maximum permitted by the order (approximately two 
fiscal periods' expenses; Sec. 959.43).
    Recent price information indicates that the grower price for the 
1997-98 marketing season will range between $7.00 and $12.00 per 50-
pound container or equivalent of onions. Therefore, the estimated 
assessment revenue for the 1997-98 fiscal period as a percentage of 
total grower revenue will range between .714 and .417 percent.
    This rule continues to decrease the assessment obligation imposed 
on handlers. While this rule imposes some additional costs on handlers, 
the costs are minimal and in the form of uniform assessments on all 
handlers. Some of the additional costs may be passed on to producers. 
However, these costs are

[[Page 16392]]

offset by the benefits derived by the operation of the marketing order. 
In addition, the Committee's meeting was widely publicized throughout 
the South Texas onion industry and all interested persons were invited 
to attend the meeting and participate in Committee deliberations on all 
issues. Like all Committee meetings, the November 6, 1997, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large South Texas onion handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    An interim final rule concerning this action was published in the 
Federal Register on December 30, 1997 (62 FR 67694). The interim final 
rule was made available through the Internet by the Office of the 
Federal Register. A 60-day comment period was provided for interested 
persons to respond to the interim final rule. The comment period ended 
March 2, 1998, and no comments were received.
    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.

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, 7 CFR part 959 is 
amended as follows:

PART 959--ONIONS GROWN IN SOUTH TEXAS

    Accordingly, the interim final rule amending 7 CFR part 959 which 
was published at 62 FR 67694 on December 30, 1997, is adopted as a 
final rule without change.

    Dated: March 30, 1998.
Sharon Bomer Lauritsen,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-8786 Filed 4-2-98; 8:45 am]
BILLING CODE 3410-02-P