[Federal Register Volume 64, Number 20 (Monday, February 1, 1999)]
[Rules and Regulations]
[Pages 4928-4934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2371]



[[Page 4927]]

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Part II





Department of Agriculture





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Agricultural Marketing Service



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7 CFR Part 956



Sweet Onions Grown in the Walla Walla Valley of Southeast Washington 
and Northeast Oregon; Order Amending Marketing Agreement and Order No. 
956; Final Rule

  Federal Register / Vol. 64, No. 20 / Monday, February 1, 1999 / Rules 
and Regulations  

[[Page 4928]]



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; Order Amending Marketing Agreement and 
Order No. 956

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends the marketing agreement and order 
(order) for sweet onions grown in the Walla Walla Valley of Southeast 
Washington and Northeast Oregon. The amendments were submitted by the 
Walla Walla Sweet Onion Committee (committee), the agency responsible 
for local administration of the order. The changes 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 minor change is made in 
the committee's name. These changes were favored by Walla Walla Sweet 
Onion growers in a mail referendum and will improve the operation and 
functioning of the Walla Walla Sweet Onion marketing order program.

EFFECTIVE DATE: February 2, 1999.

FOR FURTHER INFORMATION CONTACT: Robert Curry, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, Northwest Marketing Field Office, 1220 SW Third Avenue, room 
369, Portland, Oregon 97204; telephone: (503) 326-2724, or Fax: (503) 
326-7440; or Anne M. Dec, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, room 2525-S, Washington, DC 20250-
0200; telephone: (202) 720-2491, or Fax: (202) 205-6632. Small 
businesses may request information on compliance with this regulation, 
or obtain a guide on complying with fruit, vegetable, and specialty 
crop marketing agreements and orders 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). Recommended Decision 
and Opportunity to File Written Exceptions issued on September 17, 
1998, and published in the Federal Register on September 23, 1998 (63 
FR 50802). Secretary's Decision and Referendum Order issued November 
13, 1998, and published in the Federal Register on November 19, 1998 
(63 FR 64215).
    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

    This final rule was formulated on the record of a public hearing 
held in Walla Walla, Washington, on April 7, 1998, to consider 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 
collectively as the ``order.'' The hearing was held 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 proceedings to 
formulate marketing agreements and marketing orders (7 CFR part 900). 
The Notice of Hearing contained amendment proposals submitted by the 
committee and the U.S. Department of Agriculture.
    The committee's proposals pertained to adding 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. No conforming changes have been deemed 
necessary.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of the Agricultural Marketing Service (AMS) 
on September 17, 1998, filed with the Hearing Clerk, U.S. Department of 
Agriculture, a Recommended Decision and Opportunity to File Written 
Exceptions thereto by October 23, 1998. None were received.
    A Secretary's Decision and Referendum Order was issued on November 
13, 1998, directing that a referendum be conducted during the period 
November 25 through December 10, 1998, among growers of Walla Walla 
sweet onions to determine whether they favored the proposed amendments 
to the order. In the referendum, both amendments were favored by more 
than two-thirds of the growers voting in the referendum by number and 
volume.
    The amended marketing agreement was subsequently mailed to all 
Walla Walla sweet onion handlers in the production area for their 
approval. The marketing agreement was approved by handlers representing 
more than 50 percent of the volume of Walla Walla sweet onions handled 
by all handlers during the representative period of June 1, 1997, 
through May 31, 1998.

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 
final 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.

[[Page 4929]]

    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 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

[[Page 4930]]

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 
will 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 will 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 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 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 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

[[Page 4931]]

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 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 amendments 
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 amendments set forth in this rule are 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 by conducting 
spot inspections, if necessary, at the committee's expense. It is 
estimated that compliance activities 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 
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 amendment 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 amendments 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 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

[[Page 4932]]

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 by these amendments to the 
marketing order. No increase in information collection will occur with 
the adoption of the amendments alone. However, if these amendments 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 Part 956 are 
approved by OMB under OMB number 0581-0172.
    The amendment to modify the name of the committee from the Walla 
Walla Sweet Onion Committee to the Walla Walla Sweet Onion Marketing 
Committee will have no regulatory impact on handlers or growers.
    Accordingly, this action will 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 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 amendments 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 were invited to submit information 
on the regulatory and informational impacts of this action on small 
businesses.

Civil Justice Reform

    The amendments contained in this rule have been reviewed under 
Executive Order 12988, Civil Justice Reform. They are not intended to 
have retroactive effect. The amendments will 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.

Order Amending the Order Regulating the Handling of Sweet Onions 
Grown in the Walla Walla Valley of Southeast Washington and 
Northeast Oregon

Findings and Determinations

    The findings and determinations hereinafter set forth are 
supplementary and in addition to the findings and determinations 
previously made in connection with the issuance of the order; and all 
of 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.
    (a) Findings and Determinations Upon the Basis of the Hearing 
Record.
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601 et seq.), and the applicable 
rules of practice and procedure effective thereunder (7 CFR part 900), 
a public hearing was held upon the proposed amendments to the Marketing 
Agreement and Order No. 956 (7 CFR part 956), regulating the handling 
of sweet onions grown in the Walla Walla Valley of Southeast Washington 
and Northeast Oregon.
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, it is found that:
    (1) The marketing agreement and order, as hereby amended, and all 
of the terms and conditions thereof, will tend to effectuate the 
declared policy of the Act;
    (2) The marketing agreement and order, as hereby amended, regulate 
the handling of sweet onions grown in the production area in the same 
manner as, and is applicable only to persons in the respective classes 
of commercial and industrial activity specified in the marketing order 
upon which hearings have been held;
    (3) The marketing agreement and order, as hereby amended, are 
limited in application to the smallest regional production area which 
is practicable, consistent with carrying out the declared policy of the 
Act, and the issuance of several orders applicable to subdivisions of 
the production area would not effectively carry out the declared policy 
of the Act;
    (4) The marketing agreement and order, as hereby amended, 
prescribe, insofar as practicable, such different terms applicable to 
different parts of the production area as are necessary to give due 
recognition to the differences in the production and marketing of sweet 
onions grown in the production area; and

[[Page 4933]]

    (5) All handling of sweet onions grown in the production area is in 
the current of interstate or foreign commerce or directly burdens, 
obstructs, or affects such commerce.
    (b) Additional findings. It is necessary and in the public interest 
to make these order amendments effective one day after publication. A 
later effective date would unnecessarily delay the implementation of 
the amendments and the improvement in operation of the marketing order 
program. The committee, producers and handlers need as much time as 
possible to make plans to implement the amended order and discuss any 
needed changes to the regulations and committee operating procedures. 
Furthermore, the fiscal period for 1999 begins on June 1.
    In view of the foregoing, it is hereby found and determined that 
good causes exists for making these amendments effective one day after 
publication, and that it would be contrary to the public interest to 
delay the effective date of these amendments for 30 days after 
publication in the Federal Register (5 U.S.C. 553).
    (c) Determinations. It is hereby determined that:
    (1) Handlers (excluding cooperative associations of producers who 
are not engaged in processing, distributing, or shipping Walla Walla 
sweet onions covered by the order as hereby amended) who, during the 
period June 1, 1997, through May 31, 1998, handled 50 percent or more 
of the volume of such onions covered by said order, as hereby amended, 
have signed an amended marketing agreement; and
    (2) The issuance of this amendatory order is favored or approved by 
at least two-thirds of the producers who participated in a referendum 
on the question of approval and who, during the period June 1, 1997, 
through May 31, 1998 (which has been deemed to be a representative 
period), have been engaged within the production area in the production 
of such onions for fresh market.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of sweet onions grown in the Walla Walla Valley of 
Southeast Washington and Northeast Oregon, shall be in conformity to, 
and in compliance with, the terms and conditions of the said order as 
hereby amended as follows:
    The provisions of the proposed marketing agreement and order 
amendments contained in the Secretary's Decision issued by the 
Administrator on November 13, 1998, and published in the Federal 
Register on November 19, 1998, shall be and are the terms and 
provisions of this order amending the order and are set forth in full 
herein.

List of Subjects in 7 CFR Part 956

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR Part 956 is 
amended as follows:

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

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

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

    2. In part 956, Sec. 956.14 is added and reserved, and 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 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

[[Page 4934]]

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 or 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: January 26, 1999.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
[FR Doc. 99-2371 Filed 1-29-99; 8:45 am]
BILLING CODE 3410-02-P