[Federal Register Volume 63, Number 184 (Wednesday, September 23, 1998)]
[Proposed Rules]
[Pages 50802-50814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25400]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 63, No. 184 / Wednesday, September 23, 1998 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 956

[Docket Nos. 98AMA-FV-956-1;FV98-956-1]


Sweet Onions Grown in the Walla Walla Valley of Southeast 
Washington and Northeast Oregon; Recommended Decision and Opportunity 
To File Written Exceptions to Proposed Amendment of Marketing Agreement 
and Order No. 956

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision invites written exceptions on 
proposed amendments to the marketing agreement and order for sweet 
onions grown in the Walla Walla Valley of Southeast Washington and 
Northeast Oregon. The proposed amendments would broaden the scope of 
the order by adding authority for grade, size, quality, maturity, and 
pack regulations, mandatory inspection, marketing policy statements, 
and minimum quantity exemptions. In addition, a proposal is included to 
make a minor change in the Walla Walla Sweet Onion Committee 
(committee) name. The committee is responsible for local administration 
of the order. These proposals are intended to improve the operation and 
functioning of the Walla Walla sweet onion marketing order program.

DATES: Written exceptions must be filed by October 23, 1998.

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. Four copies of all written exceptions 
should be submitted and they should reference the docket numbers and 
the date and page number of this issue of the Federal Register. 
Exceptions will be made available for public inspection in the Office 
of the Hearing Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, room 2525-S, Washington, D.C. 20250-0200; 
telephone: (202) 720-1509, or 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, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone (202) 720-2491; Fax (202) 205-6632.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on March 25, 1998, and published in the April 1, 
1998, issue of the Federal Register (63 FR 15787).
    This administrative action is governed by the provisions of 
sections 556 and 557 of Title 5 of the United States Code and, 
therefore, is excluded from the requirements of Executive Order 12866.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendment of 
Marketing Agreement and Order No. 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), and the 
opportunity to file written exceptions thereto. Copies of this decision 
can be obtained from Kathleen M. Finn whose address is listed above.
    This action is issued pursuant to the provisions of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 
et seq.), hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900).
    The proposed amendment of Marketing Agreement and Order No. 956 is 
based on the record of a public hearing held in Walla Walla, 
Washington, on April 7, 1998. Notice of this hearing was published in 
the Federal Register on April 1, 1998. The notice of hearing contained 
proposals submitted by the committee.
    The committee's proposed amendments would add the authority for 
grade, size, quality, maturity, and pack regulations, mandatory 
inspection, marketing policy statements, and minimum quantity 
exemptions. In addition, the committee proposed changing its name from 
the Walla Walla Sweet Onion Committee to the Walla Walla Sweet Onion 
Marketing Committee.
    Also, the Fruit and Vegetable Programs of the Agricultural 
Marketing Service (AMS), U.S. Department of Agriculture, proposed to 
allow such changes as may be necessary to the order, if any or all of 
the above amendments are adopted, so that all of its provisions conform 
with the proposed amendment.
    At the conclusion of the hearing, the Administrative Law Judge 
fixed May 8, 1998, as the final date for interested persons to file 
proposed findings and conclusions or written arguments and briefs based 
on the evidence received at the hearing. None were filed.

Material Issues

    The material issues of record addressed in this decision are as 
follows:
    (1) Whether to add the authority for grade, size, quality, 
maturity, and pack regulations, mandatory inspection, marketing policy 
statements, and minimum quantity exemptions; and
    (2) Whether to change the committee name to the Walla Walla Sweet 
Onion Marketing Committee.

Findings and Conclusions

    The findings and conclusions on the material issues, all of which 
are based on evidence presented at the hearing and the record thereof, 
are:

Material Issue Number 1

    The Walla Walla sweet onion marketing order was promulgated in May 
1995. The order sets forth the production area, which consists of 
designated parts of Walla Walla County, Washington, and designated 
parts of Umatilla County, Oregon. The order authorizes production and 
marketing research and marketing development and promotion projects, 
including paid advertising. In addition, the order authorizes the 
establishment of container marking requirements.
    The promulgation record indicates that the production area was 
designated

[[Page 50803]]

as it currently is because it was determined that the unique soil and 
growing conditions in that highly localized area constituted the 
definitive and smallest geographical area recognized for the production 
of Walla Walla sweet onions. The proponents of the marketing order did 
not want any other geographic area to have the authority to use the 
``Walla Walla Sweet Onion'' name. The promulgation hearing record 
indicated that growers in the Walla Walla Valley spent time and effort 
attempting to market the Walla Walla sweet onion as one that has unique 
characteristics because of the area where it is grown. Other growers 
and handlers were selling onions produced outside the production area 
and marketing them as Walla Walla sweet onions, which the record 
indicated was detrimental to the integrity of the name Walla Walla 
sweet onions.
    In addition, the proponents of the marketing order believed that 
research and promotion efforts were imperative if the industry was to 
remain competitive with other sweet onion areas. The proponents of the 
marketing order believed that pooling available resources under a 
marketing order for marketing and production research and promotion 
would allow the industry to expand existing markets, create new ones, 
improve grower returns and compete with other sweet onion growing 
areas.
    At the April 7, 1998, hearing on the proposed amendments to the 
marketing order, the record revealed that prior to the promulgation 
proceedings, the industry discussed including authority for quality and 
size regulations in the order at that time. However, because of 
consternation on the part of some growers about how quality and size 
regulations would impact their individual businesses, it was determined 
not to include the proposals at that time. The intent was that the 
aspects of the marketing order that were included during the 
promulgation proceeding would address the major problems facing the 
industry.
    Testimony at the amendment hearing indicated that the committee now 
realizes that poor quality on the market is a serious marketing 
problem. The committee believes that market share is being lost because 
of inconsistent quality of Walla Walla sweet onions.
    The committee has discussed quality problems since the order was 
promulgated and delegated some of the discussions to a compliance 
subcommittee. Recently, more serious discussions concerning quality 
issues revealed that the majority of the industry supported moving 
toward establishing minimum quality and size authority in the order.
    Currently, the Walla Walla sweet onion industry is comprised of 71 
industry members, 33 of which are registered handlers. There are a 
total of 64 growers, which includes growers who are also handlers. 
There are 7 commercial packinghouses that pack approximately 90 percent 
of the industry's onions.
    In 1997, 43 percent of the Walla Walla sweet onion crop was shipped 
to the Pacific Northwest United States (U.S.); 20 percent to North 
Central U.S.; 12 percent to export markets; 10 percent to the Western/
Southwestern U.S.; 7 percent to the Western U.S.; and 3 percent or less 
to the Rocky Mountain states, Southeast and Northeast U.S. and to 
roadside stands.
    In 1988, 1,800 acres of Walla Walla sweet onions were planted. In 
1997, 900 acres of Walla Walla sweet onions were planted and harvested. 
This represents a 50 percent decline in plantings since 1988. 
Similarly, acres harvested have decreased from 1,600 in 1988 to 900 in 
1997. Yields during this period ranged from 600 50-pound containers to 
820 50-pound containers per acre and averaged 734 50-pound containers. 
Production of Walla Walla sweet onions for 1988 was 1,280,000 50-pound 
containers. In 1997, production was 666,000 50-pound containers, a 48 
percent decrease in production in the last 10 years.
    Record testimony indicates that the major reasons for the decreases 
in plantings and production relate to uncertainty of grower returns, 
and the increased competition from other sweet onion production areas. 
These other sweet onion areas have established higher quality standards 
than Walla Walla sweet onions, and have made substantial promotional 
efforts that make the competition with these areas challenging. In 
addition, poor shelf life and storability problems concern many Walla 
Walla sweet onion industry members. Although research is being 
conducted on behalf of the committee to address these quality problems, 
it has been difficult to keep pace with the competition.
    The record testimony indicated that large wholesale and chainstore 
markets have been lost due to quality and shelf life problems and that 
if these issues were addressed successfully, these markets could be 
regained. With a higher quality onion, more distant markets could be 
established and production could increase significantly.
    The season-average f.o.b. prices for Walla Walla sweet onions have 
ranged from a low of $4.14 per 50-pound container in 1983 to a high of 
$11.95 per 50-pound container in 1991. Prices have generally trended 
upward, but have been highly variable, which suggests unsteady market 
conditions. The average price over an 18-year period is $7.45 per 50-
pound container.
    Since 1981, U.S. per capita consumption of fresh onions has 
increased from 10.7 pounds per year to 17.5 pounds per year. A witness 
testifying for the committee stated that other onion groups and 
associations are promoting various onion products and increasing 
consumer awareness and use of onions, in general. This grower-handler 
further stated that Walla Walla sweet onions still have a nationally 
recognizable name. He believed that if the industry could improve the 
quality of their onions and be consistent with that quality, the 
industry could stabilize their market, regain consumer and chainstore 
confidence, and gain some of this share of the market indicated by the 
increased per capita consumption of onions.
    Walla Walla sweet onions are a type of sweet onion. Sweet onions 
are distinguished from other onion groups by their sweet taste and the 
absence of the strong, pungent taste of yellow, red, white and other 
storage onions and are usually only available during the spring and 
summer months. Generally, these onions do not store well and have a 
short shelf life. In addition, sweet onions usually bring higher prices 
than other onions.
    Other sweet onion growing areas that compete with Walla Walla sweet 
onions at some time during its season are: Georgia Vidalia Onions; 
Texas hybrid 1015Y's (spring and summer crops), Maui Sweets from 
Hawaii, and New Mex. Sweets from New Mexico.
    Statistical data shows that Vidalia and Maui Sweet onions have 
increased their acres harvested while others have declined. Texas has 
the largest volume of acres harvested (average--14,839 acres) while 
Maui has the smallest (average--142 acres). Surprisingly, these two 
onion areas have the lowest yield per acre. Although yields in all 
onion producing areas are highly variable, New Mexico and Walla Walla 
have the highest yields.
    Texas, New Mexico and Vidalia sweet onions have the highest 
production, with Vidalia sweet onions experiencing the most dramatic 
increase in production in recent years. Walla Walla and Maui onions 
have the lowest production, mostly due to the amount of acres planted 
in recent years.
    Maui onions' f.o.b. prices are the highest among the sweet onion

[[Page 50804]]

producing areas with an average price of $43 per 50-pound container 
over the last 18 years. Vidalia onions are second with an average price 
of $14 per 50-pound container for a nine-year period. These two onion 
groups have clearly differentiated their production from the other 
sweet onion groups and are receiving premium prices. These higher 
prices may be based on superior quality and taste. However, these 
premium prices demonstrate the marketing potential for other sweet 
onion producing areas. Walla Walla sweet onions averaged $7.50 per 50-
pound container during this same period.
    Comparing Vidalia onions with Walla Walla sweet onions for the 
nine-year period that Vidalia onion data has been available, Vidalia 
onion prices have always been higher than Walla Walla sweet onion 
prices. The difference in f.o.b prices ranges from a low of $1.50 per 
50-pound container in 1994 to a high of $9.90 per 50-pound container in 
1990. The average difference between the two prices is $5.
    Crop value statistics (based on price and production) for the sweet 
onion producing areas show that while Maui onions receive the highest 
prices, its total crop value is the lowest of the six producing areas 
due to its low level of production. Vidalia and New Mexico onion crop 
values have been increasing, while Texas, Maui, and Walla Walla's crop 
values have been stagnant or slowly declining. The high crop values of 
Vidalia onions are the result of increasing levels of production and 
higher prices.
    A witness for the committee testified that poor quality and shelf 
life of Walla Walla sweet onions limits marketing firms to distribute 
their products into the nearer markets, particularly the Pacific 
Northwest. The grower-handler testified that these shipping patterns 
tend to saturate these markets. If quality and shelf life were 
improved, more product could be shipped outside of the Pacific 
Northwest area and thereby, increase production and improve crop values 
of Walla Walla sweet onions.
    Record testimony indicates that the potential exists for Walla 
Walla sweet onions to become more competitive with other sweet onion 
growing regions. A witness for the committee testified that he believes 
that part of the Vidalia onion industry's success has been due to the 
proximity of the growing area to a large population base on the East 
Coast. However, if the quality of Walla Walla sweet onions was 
improved, more onions could be shipped to those areas where sweet 
onions are widely accepted by consumers, which would result in an 
increase in total production of Walla Walla sweet onions.
    The season for Walla Walla sweet onions generally begins in middle 
or late June and continues until the end of July. The season is 
approximately 6 weeks long. The Department's Market News Service 
collects data on Walla Walla sweet onions. Prices are published for 
jumbo and medium 50-pound sacks and cartons. This data shows that in 
most seasons, the prices start relatively high. As the season 
progresses, prices generally fall. The high prices at the beginning of 
the season are due to the low supply of sweet onions at that time of 
the season and the high demand as summer approaches. The quality at the 
beginning of the season sets the market tone for the remainder of the 
season. If quality is high at the beginning of the season, this makes a 
favorable impression on receivers as well as consumers. With high 
quality onions at the start of the season, consumers are more willing 
to become repeat customers. However, if quality is low at the beginning 
of the season, receivers as well as consumers will be disappointed. 
This low quality will result in consumers shopping for alternative 
sweet onions and they will not be repeat purchasers.
    This seasonal price behavior where prices start high and then fall 
may cause producers to harvest onions before they are fully matured. 
This may result in poor quality onions being sold on the market which 
tends to make an unfavorable impression on consumers, supermarkets, and 
other outlets that handle Walla Walla sweet onions.
    Most Walla Walla onions meet U.S. No. 2 grade but the majority do 
not meet U.S. No. 1. Testimony revealed that the committee would not 
make a recommendation to impose a minimum grade requirement that would 
be difficult for most handlers to make and would result in a higher 
volume of onions being unmarketable. Initially, the committee would 
likely recommend a minimum grade, less than a U.S. No. 1, such as a 
modified U.S. Commercial, with stronger maturity requirements. This 
would enable handlers and growers to modify their operations in a cost-
effective manner. In time, as growers and handlers realize the benefits 
of minimum quality and size requirements, they would be more prepared 
to further increase the quality of their onions.
    Record evidence revealed that the Walla Walla sweet onion marketing 
season is shortening because of the typical high prices at the 
beginning of the season. A witness for the committee testified that he 
believes that growers are harvesting immature onions in order to obtain 
these higher prices. The witness stated that immature onions on the 
market early in the season have a negative impact on the market at the 
middle and the end of the season. He further testified that growers are 
concerned with this and are targeting this problem. He believes that 
these problems could be alleviated to a great extent by establishing 
quality standards for defects such as sprouting and staining which 
would address the maturity problem early in the season and increase 
demand for Walla Walla sweet onions for a longer period. He further 
stated that if a higher quality product is consistently available, 
promotional efforts would be enhanced. These efforts would improve 
buyers' confidence in purchasing Walla Walla sweet onions.
    Statistical data evidenced on the record indicates that Walla Walla 
sweet onions are currently sorted by size and packed in cartons or 
sacks. Different prices are realized between sacks and cartons and 
between jumbo and medium sized onions. Higher prices are received for 
cartons as compared to sacks. Higher prices are received for jumbo as 
compared with medium size onions. Data shows that larger sized onions 
receive an average of $3 a container more than smaller onions.
    The record revealed that when purchasing sweet onions, consumers 
prefer a larger onion. There is a perception that sweet onions should 
be larger than storage onions. Consumers are willing to pay a premium 
price for a larger sweet onion. Proper seed spacing during planting is 
a critical factor in producing larger onions. In addition, handlers who 
can pack larger onions can realize larger returns.
    Since the majority of handlers are already sorting onions by size, 
record evidence revealed that handlers would not have to purchase new 
equipment should these proposals be implemented. A grower-handler 
testified that the majority of the larger handlers always try to pack 
to certain established quality and size standards. Costs associated 
with handlers modifying their grading facilities would be minimal 
because most handlers already have the equipment necessary to implement 
these proposals. These proposals, if implemented, would require that 
all handlers conform to the same established quality and size 
standards, which would provide a consistent product to buyers and 
consumers. A primary cost associated with these proposals would be the 
cost of inspection procedures, which are

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discussed later in this recommended decision.
    Another potential cost item is the cost associated with growers 
having to purchase additional or improved equipment in order to meet 
minimum quality or size standards. A handler testified that growers 
could update their mechanical seeders so that the seeds could be 
planted equidistant from each other, which would result in onions with 
better shape and uniformity and larger onions. There are increasingly 
more growers that are purchasing this equipment or contracting with 
other growers that have the seeders. Seed coating or pelleting is 
another alternative to achieve better seed placement, which is less 
expensive than the purchase of a highly advanced seeder. The seed 
coating adds a clay-like material to the exterior of the seed, so that 
the seeders do not cause two or three seeds to drop at the same time. 
It appears that costs associated with growers modifying their cultural 
practices to abide by minimum quality and size standards would be 
minimal and offset by improved returns.
    Currently, there are limited secondary outlets for Walla Walla 
sweet onions. Record testimony indicates that the primary outlets for 
non-marketable or cull onions are livestock feed, charitable 
institutions or disposal. A minimal amount is sent to processors, but 
there are no returns realized other than the reduced cost of packing.
    If quality control and size provisions were implemented, it could 
be assumed that more onions would become non-marketable which could 
produce hardships for some producers. A witness for the committee 
testified that if a U.S. Commercial grade were established as a minimum 
quality standard, about 5 to 10 percent of the onions would not meet 
that grade and would have to be disposed of in secondary outlets. The 
witness testified that increased grower returns would offset any 
increase in cull onions. In addition, if a minimum quality or size 
standard were established, this would provide an incentive for growers 
to modify and improve their cultural practices so that only onions that 
would make that quality or size standard would be sent to the packing 
houses. This would minimize the percentage of onions that do not make 
quality or size standards.
    The inspection and certification portion of the proposed amendments 
would require that during any period when Walla Walla sweet onions are 
regulated, the onions would be inspected by representatives of the 
Federal-State Inspection Service. The proposal contains a provision 
regarding re-inspection procedures. Handlers who handle a specified 
minimum quantity would be exempt from inspection, but still be required 
to meet any minimum quality or size regulations in effect. The minimum 
quantity would be established at 2,000 pounds or less of onions per 
shipment, but could be modified through informal rulemaking, if 
necessary.
    The Federal-State Inspection Service Office that is responsible for 
inspecting Walla Walla sweet onions is currently located in Pasco, 
Washington, less than 50 miles from Walla Walla. According to record 
testimony, inspectors would be staffed in Walla Walla during the season 
if mandatory inspection was implemented.
    Inspection costs in the State of Washington are computed on an 
hourly basis or a per unit basis, whichever is greater. If the hourly 
rate is used, the rate applies to the total number of the inspector's 
hours, including travel time. Depending upon the workload, inspectors 
could be based in Walla Walla during the season, which would lessen 
travel costs. Record testimony indicated that the hourly inspection 
rate is $26, with a two-hour minimum, or $52, for inspection or $208 
for an eight-hour day. However, the State of Washington Agriculture 
Code regulations appearing at Chapter 16-400-210 WAC provide that the 
hourly inspection rate is $23, with no minimum time required. In 
accordance with the Rules of Practice and Procedure governing the 
formulation of marketing agreements and orders (7 CFR Part 900), 
official notice is taken of the fees set forth in the State of 
Washington regulations at Chapter 16-400-210 WAC. The fee schedule will 
be used in our analysis. On a per unit basis, the inspection fee is 
$.04 per 50-pound unit.
    As stated above, inspection costs are computed on an hourly basis 
or a per unit basis, whichever is greater. For example, if an 
inspection was requested on 100 50-pound containers and the inspection 
lasted one hour, the per unit cost for inspecting the lot would be $4, 
and the per hour cost would be $23. Under this scenario, the handler 
would be charged $23 for the inspection, the greater amount. This would 
average $.23 per unit.
    Under the current fee schedule, it would be necessary for the 
inspection office to inspect over 4,600 50-pound units of onions per 
day in order to maintain the fee at $.04 per 50-pound unit. If handlers 
do not handle over 4,600 50-pound units per day, their inspection costs 
would be computed at the hourly rate. Even for handlers who normally 
handle that volume, there would be times during the season, 
particularly in the beginning and end of the season, where the volume 
of onions inspected would not be at a level where the $.04 per 50-pound 
unit could be used. The fees would convert to the hourly rate.
    Record testimony indicated that the committee is concerned with 
increased costs associated with these proposals, particularly, the 
costs of inspection. The committee discussed options to address these 
concerns and developed two remedies intended to alleviate the cost 
burdens on small handlers. First, the committee recommended adding 
authority in the order for the committee to contract with the Federal-
State Inspection Service and pay for all inspections of Walla Walla 
sweet onions. Second, the committee recommended an exemption from 
inspection for handlers of small lots of onions.
    Under the scenario of contracting with the inspection service, each 
handler would pay a separate assessment for inspection costs at a per 
unit price. All handlers would pay the same price per bag for 
inspection, whether exempt or not. Under such a contract, the larger 
volume handlers would pay more of the inspection costs because they 
handle so many more onions. In this manner, the burden of inspection 
costs for smaller volume handlers would be minimized. This was 
discussed at committee meetings with representatives of the inspection 
service.
    Testimony confirmed that travel costs would be lessened if an 
inspector was based in Walla Walla. However, the witness indicated that 
$.04 per 50-pound unit would be the minimum cost for the inspection. 
Costs could increase depending on the workload. If the workload was 
light, such as late in the season when the quantities of onions are 
diminishing, it could be more costly for an inspector to conduct 
inspections on smaller lots. It could be necessary to convert the cost 
to an hourly cost, which would exceed $.04 per 50-pound unit.
    A witness for the committee stated that there were discussions at 
committee meetings regarding contractual relationships with the 
inspection service but factors such as inspection of small quantities 
would need to be addressed in the contract. The inspector testified 
that the inspection office must cover the cost of inspectors and if 
there was not a full day's work in Walla Walla, the inspector would 
need to travel elsewhere. These situations would need to be factored

[[Page 50806]]

into any contractual agreements. Because of the variables associated 
with inspecting Walla Walla sweet onions, a witness for the committee 
estimated the cost of inspection would range between $.04 and $.06 per 
50-pound unit if the per unit price were used in a contractual 
agreement.
    Another option the committee developed to address the issues of 
costs on small handlers would provide an exemption for handlers who 
handle up to, but not more than 2,000 pounds of Walla Walla sweet 
onions per shipment. These handlers would be exempt from inspection 
requirements, but these exempt onions would still be required to meet 
the quality and size requirements in effect at the time of shipment. 
Handlers could make more than one exempt shipment per day as long as 
each shipment was at or below the 2,000-pound exemption. These exempt 
onions would not be exempt from assessments. The committee would be 
able to recommend modification of the minimum quantity exemption 
through informal rulemaking, if necessary. The committee would be 
responsible for monitoring compliance with this proposal. If necessary, 
the committee would conduct spot inspections at the committee's expense 
to ensure that inspection-exempt onions were meeting the established 
quality and size regulations.
    A witness for the committee projected that the committee manager's 
work hours may need to be increased in order to monitor compliance with 
these proposals, which could result in increased administrative costs 
for the committee. The committee projects a possible increase of 
$3,000, or a 3 percent increase in the current committee budget.
    Currently, there are 7 commercial packers that pack approximately 
90 percent of the industry's onions. The remaining 10 percent are 
handled by approximately 26 handlers. If the 2,000 pound minimum 
quantity exemption were implemented, it is estimated that 50 percent of 
the remaining 26 handlers would be exempt from inspection. This would 
represent approximately 42 acres (25,000 50-pound containers), or 5 
percent of the crop. This minimum quantity exemption addresses concerns 
regarding possible increased costs that could be encountered by small 
handlers without jeopardizing the objectives of a quality and size 
program.
    Record testimony revealed that consideration to modify this 
exemption provision would primarily relate to the effectiveness of the 
amount exempted. If it was determined that 2,000 pounds or less was 
insufficient, the committee could recommend raising the amount. A 
similar recommendation could be made if it was determined the amount 
was too large and too many onions were exempt from inspection. In 
making any recommendations, consideration would be given to alleviating 
any inordinate cost burden on handlers without jeopardizing the 
objectives of quality and size requirements. Testimony indicated that 
the committee does not believe it would ever recommend eliminating the 
minimum quantity exemption.
    The cost of inspection is a primary cost factor related to these 
proposals. The record reveals that the industry is ready to accept this 
additional cost in order to improve the competitiveness of the 
industry. It is believed in the long run, increased production, 
increased prices, and increased demand for Walla Walla sweet onions 
would offset these inspection costs. The committee is concerned with 
increased costs and is willing to take steps to mitigate these costs 
for the benefit of the industry. It is believed that without 
implementation of these proposals, the industry cannot improve and may 
continue to decline.
    Adding quality and size provisions to the marketing order would 
provide an incentive for producers to allow their onions to fully 
mature, resulting in a more favorable impression of the onions 
purchased. Consumers prefer larger onions and are willing to pay a 
premium price for large sweet onions. A better quality and larger onion 
would provide an opportunity to establish consistent quality and size 
of onions throughout the season. This would tend to benefit consumers 
with a higher quality of onion and would benefit producers through a 
higher demand for their product. In the long run, high quality, 
seasonal product would build name recognition and help enhance demand 
for Walla Walla sweet onions.
    It is determined that there would be costs associated with 
implementing these proposals. The primary costs relate to inspection 
fees and administration by the committee for overseeing the program. In 
addition, it is possible that some growers would need to modify their 
cultural practices and handlers would need to modify their packing 
operations in order to provide a higher quality product.
    Witnesses testifying at the hearing represented small and large 
handlers and growers. The majority of the industry is prepared to incur 
some additional costs because they believe, that in the long run, 
increased production and sales, and higher grower returns and buyer 
confidence in Walla Walla sweet onions would offset any increased 
costs. In fact, some growers testified that these proposals were not 
strong enough. They would have been even more supportive of the 
proposals if stronger quality requirements had been included.
    One grower-handler testified that unless the minimum grade 
regulations were established higher than a U.S. Commercial grade, they 
would not benefit his company. He believed that the minimum grade 
should not be lower than the standards to which most handlers already 
pack. In addition, this grower-handler was concerned about the 
committee being under-funded and wanted to be assured that these 
proposals would be properly funded and that other programs, such as the 
promotion program, would not suffer. In testimony, a witness noted that 
the committee has considered the funding issues and has determined that 
if these proposals were implemented, additional income would be 
realized in the long run, which could be used for promotions and 
research projects.
    Another grower-handler testified that the industry used to ship 
higher quality onions but perhaps because of lack of competition, the 
quality decreased. Competition in the sweet onion business has 
dramatically increased in recent years. The grower-handler stated that 
the purpose of these proposals is for the industry to put a better 
quality onion in the bag from the start, and then the onion would be a 
better product when it reaches the consumer. As far as costs, this 
grower-handler stated that the committee considered the costs very 
seriously and even discussed the cost burden between larger and smaller 
handlers. He believed the minimum quantity exemption addresses such 
concerns.
    This grower-handler also testified that Walla Walla sweet onions 
are labor intensive and expensive to produce. With a quality control 
system in place, poor quality onions could not be shipped by handlers. 
Acreage could be increased, better prices could be realized, and 
positive name recognition would result. Increased acreage and 
production would result in additional funds for promotion and research, 
including development of controlled atmosphere storage for Walla Walla 
onions. In addition, the major cost of these proposals, the cost of 
inspection, is not considered a high cost item compared to the cost of 
labor and growing costs. Preharvest costs of production are estimated 
to increase by 0.4 to 0.6 percent an acre due to inspection. Because so 
much is invested up front per acre, a premium price is

[[Page 50807]]

necessary for growers to realize a reasonable return.
    A witness for the proposals testified that lack of quality controls 
has depleted repeat business. This handler did not believe that 
handlers would need to purchase new equipment to implement grading 
schemes in their businesses.
    A witness testified that if these proposals are implemented, 
possible increased administrative costs of $3,000 are projected. These 
costs relate to the additional duties involved in overseeing compliance 
of the inspection-exempt onions. The committee manager position is 
currently a part-time position. The witness testified that the 
committee has discussed increasing the hours of the manager's position 
to provide adequate coverage of the new duties.
    A witness for the committee indicated that an advertising agency 
conducted market research at seven retail chains in the Los Angeles, 
California area. The research concluded that the retail trade 
perception of the Walla Walla sweet onion is that it is a high cost, 
high shrink, and short shelf life alternative to low cost alternatives 
already in the Los Angeles area. Retailers are concerned with paying a 
premium price for a product with inconsistent quality.
    Record evidence revealed that without the implementation of these 
proposals, the Walla Walla sweet onion industry would remain stagnant 
or decline further. With the tremendous rise in consumption of fresh 
onions, and the success of other sweet onion producing areas, it is 
clear that this industry has the potential to improve. These proposals 
would enhance that opportunity.
    The industry has attempted to regulate quality voluntarily. Prior 
to implementation of the marketing order, the Walla Walla Sweet Onion 
Commission, a voluntary organization composed of producers and 
handlers, implemented quality requirements for its members. These 
requirements restricted the sale of U.S. No. 2 grade onions and culls 
from fresh market use, and included random inspections. Common defects 
that caused the onions to fail to meet these conditions were seed 
stems, immaturity, and decay. Because of the voluntary nature of these 
imposed requirements, this project was unsuccessful.
    Although the marketing order currently addresses problems the 
industry is facing with the establishment of a production area and the 
authority to conduct promotions and research projects, it is lacking in 
that the current authorities cannot directly address the quality 
problems that are detrimental to the industry. The record evidence 
revealed that the establishment of quality control and size 
requirements would specifically address the marketing problems being 
experienced by the industry. The evidence showed conclusively that the 
industry is facing further decline if nothing is done to improve the 
quality of the onions marketed. Adding these authorities to the order 
would enhance the program's effectiveness and provide the committee 
with the tools needed to administer a productive, more useful program.
    The committee is composed of 10 voting members. Seven concurring 
votes, or a super majority, would be needed to pass a recommendation 
relative to quality and size requirements. Other committee actions 
require a simple majority or six votes. With the requirement of 
preparing an annual marketing policy, the committee would review market 
conditions each year. The committee could recommend that no regulations 
be imposed on handlers.
    It is determined that the costs related to implement these 
proposals would be offset by improved grower returns, increased 
production, re-established markets, new markets, and more effective 
promotional efforts. Handlers are willing to impose these requirements 
on themselves to save their industry. The record evidence provided a 
compelling justification of these proposals.
    Therefore, the proposals relating to authorizing quality control 
and size requirements by adding new Sec. 956.15 (Grade and Size), 
Sec. 956.16 (Pack), Sec. 956.60 (Marketing Policy), 956.70 (Inspection 
and Certification) and amending Secs. 956.62 (Container Markings) and 
956.64 (Minimum Quantities) are recommended.
    As stated above, implementation of the above proposals would entail 
adding and modifying several sections of the Walla Walla Sweet Onion 
marketing order. These sections are interrelated and should be 
considered together. For instance, there would be no need to have a 
minimum quantity exemption if there were no mandatory inspection 
requirements. If it is determined that these proposals would not 
address problems facing the industry, none of the above proposals would 
be implemented.
    A new Sec. 956.14, a definition for ``grading'', would not be added 
to the order. In the proposal, grading is defined as synonymous with 
``preparing for market'' and means the sorting or separation of Walla 
Walla Sweet Onions into grades, sizes, and packs for market purposes.
    Currently, the term ``grading'' does not appear in the marketing 
order. It is also not used in the proposed amendatory text. Testimony 
indicated that the possibility exists for this term to be used in 
future regulations.
    If these proposals are adopted and regulations implemented, 
handlers would be required to implement grading schemes in their 
operations. Informal rulemaking actions would be necessary to implement 
any minimum quality and size requirements. If this term is necessary in 
the future, it can easily be included in the regulations without having 
this term defined in the order. Therefore, this section is not proposed 
herein.
    A new Sec. 956.15, a definition for ``grade and size'', should be 
added to the order. In the proposal, ``grade'' means any of the 
officially established grades of onions and ``size'' means any of the 
officially established sizes of onions, each set forth in the U.S. 
Standards for grades of onions or the States of Washington and Oregon 
standards. This section would authorize modifications or variations to 
these standards if recommended by the committee and approved by the 
Secretary.
    It was determined that the above Federal and State standards would 
be a commonly accepted basis for the committee to use in recommending 
regulations on quality and size. The committee's intent is to have this 
language flexible so that any subsequent amendments to these grade 
standards would be applicable to the order.
    Testimony indicated that it is common practice in the industry to 
refer to onions by grades and/or sizes and these definitions would 
provide a basis for making recommendations for regulations. The 
proposal includes the authority to make variations from the U.S. and 
State standards. This would allow the committee flexibility in 
determining an appropriate quality or size to recommend which may 
deviate from what the standards specify, but better serve the needs of 
the industry. The definitions for grade and size are recommended.
    A new Sec. 956.16, Pack, should be added to the order. ``Pack'' 
would be defined as a quantity of Walla Walla sweet onions specified by 
grade, size, weight, or count or by type or condition of container 
recommended by the committee and approved by the Secretary. Normally, 
onions are sorted by grade or size. The intent of having a definition 
for pack is to reduce the incidences of co-mingling grades and

[[Page 50808]]

sizes that could dissuade customers from purchasing the products. This 
would provide the authority to restrict different grades and sizes to 
certain containers in order to obtain higher prices and increase sales. 
An example provided by a witness for the committee at the hearing 
related to the possibility of establishing a premium pack which would 
require a higher quality onion to be shipped in a container marked 
``premium.'' The definition for pack is recommended.
    A new Sec. 956.60, Marketing Policy, should be added to the order. 
Specifically, this provision would require that the committee annually 
consider and prepare a policy for marketing onions grown in the 
production area prior to the beginning of the season. The committee's 
marketing policy would rely on the conditions that exist at the time 
the policy is adopted and projections for the upcoming season. It is 
therefore, essential that the committee have as much information as 
possible concerning marketing conditions, including information that 
affects supply and demand.
    Primary information that would assist the committee in determining 
its marketing policy are supplies of Walla Walla sweet onions, expected 
harvest, expected yield, quality, quality and supplies of competing 
onions, and consumer preferences. The marketing policy would provide a 
means of determining the recommendation of regulations relating to 
quality and size for that year in order to prevent onions of inferior 
quality or small size from being marketed. The marketing policy would 
also assist the committee in recommending quality and size regulations 
that would bring producers the greatest possible return consistent with 
the supply and demand conditions, while protecting the interest of 
consumers by making available for purchase better quality and preferred 
sizes of onions. The marketing policy would focus on the optimization 
of returns to growers given the conditions in the industry that year.
    The committee would consider several factors in determining its 
marketing policy. These factors include market prices for sweet onions, 
supplies of sweet onions (including competitors), the trend and level 
of consumer income, establishment and maintenance of orderly marketing 
conditions, orderly marketing on behalf of the public, and other 
relevant factors. A witness for the committee indicated that all of 
this information is available through industry sources, the Department, 
and University Extension Services. These available resources along with 
the expertise of the committee members would guide the committee in 
making informed effective marketing policies that would benefit growers 
and consumers.
    The committee would submit a report to the Secretary setting forth 
the marketing policy and notify producers and handlers of the report. 
Testimony indicated that the report would need to be prepared well 
ahead of the shipping season, perhaps in January or February. A 
specific due-date for the marketing policy could be established through 
informal rulemaking, but the committee is aware that the policy must be 
prepared well enough in advance of the season in order to be effective 
and in order to effectuate timely regulations.
    The marketing policy could also be amended depending on changed 
supply and demand situations. Any amendments would be reported to the 
Secretary and to producers and handlers.
    Requiring the preparation of an annual marketing policy statement 
is a good business practice to implement when establishing the 
authority for quality control provisions. It would set forth a process 
for the committee to follow and consider and provide adequate 
timeframes to be effective. Therefore, this section is recommended.
    Section 956.62, Issuance of Regulations, should be amended and re-
titled. This section is currently entitled ``Container markings'' and 
sets forth the authority to recommend regulations for fixing the 
marking of containers that may be used in the packaging or handling of 
Walla Walla sweet onions.
    The section would still include the regulations regarding container 
markings but this proposal expands the section by adding the authority 
for recommending regulations to the Secretary on quality and size. The 
proposed amendment of this section would include the limitation of 
shipments of Walla Walla sweet onions by: regulating grades, sizes, 
qualities or maturities of Walla Walla sweet onions in any or all 
portions of the production area during any period; regulating grades, 
sizes, qualities or maturities for different varieties or packs for any 
period; and establishing minimum standards of quality and maturity. 
This section also provides that the Secretary may amend, terminate, or 
suspend any or all portions of any regulation issued under this 
section.
    Portions of the production area or certain varieties could be 
regulated, and record testimony revealed that this was recommended to 
cover possible problems should a certain growing area or variety 
experience a specific problem during the year, possibly due to adverse 
weather conditions in one growing area. The overall intent of this 
proposal is to establish the ability to make recommendations for the 
entire industry and production area. Testimony revealed that the 
proposal was meant to be flexible and cover a variety of situations 
that could occur so that the amendment, if implemented, could be more 
effective.
    The proposed amendment is adequate to cover the needs of the 
industry and has sufficient flexibility to cover any unusual 
circumstances that may arise. Therefore, this section is recommended.
    Section 956.64, Minimum Quantities, should be amended. This section 
currently provides for establishing minimum quantities for which Walla 
Walla sweet onions would be exempt from assessments, container 
markings, and special purpose shipment requirements. The proposal 
amends the section by adding a minimum quantity exemption for 
inspection requirements.
    Under this proposal, each handler could ship a maximum of 2000 
pounds of sweet onions per shipment without regard to inspection 
requirements. However, the exempt onions would still be required to 
meet the quality and size requirements in effect at the time of 
shipment. This requirement could be modified through informal 
rulemaking.
    The reason for the exemption is to provide a benefit for smaller 
handlers. Onions would still be required to meet established quality 
and size standards. It is estimated that only 5 percent of the crop 
would not be inspected. If circumstances warrant modification of the 
exemption amount in the future, it could be accomplished through 
informal rulemaking. The amount of the exemption could be raised or 
lowered depending on the effectiveness of the quality and size program 
and the impact on handlers, especially small handlers. Testimony 
revealed that reference should be made to Sec. 956.70, ``Inspection and 
certification'' in the last sentence in the section. This reference has 
been added to the amendatory language. Therefore, this section is 
recommended as modified.
    The committee proposes adding a new Sec. 956.70, Inspection and 
Certification. This section sets forth the inspection requirements if 
these proposals are implemented. The section states that during periods 
of regulation, no onions, unless exempted, could be handled unless a 
representative of the Federal-State Inspection Service or another 
inspection service designated by the Secretary inspects the onions. 
This section allows for modification of

[[Page 50809]]

these requirements through informal rulemaking.
    If onions are regraded, resorted, or repacked, the prior inspection 
would be invalid. If the onions are regraded, resorted or repacked, 
they must be re-inspected to ensure that the quality or size 
established is met prior to shipment of re-inspected onions. These 
requirements could also be modified through informal rulemaking.
    The committee could recommend that appropriate seals, stamps, or 
tags identify the inspected onions, or that other identification be 
affixed to the containers or master containers.
    The committee could recommend the length of time for which an 
inspection is valid and inspection certificates would be made available 
to the committee. Finally, the section would authorize the committee to 
enter into an agreement with the inspection service with respect to 
costs of inspection and the committee would collect pro-rata shares of 
such costs from handlers.
    The portion relating to contracting with the inspection service 
would cover a situation where the committee would try to lessen the 
financial burden on handlers, especially by paying for all inspections 
and assessing a pro-rata share back to the handlers. A witness 
representing the inspection service testified that this was possible 
but variables would have to be incorporated into any contractual 
arrangement to cover all costs incurred by the inspection service. It 
is reasonable to allow this provision in the order should a contractual 
arrangement be necessary, to provide additional flexibility. Section 
956.70(f) of this section has been modified to clarify that the 
inspection service is as set forth in paragragh (a) of that section.
    Regarding the identification procedures, the committee could 
recommend that all onions have positive lot identification or PIQ 
(Partners in Quality) certification. These procedures are 
identification processes developed by the Department's inspection 
service to aid in maintaining identity and integrity of products after 
inspection. The proposed amendment was written as such to allow for 
flexibility in determining the most effective and beneficial procedure 
to use. For example, if a new identification process is developed by 
the Department, the proposed amendment would allow the committee to 
consider and recommend this new process.
    Regarding establishing a time of validity for inspection 
certificates, testimony revealed that Walla Walla sweet onions are not 
stored and have a short shelf life. Three to five days is the maximum 
that onions should be stored. Therefore, it is anticipated that the 
committee could recommend a certificate validity of three to five days.
    These inspection procedures are normal and customary procedures set 
forth in marketing orders when mandatory inspection requirements are 
authorized. They provide sufficient flexibility without losing 
effectiveness. Therefore, this section is recommended.

Material Issue Number 2

    The committee proposes to change its name from the Walla Walla 
Sweet Onion Committee to the Walla Walla Sweet Onion Marketing 
Committee. This proposal would entail an amendment to paragraph (a) of 
Sec. 956.20, Establishment and membership, which sets forth the name of 
the committee. The reason for the proposed change is to better reflect 
the goals and accomplishments of the committee.
    The committee believes adding the word ``marketing'' to their name 
would better reflect the goals of the committee and better portray the 
image sought. The committee is charged with improving the marketing 
practices of Walla Walla sweet onions by using the authorities in the 
marketing order and therefore, this proposal should be authorized.
    The Agricultural Marketing Service proposed to make such changes as 
may be necessary to the order to conform with any amendment that may 
result from the hearing. No necessary conforming changes have been 
identified by the Department.

Small Business Considerations

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the AMS has considered the economic impact of 
this action on small entities. Accordingly, the 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. Small agricultural producers 
have been defined by the Small Business Administration (SBA) (13 CFR 
121.601) as those having annual receipts of less than $500,000. Small 
agricultural service firms, which include handlers regulated under the 
order, are defined as those with annual receipts of less than 
$5,000,000.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impact of the proposed 
amendments on small businesses. The record indicates that growers and 
handlers would not be unduly burdened by any additional regulatory 
requirements, including those pertaining to reporting and 
recordkeeping, that might result from this proceeding.
    During the 1996-97 crop year, approximately 33 handlers were 
regulated under Marketing Order No. 956. In addition, there were about 
64 producers of Walla Walla sweet onions in the production area. 
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.
    Twenty-four of the 33 handlers are also producers who handle their 
own onions. There are seven commercial packinghouses that pack 
approximately 90 percent of all Walla Walla sweet onions. In the 1996-
97 season, the average f.o.b. price for Walla Walla sweet onions was 
$8.70 per 50-pound sack. Total production for the 1996-97 season was 
666,000 50-pound containers. A handler who packed over 550,000 50-pound 
units would exceed the SBA definition of a small handler. According to 
record evidence, there are two dominant handlers in the industry and at 
least one of these handlers could be considered a large handler under 
this definition. The record revealed that all Walla Walla sweet onion 
growers would be considered small producers. Therefore, it can be 
concluded that the majority of growers and handlers would be considered 
small businesses.
    The marketing order, promulgated in 1995, currently defines the 
production area where onions must be grown to be designated as Walla 
Walla sweet onions. It also provides the authority to fund research and 
promotion activities through assessments on handlers, as well as 
establish container regulations. Although the marketing order as 
currently written addresses some of the marketing problems facing the 
industry, the Walla Walla sweet onion industry continues to experience 
marketing problems.
    Economic data presented on the record indicates that the acres 
planted have decreased from 1,800 in 1988 to 900 acres planted in 1997. 
This is a 50% decrease since 1988. Similarly, acres harvested have 
decreased from 1,600 in 1988 to 900 in 1997.
    In addition, the data shows production has decreased dramatically 
from 1,280,000 50-pound containers in 1988 to 666,000 50-pound 
containers in 1997. This is a 48% decrease in production in the last 10 
years.
    Total crop values have declined from $9,345,000 in 1989 to 
$5,794,000 in

[[Page 50810]]

1997. This is a 38% decrease in total crop values in 9 years.
    U.S. per capita consumption of fresh onions has increased from 10.7 
pounds per year in 1981 to 17.5 pounds per year in 1997. This is a 64% 
increase in per capita use of fresh onions, while the production of 
Walla Walla sweet onions has decreased. This increased consumption 
shows that this industry has the potential to improve.
    In addition, economic data shows that competition from other sweet 
onion producing areas has increased dramatically. Producers of Walla 
Walla sweet onions have lost market share to other sweet onions such as 
Georgia Vidalia onions, California Imperial onions, Hawaii Maui Sweets, 
New Mex. Sweets from New Mexico, and Texas hybrid 1015Y's.
    The acres harvested and production of Vidalia onions have increased 
by 236% and 447%, respectively, since 1989. The Vidalia sweet onion 
industry's normal harvesting and shipping season begins in the middle 
of April and ends in late July. The Vidalia onion industry has been 
successful in extending its shipping season into September and October 
by establishing controlled atmosphere storage capabilities. This may be 
having a price dampening effect on Walla Walla sweet onions because of 
the overlap of shipping seasons and direct competition caused by the 
extended season of Vidalia onions.
    Of the six sweet onion-producing areas in the U.S., Walla Walla 
sweet onion prices are lower than Maui, Vidalia and Texas onions. In 
addition, the economic report presented on the record shows that 
Vidalia onions always receive higher prices than Walla Walla sweet 
onions with an average price differential of $5 per 50-pound container.
    The Walla Walla sweet onion season begins in middle or late June 
and continues until the end of July. The shipping season lasts for 
approximately six weeks. Prices for Walla Walla sweet onions at the 
beginning of the season start relatively high. As the season 
progresses, prices generally fall. This seasonal price behavior has 
resulted in producers harvesting onions before they are fully matured. 
This has led to poor quality onions being sold on the market that make 
an unfavorable impression on consumers, supermarkets, and other outlets 
that handle Walla Walla sweet onions. In addition, this situation 
appears to have shortened the marketing season.
    The quality at the beginning of the season has a tendency to set 
the market tone for the remainder of the season. If quality is high at 
the beginning of the season, this makes a favorable impression on 
buyers as well as consumers. With high quality onions at the start of 
the season, consumers are likely to become repeat customers. However, 
if quality is low at the beginning of the season, receivers as well as 
consumers are disappointed. Initial low quality will result in 
consumers shopping for alternative sweet onions and they will not be 
repeat purchasers.
    Minimum quality and size requirements are established under 
marketing orders to ensure that substandard produce does not find its 
way to the market and destroy consumer confidence and harm producers' 
returns. The objective of implementing quality control and size 
provisions under marketing orders is to make the markets work more 
efficiently, improve quality, and to market preferred sizes. The use of 
quality and size standards through a grading scheme benefits consumers 
by assuring the buyers that they are getting high quality produce of 
desirable size. This helps build consumer demand in the long run. 
Minimum quality and size standards are deemed desirable because they 
prevent the shipment of poor quality produce, which ends up harming 
producers' ability to sell their product and consumers' willingness to 
buy.
    The reputation of Walla Walla sweet onions has deteriorated over 
the recent years due to the poor quality of some of the onions 
marketed. Record evidence indicated that a surveillance project 
conducted during the 1997 harvest season by the Washington State 
Department of Agriculture on behalf of the committee noted that a 
significant amount of onions sold within the immediate Walla Walla area 
did not meet minimum U.S. standards. Walla Walla sweet onions usually 
meet at least U.S. No. 2 grade, but only a small volume meets U.S. No. 
1 grade.
    Establishing quality and size provisions under the Walla Walla 
sweet onion marketing order would provide an incentive for producers to 
allow their onions to fully mature, resulting in a higher quality of 
onion marketed. Establishing quality and size requirements would ensure 
consistent quality and acceptable sizes of onions throughout the 
season. This tends to benefit consumers through a higher quality of 
onion and benefits producers with a higher demand for their product. In 
the long run, high quality, seasonal produce builds name recognition 
and helps enhance demand.
    The Walla Walla sweet onion industry has attempted to voluntarily 
implement quality control. Prior to implementation of the marketing 
order, the Walla Walla Sweet Onion Commission, a voluntary organization 
composed of producers and handlers, implemented quality rules for its 
members. These rules restricted the sale of U.S. No. 2 grade onions and 
culls from fresh market use, and included random inspections. Common 
defects that caused the onions to fail to meet these requirements were 
seed stems, immaturity, and decay. Because of the voluntary nature of 
these imposed regulations, this project was unsuccessful.
    Currently, the marketing order allows only onions grown in the 
designated production area to be marketed as Walla Walla sweet onions. 
Research activities as well as promotional activities are also 
authorized under the current order. Broadening the scope of the order 
by authorizing minimum quality and size requirements would add another 
marketing tool to help the industry solve marketing problems, 
especially those related to quality. Minimum quality and size 
requirements would allow the industry to improve their name recognition 
with a quality product. Amending the order by authorizing the 
establishment of minimum quality and size requirements would help to 
expand markets and deliver a more consistent quality product of 
desirable size to the consumer.
    Without any quality and size provisions in place, industry members 
can place substandard product on the market that is severely impacting 
the credibility and marketability of all Walla Walla sweet onions. 
Because of these current practices, the industry is experiencing 
problems establishing and maintaining markets in areas that have 
traditionally been strong. The industry has lost markets due to poor 
quality, short shelf life and increased competition from other sweet 
onion producing areas.
    Minimum quality and size requirements would help alleviate some of 
these problems and work to improve producer returns by strengthening 
consumer and retail demand. Mandatory inspection requirements would 
make all producers and handlers responsible for the quality of the 
industry's output. Poor quality would not be mixed with better quality. 
The record revealed that most handlers are already sorting by size. The 
Department's Market News Service reports prices for jumbo and medium 
onions, which further indicates that handlers are sorting by size. Most 
handlers also pack to a certain quality standards, usually based on 
U.S. grade standards. Therefore, handlers would

[[Page 50811]]

not be required to drastically modify their packing operations or 
purchase new equipment. The committee considered grower and handler 
costs very seriously and even discussed the cost burden between larger 
and smaller handlers. The minimum quantity exemption should address 
such concerns.
    Growers may be faced with a potential cost item related to improved 
equipment that could be needed in order to meet minimum quality or size 
standards. A handler testified that growers could update their 
mechanical seeders so that the seeds could be planted equidistant from 
each other, which would result in onions with better shape, more 
uniformity and larger size. There are increasingly more growers that 
are purchasing this equipment or contracting with other growers that 
have the seeders. Seed coating or pelleting is another alternative for 
better seed placement, which is less expensive than the purchase of a 
highly advanced seeder. The seed coating adds a clay-like material to 
the exterior of the seed, so that the seeders do not cause two or three 
seeds to drop at the same time. It appears that costs associated with 
growers modifying their cultural practices to abide by minimum quality 
and size standards would be minimal and offset by improved producer 
returns.
    A witness for the committee testified that the benefits of 
including the authority for minimum quality and size standards would 
far outweigh any negative impact to producers and handlers and the 
industry could start rebuilding markets and creating new ones.
    The Federal-State Inspection Service Office that is responsible for 
inspecting Walla Walla sweet onions is currently located in Pasco, 
Washington, less than 50 miles from Walla Walla. According to record 
testimony, inspectors would be staffed in Walla Walla during the season 
if mandatory inspection was implemented.
    Inspection costs in the State of Washington are computed on an 
hourly basis or a per unit basis, whichever is greater. If the hourly 
rate is used, the rate applies to the total number of the inspector's 
hours, including travel time. Depending upon the workload, inspectors 
could be based in Walla Walla during the season, which would lessen 
travel costs. Record testimony indicated that the hourly inspection 
rate is $26, with a two-hour minimun, or $52, for inspection or $208 
for an eight-hour day. However, the State of Washington Agriculture 
Code regulations appearing at Chapter 16-400-210 WAC provide that the 
hourly inspection rate is $23, with no minimum time required. In 
accordance with the Rules of Practice and Procedure governing the 
formulation of marketing agreements and orders (7 CFR part 900), 
official notice has been taken of the fees set forth in the State of 
Washington regulations at Chapter 16-400-210 WAC. The fee schedule will 
be used in our analysis. On a per unit basis, the inspection fee is 
$.04 per 50-pound unit.
    As stated above, inspection costs are computed on an hourly basis 
or a per unit basis, whichever is greater. For example, if an 
inspection was requested on 100 50-pound containers and the inspection 
lasted one hour, the per unit cost for inspecting the lot would be $4, 
and the per hour cost would be $23. Under this scenario, the handler 
would be charged $23 for the inspection, the greater amount. This would 
average $.23 per unit.
    Under the current fee schedule, it would be necessary for the 
inspection office to inspect over 4,600 50-pound units of onions per 
day in order to maintain the fee at $.04 per 50-pound unit. If handlers 
do not handle over 4,600 50-pound units per day, their inspection costs 
would be computed at the hourly rate. Even for handlers who normally 
handle that volume, there would be times during the season, 
particularly in the beginning and end of the season, where the volume 
of onions inspected would not be at a level where the $.04 per 50-pound 
unit could be used. The fees would convert to the hourly rate.
    Record testimony indicated that the committee is concerned with 
increased costs associated with these proposals, particularly, the 
costs of inspection. The committee discussed options to address these 
concerns and developed two remedies intended to alleviate the cost 
burdens on small handlers. First, the committee recommended adding 
authority in the order for the committee to contract with the Federal-
State Inspection Service and pay for all inspections of Walla Walla 
sweet onions. Second, the committee recommended an exemption from 
inspection for handlers of small lots of onions.
    Under the scenario of contracting with the inspection service, each 
handler would pay a separate assessment for inspection costs at a per 
unit price. All handlers would pay the same price per bag for 
inspection, whether exempt or not. Under such a contract, the larger 
volume handlers would pay more of the inspection costs because they 
handle so many more units of onions. In this manner, the burden of 
inspection costs for smaller volume handlers could be minimized. This 
was discussed with representatives of the inspection service.
    A Washington State inspector confirmed that travel costs would be 
lessened if an inspector was based in Walla Walla. However, the 
inspector indicated that $.04 per 50-pound unit would be the minimum 
cost for the inspection. Costs could increase depending on the 
workload. If the workload was light, such as late in the season when 
the quantities of onions are diminishing, it could be more costly for 
an inspector to conduct inspections on smaller lots. It could be 
necessary to convert the cost to an hourly cost, which would exceed 
$.04 per 50-pound unit.
    There have been discussions regarding contractual relationships 
with the inspection service but factors such as inspection of small 
quantities would need to be addressed in the contract. The inspector 
testified that the inspection office must cover the cost of inspectors 
and if there was not a full days work in Walla Walla, the inspector 
would need to travel elsewhere. These situations would need to be 
factored into any contractual agreements. A witness for the proposals 
testified that because of the variables associated with inspecting 
Walla Walla sweet onions, it is estimated the cost of inspection would 
range between $.04 and $.06 per 50-pound unit if the per unit price 
were used in a contractual agreement. The committee could consider only 
contracting with the inspection service during the busiest parts of the 
season in order to keep the inspection cost lower. The committee could 
also consider only regulating for part of the season.
    Another option the committee developed to address the issues of 
costs on small handlers would provide an exemption for handlers who 
handle up to, but not more than 2,000 pounds of Walla Walla sweet 
onions per shipment. These handlers would be exempt from inspection 
requirements, but these exempt onions would still be required to meet 
the quality and size requirements in effect at the time of shipment. 
Handlers could make more than one exempt shipment per day as long as 
each shipment was at or below the 2,000-pound exemption. These exempt 
onions would not be exempt from assessments. The committee would be 
able to recommend modification of the minimum quantity exemption 
through informal rulemaking, if necessary. The committee would be 
responsible for monitoring compliance with this proposal. If necessary, 
the

[[Page 50812]]

committee would conduct spot inspections at the committee's expense to 
ensure that inspection-exempt onions were meeting the established 
quality and size regulations.
    Record testimony indicated the implementation of these proposals 
could necessitate that the committee increase the manager's work hours 
in order to monitor compliance with these provisions. This could result 
in the need to recommend an increase in the marketing order assessment 
rate. However, an increase is not expected because the increased 
production, demand, and expanded markets would help to supply ample 
funds to administer the program without increasing the assessment rate.
    When the committee was considering amending the marketing order to 
include quality and size requirements, a compliance subcommittee was 
appointed to address concerns of small producers and handlers. The 
subcommittee is composed of producers and handlers who developed the 
minimum quantity exemption provisions of the committee's proposals. The 
subcommittee considered different options during their deliberations 
and determined that the current proposed amendments were the most 
advantageous to small growers and handlers while still allowing quality 
objectives to be met.
    Inspection requirements would not apply to shipments of Walla Walla 
sweet onions that are 2,000 pounds or less. However, these onions would 
be required to meet any minimum requirements in effect at the time of 
shipment. This would be enforced through periodic spot examinations 
conducted by the committee. A general consensus among industry members 
was that establishing a minimum quantity exemption was necessary to 
relieve any undue financial burden on small volume handlers. The 
committee would be responsible for monitoring compliance with this 
proposal by conducting spot inspections, if necessary, at the 
committee's expense. It is estimated that compliance with these 
proposals could increase administrative costs for the committee by 
$3,000, or a 3 percent increase in the current committee budget.
    As previously stated, 7 commercial handlers pack 90 percent of the 
industry's crop. Approximately 26 handlers handle the remaining 10 
percent. With the 2,000 pound inspection exemption implemented, it is 
estimated that 50 percent of the remaining 26 handlers would be exempt 
from mandatory inspection. This represents approximately 42 acres or 
25,000 50-lb. units, which is 5 percent of the crop. Therefore, it 
appears that at least 13 handlers would be exempt from inspection, 
while 95 percent of the production would still be inspected. This 
proposed amendment would minimize the impact on small handlers without 
jeopardizing quality objectives.
    These exempt onions would not be exempt from assessments. In 
addition, exempt onions would still be required to meet the minimum 
quality and size requirements established by the committee and approved 
by the Secretary. Committee staff would conduct spot inspections to 
monitor the exempt handlers' activities. The proposal allows for 
modification of this provision depending on industry needs. The 
committee does not believe it would ever recommend not having a minimum 
quantity exemption.
    A witness for the proposals testified that the only cost increase 
would be the cost of inspection. He further stated that the cost of 
inspection is a minor cost item, compared to labor and growing costs. 
Walla Walla sweet onion production is labor-intensive and high cost. A 
premium price is necessary for the onions to pay the costs of 
production.
    This witness testified that a grower normally has $1,800 to $2,000 
an acre invested in production prior to harvest. Using this estimate 
and assuming a yield of 190 50-pound units per acre, inspection costs 
(estimated at $.04 to $.06 per 50-pound unit) are estimated to be $7.60 
to $11.40 per acre, or an estimated 0.4 to 0.6 percent increase of pre-
harvest cost.
    Following is an example of possible costs associated with 
implementing quality and size standards. Testimony revealed that if a 
U.S. Commercial grade were established as a minimum quality standard, 5 
to 10 percent of the onions would not meet that grade and would have to 
be disposed of in secondary outlets. Using last year's production 
figures (1996-97), 666,000 50-pound containers were produced for sale. 
If 10 percent would not make U.S. Commercial grade, 66,600 50-pound 
containers would need to be disposed of in secondary outlets. It is 
estimated that 5 percent of the crop, or 33,300 pounds, would be exempt 
from inspection. Therefore, approximately 566,100 50-pound containers 
would need to be inspected. Using the high inspection cost estimate of 
$.06 per container, inspection costs for the entire crop would be 
$33,966. Seven commercial packing houses pack 90 percent of the crop 
which would account for $30,569.40 of the costs. The remaining 26 small 
handlers would be responsible for the remaining inspection costs of 
$3,396.60, or approximately $131 per handler for inspection fees for 
that season.
    Minimum quality and size standards would maintain the integrity of 
the product so that the commodities' overall quality image is not 
diminished by a low quality sample. The principle objective of a 
grading system is to make the market work more efficiently. Minimum 
quality and size requirements would improve information between buyers 
and sellers. Contracts could be made based on grade specifications, and 
buyers need not personally inspect each lot of product. Standardization 
of quality and size reduces uncertainty between buyers and sellers, and 
this helps reduce marketing costs. The goal of an effective grading 
system is to improve quality and size. Minimum quality and size 
standards would help ensure that substandard produce does not find its 
way to the market and destroy consumer confidence and harm producers' 
returns.
    The ability of producers of Walla Walla sweet onions to increase 
the demand for their product depends on their ability to differentiate 
their product and to create a favorable image (including quality) with 
consumers. In recent years, this favorable image has deteriorated. 
Culling out low quality produce of undesirable size, even though the 
demand for it may be elastic, may increase total returns. The price 
increase from the higher quality sold is expected to be large enough to 
offset the effect of the reduced quantity sold, even after the costs of 
culling are covered.
    Record evidence also shows that the collection of information under 
the marketing order would not be effected if the amendments were made 
to the marketing order. No increase in information collection would 
occur with the adoption of the amendments alone. However, if these 
proposals are implemented and the committee recommends regulations to 
impose quality and size requirements, it is possible that additional 
information would be needed from handlers to aid in administering the 
program effectively. It is also possible that because inspection 
certificates would be received by the committee, needed information 
could be collected from the certificates and the information collection 
requirements could be reduced. Whatever information collection changes 
result from any regulations, the committee and the Department would 
submit such changes to the Office of Management and Budget (OMB) for 
approval. Current information collection requirements for

[[Page 50813]]

part 956 are approved by OMB under OMB number 0581-0172.
    The proposed amendment to modify the name of the committee from the 
Walla Walla Sweet Onion Committee to the Walla Walla Sweet Onion 
Marketing Committee would have no regulatory impact on handlers or 
growers.
    Accordingly, this action would not impose any additional reporting 
or recordkeeping requirements on either small or large Walla Walla 
sweet 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 proposed rule. All of these 
amendments are designed to enhance the administration and functioning 
of the marketing order to the benefit of the industry.
    While the implementation of quality and size requirements may 
impose some additional costs on handlers, the costs are minimal and 
uniform on all handlers. Some of these costs may be passed on to 
growers. However, these costs would be offset by the benefits derived 
by the operation of the marketing order. In addition, the meetings 
regarding these proposals as well as the hearing date were widely 
publicized throughout the Walla Walla Sweet onion production area 
industry and all interested persons were invited to attend the meetings 
and the hearing and participate in committee deliberations on all 
issues. All committee meetings 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 because the 
committee would like to have the opportunity to discuss these 
amendments if they are implemented and recommend appropriate 
regulations prior to the 1999 season which starts in June 1999. 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 proposed herein have been reviewed under Executive 
Order 12988, Civil Justice Reform. They are not intended to have 
retroactive effect. If adopted, the proposed amendments would not 
preempt any State or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with the amendments.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.

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 hereby proposed to be 
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 hereby proposed to be 
amended, regulate the handling of Walla Walla sweet onions 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 hereby proposed to be 
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; and
    (4) All handling of Walla Walla sweet onions grown in the 
production area as defined in the marketing agreement and order, as 
hereby proposed to be amended, is in the current of interstate or 
foreign commerce or directly burdens, obstructs, or affects such 
commerce.

List of Subjects in 7 CFR Part 956

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

Recommended Amendment of the Marketing Agreement and Order

    For the reasons set out in the preamble, 7 CFR part 956 is proposed 
to be amended as follows:

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

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

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

    2. In part 956, new Secs. 956.15 and 956.16 are added to read as 
follows:


Sec. 956.15  Grade and size.

    Grade means any of the officially established grades of onions, 
including maturity requirements and size means any of the officially 
established sizes of onions as set forth in the United States standards 
for grades of onions or amendments thereto, or modifications thereof, 
or variations based thereon, or States of Washington or Oregon 
standards of onions or amendments thereto or modifications thereof or 
variations based thereon, recommended by the committee and approved by 
the Secretary.


Sec. 956.16  Pack.

    Pack means a quantity of Walla Walla Sweet Onions specified by 
grade, size, weight, or count, or by type or condition of container, or 
any combination of these recommended by the committee and approved by 
the Secretary.


Sec. 956.20  [Amended]

    3. In Sec. 956.20, paragraph (a) is amended by adding the word 
``Marketing'' immediately following the word ``Onion'' in the first 
sentence.
    4. In part 956, a new Sec. 956.60 is added to read as follows:


Sec. 956.60  Marketing policy.

    (a) Preparation. Prior to each marketing season, the committee 
shall consider and prepare a proposed policy for the marketing of Walla 
Walla Sweet Onions. In developing its marketing policy, the committee 
shall investigate

[[Page 50814]]

relevant supply and demand conditions for Walla Walla Sweet Onions. In 
such investigations, the committee shall give appropriate consideration 
to the following:
    (1) Market prices for sweet onions, including prices by variety, 
grade, size, quality, and maturity, and by different packs;
    (2) Supply of sweet onions by grade, size, quality, maturity, and 
variety in the production area and in other sweet onion producing 
sections;
    (3) The trend and level of consumer income;
    (4) Establishing and maintaining orderly marketing conditions for 
Walla Walla Sweet Onions;
    (5) Orderly marketing of Walla Walla Sweet Onions as will be in the 
public interest; and
    (6) Other relevant factors.
    (b) Reports. (1) The committee shall submit a report to the 
Secretary setting forth the aforesaid marketing policy, and the 
committee shall notify producers and handlers of the contents of such 
report.
    (2) In the event it becomes advisable to shift from such marketing 
policy because of changed supply and demand conditions, the committee 
shall prepare an amended or revised marketing policy in accordance with 
the manner previously outlined. The committee shall submit a report 
thereon to the Secretary and notify producers and handlers of the 
contents of such report on the revised or amended marketing policy.
    5. Section 956.62 is revised to read as follows:


Sec. 956.62  Issuance of regulations.

    (a) Except as otherwise provided in this part, the Secretary shall 
limit the shipment of Walla Walla Sweet Onions by any one or more of 
the methods hereinafter set forth whenever the Secretary finds from the 
recommendations and information submitted by the committee, or from 
other available information, that such regulation would tend to 
effectuate the declared policy of the Act. Such limitation may:
    (1) Regulate in any or all portions of the production area, the 
handling of particular grades, sizes, qualities, or maturities of any 
or all varieties of Walla Walla Sweet Onions, or combinations thereof, 
during any period or periods;
    (2) Regulate the handling of particular grades, sizes, qualities, 
or maturities of Walla Walla Sweet Onions differently, for different 
varieties or packs, or for any combination of the foregoing, during any 
period or periods;
    (3) Provide a method, through rules and regulations issued pursuant 
to this part, for fixing the size, capacity, weight, dimensions, 
markings or pack of the container or containers, which may be used in 
the packaging or handling of Walla Walla Sweet Onions, including 
appropriate logo or other container markings to identify the contents 
thereof;
    (4) Regulate the handling of Walla Walla Sweet Onions by 
establishing, in terms of grades, sizes, or both, minimum standards of 
quality and maturity.
    (b) The Secretary may amend any regulation issued under this part 
whenever the Secretary finds that such amendment would tend to 
effectuate the declared policy of the Act. The Secretary may also 
terminate or suspend any regulation or amendment thereof whenever the 
Secretary finds that such regulation or amendment obstructs or no 
longer tends to effectuate the declared policy of the Act.
    6. Section 956.64 is revised to read as follows:


Sec. 956.64  Minimum quantities.

    During any period in which shipments of Walla Walla Sweet Onions 
are regulated pursuant to this part, each handler may handle up to, but 
not to exceed, 2,000 pounds of Walla Walla Sweet Onions per shipment 
without regard to the inspection requirements of this part: Provided, 
That such Walla Walla Sweet Onion shipments meet the minimum 
requirements in effect at the time of the shipment pursuant to 
Sec. 956.62. The committee, with the approval of the Secretary, may 
recommend modifications to this section and the establishment of such 
other minimum quantities below which Walla Walla Sweet Onion shipments 
will be free from the requirements in, or pursuant to, Secs. 956.42, 
956.62, 956.63, and 956.70, or any combination thereof.
    7. In part 956, a new center heading and Sec. 956.70 are added to 
read as follows:

Inspection


Sec. 956.70  Inspection and certification.

    (a) During any period in which shipments of Walla Walla Sweet 
Onions are regulated pursuant to this subpart, no handler shall handle 
Walla Walla Sweet Onions unless such onions are inspected by an 
authorized representative of the Federal-State Inspection Service, or 
such other inspection service as the Secretary shall designate and are 
covered by a valid inspection certificate, except when relieved from 
such requirements pursuant to Secs. 956.63 and 956.64, or both. Upon 
recommendation of the committee, with approval of the Secretary, 
inspection providers and certification requirements may be modified to 
facilitate the handling of Walla Walla Sweet Onions.
    (b) Regrading, resorting, or repacking any lot of Walla Walla Sweet 
Onions shall invalidate prior inspection certificates insofar as the 
requirements of this section are concerned. No handler shall ship Walla 
Walla Sweet Onions after they have been regraded, resorted, repacked, 
or in any other way further prepared for market, unless such onions are 
inspected by an authorized representative of the Federal-State 
Inspection Service, or such other inspection service as the Secretary 
shall designate: Provided, That such inspection requirements on 
regraded, resorted, or repacked Walla Walla Sweet Onions may be 
modified, suspended, or terminated under rules and regulations 
recommended by the committee, and approved by the Secretary.
    (c) Upon recommendation of the committee, and approval of the 
Secretary, all Walla Walla Sweet Onions that are required to be 
inspected and certified in accordance with this section shall be 
identified by appropriate seals, stamps, tags, or other identification 
to be furnished by the committee and affixed to the containers by the 
handler under the direction and supervision of the Federal-State or 
Federal inspector, or the committee. Master containers may bear the 
identification instead of the individual containers within said master 
container.
    (d) Insofar as the requirements of this section are concerned, the 
length of time for which an inspection certificate is valid may be 
established by the committee with the approval of the Secretary.
    (e) When Walla Walla Sweet Onions are inspected in accordance with 
the requirements of this section, a copy of each inspection certificate 
issued shall be made available to the committee by the inspection 
service.
    (f) The committee may enter into an agreement with an inspection 
service with respect to the costs of the inspection as provided by 
paragraph (a) of this section, and may collect from handlers their 
respective pro rata shares of such costs.

    Dated: September 17, 1998.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
[FR Doc. 98-25400 Filed 9-22-98; 8:45 am]
BILLING CODE 3410-02-P