[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Rules and Regulations]
[Pages 41019-41023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19353]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV99-979-1 FIR]


Melons Grown in South Texas; Change in Container Regulation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
changing the handling regulation currently prescribed under the South 
Texas melon (cantaloupes and honeydews) marketing order. The marketing 
order regulates the handling of melons grown in South Texas and is 
administered locally by the South Texas Melon Committee (committee). 
This rule continues in effect changes to the dimensions of bulk 
containers used for shipping honeydew melons, requirements that these 
containers be octagonal or rectangular in shape, and the addition of a 
dimension tolerance for that container. It also continues the 
provisions allowing the committee to approve the use of experimental 
containers and melon shipments for experimental purposes, and the 
removal of two experimental containers that have not been used by the 
industry for several years. These changes were unanimously recommended 
by the committee and will enable handlers to compete more effectively 
in the marketplace.

EFFECTIVE DATE: August 30, 1999.

FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, McAllen Marketing 
Field Office, Marketing Order Administration Branch, F&V, AMS, USDA, 
1313 E. Hackberry, McAllen, Texas 78501; telephone; (956) 682-2833, 
Fax: (956) 682-5942; or George Kelhart, Technical Advisor, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
PO Box 96456, room 2525-S, Washington, DC 20090-6456; telephone: (202) 
720-2491; Fax: (202) 720-5698. Small businesses may request information 
on complying 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, PO Box 96456, Room 2525-S, 
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698, or E-mail:

[[Page 41020]]

Jay.G[email protected]. You may also view the marketing agreement and 
order small business compliance guide at the following web site: http:/
/www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 156 and Order No. 979 (7 CFR part 979), regulating the 
handling of melons grown in South Texas, hereinafter referred to as the 
``order.'' The marketing agreement and order are effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988 Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. 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 the date of the entry of the ruling.
    This rule continues in effect changes to the dimensions of bulk 
containers used for shipping honeydew melons, specifications for the 
shapes of these bulk containers, the addition of a dimension tolerance 
for that container, the addition of procedures that allow the committee 
to approve the use of experimental containers and melon shipments for 
experimental purposes, and the removal of two experimental containers 
that have not been used by the industry for several years. The changes 
will enable handlers to compete more effectively in the marketplace, 
better meet market needs, and prevent confusion in the industry. A 
subcommittee met on January 28, 1999, and unanimously recommended that 
the committee approve these changes to the regulation. The committee 
met and unanimously recommended the changes on March 30, 1999.
    Section 979.52 authorizes the issuance of regulations for grade, 
size, maturity, quality, and pack of any or all varieties of melons 
during any period. Section 979.54 authorizes the issuance of 
regulations that modify, suspend, or terminate requirements issued 
under Secs. 979.42, 979.52, or 979.60 to facilitate the handling of 
melons for special purposes. Section 979.55 requires adequate 
safeguards to ensure that melons handled under Sec. 979.54 are used for 
the stated purposes.

Changes to the Bulk Container Requirements for Honeydew Melons

    Section 979.304 of the order's rules and regulations sets container 
requirements for both cantaloupes and honeydew melons. Only honeydews 
are authorized to be packed in bulk containers. Thus, these changes to 
bulk container requirements do not apply to cantaloupes.
    Prior to the issuance of the interim final rule, Sec. 979.304(b)(4) 
authorized the use of a bulk container for honeydew melons and 
specified that the container be 48 inches long by 40 inches wide by 24 
inches deep or similar dimensions. The phrase ``or similar dimensions'' 
was included to provide flexibility recognizing that the dimensions of 
containers sometimes are a little less or more than those specified in 
the regulation. The committee determined that the provisions were too 
flexible, and that the lack of specificity could result in 
administrative, compliance, and enforcement problems.
    It now believes that a more precise tolerance is needed so there is 
no room for misinterpretation by the industry. The committee, 
therefore, recommended removing the phrase ``or similar dimensions'' 
and adding in its place provisions establishing a dimension tolerance 
of 1\1/2\ inch for each dimension. The 1\1/2\ inch tolerance for each 
dimension for this container will allow handlers to pack honeydew 
melons in containers with dimensions slightly different from the sizes 
specified in the regulation. Identifying a specific dimension tolerance 
in the regulation will prevent misunderstandings, and provide handlers 
the flexibility to use bulk containers with slight dimension variations 
when packing honeydew melons.
    The committee also recommended allowing the depth of the bulk 
container to range between 24 and 36 inches to permit melon handlers to 
pack larger or a greater number of honeydew melons in the container, if 
they desire. The industry's need to pack larger or a greater number of 
honeydews in the bulk container, depending on buyer or retailer needs, 
led to this committee recommendation for increased container 
flexibility.
    The committee further recommended that the shape of bulk containers 
used for honeydew melons be rectangular or octagonal. Currently, these 
are the only shapes used by handlers, and the limitation will not 
impose an added burden on handlers. The change is expected to foster 
compliance and simplify enforcement. Last season a total of 1,727 bulk 
containers were shipped by the industry, compared to 1,655 containers 
in 1997. Demand for bulk containers has increased in recent years 
because their use results in reduced costs to receivers. Bulk bins can 
be re-used, whereas other containers cannot. The cost of disposing of 
used containers has increased.

Addition of Provisions Allowing the Committee To Approve the Use of 
Experimental Containers and Melon Shipments for Experimental 
Purposes

    The market for both cantaloupes and honeydew melons continues to 
undergo rapid changes. Buyers, retailers, and consumers continually 
demand flexibility in container availability. The committee is always 
looking for ways to strengthen and expand the market for melons. Except 
for an experimental honeydew pony carton that was removed by the 
interim final rule, there were no provisions in place allowing the 
committee to approve melon shipments for experimental purposes nor in 
experimental containers unless informal rulemaking was initiated. There 
are times during the melon shipping season when the trade is interested 
in receiving melons in containers other than those authorized by the 
regulations. The industry has been using only fiberboard containers, 
and they are interested in experimenting with plastic bins.
    Not being able to respond quickly to market demands for testing 
different types of melon containers could have caused the South Texas 
melon industry to lose sales to competing melon-producing areas. 
Competition from other melon production areas demands that the Texas 
melon industry have the ability to quickly respond to buyer, retailer, 
and consumer demands for new containers. The committee may become aware 
of the need for new containers during the shipping season. The shipping 
season normally runs from

[[Page 41021]]

May 1 through June 20 each year. For the committee to respond quickly 
to market needs for containers, it should have flexibility to approve 
the use of experimental containers whenever the need arises. Also, 
melon-producing areas without marketing orders are not bound by 
container restrictions and have the flexibility to use different types 
and sizes of containers as needed by consumers and retailers. The added 
flexibility allows handlers to better meet buyers' needs.
    In addition, the committee recommended that provisions be added to 
the regulations to permit it to approve shipments for experimental 
purposes to allow the industry to test different types of melon 
shipments whenever needed to meet competition from other growing areas, 
and buyers' needs. Some handlers have expressed an interest in 
experimenting with the shipment of cantaloupe and honeydew melons in 
the same container.
    Establishing provisions in the regulations to allow the committee 
to approve the use of experimental containers will allow the industry 
to respond quickly to market needs for containers not approved under 
the order's container regulations. Establishing provisions in the 
regulations to allow the committee to approve shipments for 
experimental purposes will allow the industry to test different types 
of melon shipments when needed.
    Safeguards for these types of shipments are currently specified in 
paragraph (f) of Sec. 979.304. A handler wanting an exemption for an 
experimental container or experimental use would apply to the committee 
for a Certificate of Privilege. The Certificate would be issued by the 
committee after consideration of the application. Handlers using a 
Certificate of Privilege are required to report each exempt shipment to 
the committee. This enables the committee to easily track such 
shipments, and ensure compliance with the order's rules and 
regulations.
    Once the committee approves the use of experimental containers or 
experimental shipments, the industry will be able to determine the 
benefits and market acceptance of the containers and other types of 
shipments. Also, allowing handlers to ship melons in test containers 
enables the committee to determine whether such containers should be 
added to the permanent list of approved containers in the regulations.

Removal of Two Experimental Containers

    An experimental honeydew pony carton added in 1985 to paragraph 
(e)(3) and a cantaloupe carton added in 1990 to paragraph (e)(4) in 
Sec. 979.304 have not been used for several years. The committee, 
therefore, recommended that they be removed from the handling 
regulation.

Other Changes in the Regulations

    Prior to the issuance of the interim final rule, the name of one of 
the designated inspection offices and the telephone area codes of the 
designated inspection offices in Sec. 979.304(c)(4) were incorrect. To 
correct these references, the committee recommended that the name of 
the inspection office be changed to ``Texas Cooperative Inspection 
Program'' office and the telephone area codes be changed from ``210'' 
to ``956.''
    In addition, in Sec. 979.180 and Sec. 979.304, the word 
``cantaloup'' was misspelled. To correct the misspelling, all 
references to ``cantaloup'' were changed to ``cantaloupe'' by the 
interim final rule.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are 14 handlers of South Texas melons who are subject to 
regulation under the marketing order and approximately 33 melon growers 
in the regulated area. Small agricultural service firms have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts of less than $5,000,000, and small agricultural 
growers are defined as those having annual receipts of less than 
$500,000.
    Most of the handlers are vertically integrated corporations 
involved in producing, shipping, and marketing melons. For the 1997-98 
marketing year, 6,770 acres of production were shipped by the 
industry's 14 handlers; the average acreage and median acreage handled 
totaled 484 acres and 417 acres, respectively. In terms of production 
value, total revenues from the 14 handlers were estimated to be $16.4 
million.
    The Rio Grande Valley melon industry is characterized by growers 
and handlers whose farming operations generally involve more than one 
commodity, and whose income from farming operations is not exclusively 
dependent on the production of melons. Alternative crops provide an 
opportunity to utilize many of the same facilities and equipment not in 
use when the melon production season is complete. For this reason, 
typical melon growers and handlers either double-crop melons during 
other times of the year or produce alternate commodities, like onions.
    Based on the SBA's definition of small entities, the committee 
estimates that a majority of the 14 handlers regulated by the order 
would be considered small entities if only their spring melon revenues 
are considered. However, revenues from other productive enterprises 
would likely push a large number of these handlers above the $5,000,000 
annual receipt threshold. Of the 33 growers within the production area, 
few have sufficient acreage to generate sales in excess of $500,000; 
therefore, the majority of growers may be classified as small entities.
    This rule continues the changes to the container regulation to 
accurately identify the shapes and dimensions of bulk containers 
handlers use for shipping honeydew melons, the addition of procedures 
allowing the committee to approve use of experimental containers and 
melon shipments for experimental purposes, the removal of two 
experimental containers that have not been used by the industry for 
several years, and several minor modifications to update the 
regulations. These changes will enable handlers to compete more 
effectively in the marketplace, better meet market needs, and prevent 
confusion. A subcommittee met on January 28, 1999, and unanimously 
recommended that the committee approve these changes to the regulation. 
The committee met and unanimously recommended the changes on March 30, 
1999.
    Section 979.52 authorizes the issuance of regulations for grade, 
size, maturity, quality, and pack for any or all varieties of melons 
during any period. Section 979.54 authorizes the issuance of 
regulations that modify, suspend, or

[[Page 41022]]

terminate requirements issued under Secs. 979.42, 979.52, or 979.60 to 
facilitate handling of melons for special purposes. Section 979.55 
requries adequate safeguards to ensure that melons handled under 
Sec. 979.54 are used for the stated purpose.
    At its meeting on March 30, 1999, the committee unanimously 
recommended revising Sec. 979.304 as follows:
    (1) Modify the bulk container requirements to accurately identify 
the shapes and dimensions of bulk containers used for shipping honeydew 
melons;
    (2) Add provisions to allow the committee to approve the use of 
experimental containers and melon shipments for experimental purposes;
    (3) Remove two experimental containers that have not been used by 
the industry for several years; and
    (4) Make several minor modifications to update the regulations.

Changes in the Bulk Container Requirements for Honeydew Melons

    Prior to the issuance of the interim final rule, Sec. 979.304(b)(4) 
authorized the use of a bulk container for honeydew melons and 
specified that the container be 48 inches long by 40 inches wide by 24 
inches deep or similar dimensions. The committee recommended that the 
regulation specify that the bulk containers be rectangular or 
octagonal, the types of containers currently being used by the 
industry, in order to help administer the program. Making the 
regulation more specific will foster compliance and simplify 
enforcement. Last season 1,727 of these bulk containers were shipped by 
the industry. Specifying the shape of the bulk container in the 
regulation cleared up any misunderstanding that any shape bulk 
container could be used for shipping honeydew melons.
    The former regulation did not provide specific tolerances on the 
container dimensions, and the committee did not know exactly how 
``similar dimensions'' was being interpreted. Differences in 
interpretation among handlers and the industry regarding the phrase 
``or similar dimensions'' could have caused problems enforcing the 
marketing order program. A more precise tolerance was needed so that 
there was no room for misinterpretation by the industry. To clarify the 
industry's intentions, the committee recommended removing the phrase 
``or similar dimensions'' and adding in its place, ``A tolerance of 
1\1/2\ inch for each dimension shall be permitted.'' The committee 
believes the recommendation to provide a 1\1/2\ inch tolerance for each 
dimension on this container has provided handlers some flexibility to 
pack honeydew melons in containers with slightly different dimensions 
from the sizes specified in the regulation. Identifying specific 
dimension tolerances in the regulation also has prevented possible 
misunderstandings on authorized container dimensions.
    The committee also recommended increasing the depth allowance of 
the bulk container by 12 inches to permit melon handlers to pack larger 
or a greater number of honeydew melons in the container.
    Adding tolerances to the dimensions of the approved bulk container 
and increasing the depth allowance has allowed the melon industry to 
accept containers with slight dimension variations from box 
manufacturers. This has given handlers additional flexibility in making 
container purchases.
    The industry's need to pack larger or a greater number of honeydews 
in the bulk container, depending on buyer or retailer needs, led to the 
committee's recommendation to increase the depth allowance of the 
container by an additional 12 inches to permit a range from 24 to 36 
inches deep.

Addition of Provisions Allowing the Committee To Approve the Use of 
Experimental Containers and Melon Shipments for Experimental 
Purposes

    The marketplace continues to undergo rapid changes. Buyers, 
retailers, and consumers continually demand flexibility in container 
availability. The committee is always looking for ways to strengthen 
and expand the market for melons. Except for an experimental honeydew 
pony carton provision that was removed by the interim final rule, there 
were no procedures in place to allow the committee to approve melon 
shipments for experimental purposes nor in experimental containers 
unless they initiated informal rulemaking. There are times during the 
melon shipping season when the trade is interested in receiving melons 
in containers other than those authorized by the regulations. The 
industry has been using only fiberboard containers, and they are 
interested in experimenting with plastic bins. The committee did not 
have the flexibility to react quickly to the need for containers not 
approved for South Texas melon shipments. Not being able to respond 
quickly to market demands for testing different types of melon 
containers could have caused the South Texas melon industry to lose 
sales to competing melon-producing areas.
    Competition from other melon production areas demands that the 
Texas melon industry be able to quickly respond to buyer, retailer, and 
consumer demands for new containers. Because the melon regulatory 
period begins May 1 each year and runs through June 20, the committee 
is not able to meet, approve regulatory changes, and promptly complete 
the rulemaking process in order to approve various types of 
experimental containers. The industry may not be aware of the need for 
new containers until it is in the middle of its shipping season. For 
the committee to respond quickly to market needs for containers which 
were not currently authorized, it needed the flexibility to approve the 
use of experimental containers whenever the need arose. Also, melon-
producing areas without marketing orders are not bound by container 
restrictions and have the flexibility to use different types and sizes 
of containers as needed by consumers and retailers. The added 
flexibility will allow handlers to meet the competition from other 
areas and better meet buyers' needs. In addition, the committee 
recommended that provisions be added to the regulations to permit it to 
approve shipments for experimental purposes to allow the industry to 
test different types of melon shipments whenever needed. As mentioned 
before, some handlers have expressed an interest in experimenting with 
the shipment of cantaloupes and honeydew melons in the same container.
    Establishing provisions to allow the committee to approve the use 
of experimental containers will allow the industry to respond quickly 
to market needs for containers not approved under the orders's 
container regulations, and establishing provisions to authorize the 
committee to approve shipments for experimental purposes will allow the 
industry to test different types of melon shipments when needed. 
Because the committee has established safeguard for these types of 
experimental containers or experimental shipments, the industry will be 
able to determine the benefits and market acceptance of the containers 
or other types of shipments. Also, allowing handlers to ship melons in 
test containers will enable the committee to determine whether such 
containers should be added to the permanent list of approved 
containers.

Removal of Two Experimental Containers

    Two experimental containers in (e)(3) (a honeydew pony carton added 
in 1985) and (e)(4) (a cantaloupe carton added in 1990) of Sec. 979.304 
are obsolete and have not been used for several years, and the 
committee recommended that they be removed from the handling

[[Page 41023]]

regulation. The interim final rule removed these containers from the 
regulation.

Other Changes in the Regulations

    Prior to the interim final rule, the name and telephone area codes 
of an inspection office in Sec. 979.304(c)(4) were incorrect. To 
correct these references, the committee recommended that the name of 
the inspection office be changed to ``Texas Cooperative Inspection 
Program'' office and the telephone area codes be changed from ``210'' 
to ``956.''
    In Marketing Order No. 979 the correct spelling of ``cantaloupe'' 
is used, and in Secs. 979.180 and 979.304, ``cantaloup'' was 
misspelled. To correct the misspelling and for consistency, all 
references to ``cantaloup'' were changed to ``cantaloupe'' by the 
interim final rule.
    This rule will continue to permit the South Texas melon industry to 
experiment with different types of containers prior to adding them to 
their approved container list. The committee believes this will allow 
handlers to more effectively accommodate retailer and customer needs.
    The committee recommended these changes to assist the consuming 
public in receiving Texas melons in containers they desire. Permitting 
the South Texas melon industry to experiment with different types of 
containers without the need for rulemaking and adding tolerance to the 
approved honeydew bulk container have small entity orientation.
    An alternative to the recommended changes would have been to keep 
the regulations as they are, however:
    (1) It was the committee's desire to come up with a more workable 
bulk honeydew container regulation to make it more precise and 
eliminate potential problems. Not permitting a 1\1/2\ inch tolerance 
for each dimension on the bulk container could have prevented the 
industry from marketing honeydew melons in containers which might be 
manufactured slightly different from the sizes specified in the 
regulation.
    (2) Not permitting the committee to quickly approve shipments for 
experimental purposes exempt from regulations or in experimental 
containers without rulemaking could have hindered the industry's 
ability to respond to market needs and prevented it from marketing more 
melons. Not providing the committee the flexibility to quickly respond 
to market demands for test containers or shipments could have resulted 
in the industry losing sales to other melon producing areas.
    (3) The two permanent experimental containers were no longer needed 
because the containers have not been used for a number of years, and a 
new section was added to make it possible for the committee to quickly 
approve the use of experimental containers.
    (4) Not updating the name and telephone numbers of the inspection 
office to accurately reflect the correct information could have caused 
confusion in the industry.
    Although authorizing melon shipments for experimental purposes and 
the use of experimental containers will impose some additional 
reporting and recordkeeping requirements on melon handlers, this will 
be minimal. Currently, handlers making shipments of melons for special 
purposes, including experimental, are required to obtain a Certificate 
of Privilege to notify the committee of their intent to ship melons for 
these purposes. Also, handlers must prepare a special purpose shipment 
report on each shipment and forward it to the committee. The committee 
estimates that approximately two or four handlers might request 
approval for the use of experimental containers, which will increase 
the total reporting and recordkeeping burden by approximately .1 to .2 
hours, and this time to currently approved under OMB No. 0581-0178 by 
the Office of Management and Budget (OMB) in accordance with the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sectors. In addition, as noted in 
the initial regulatory flexibility analysis, the Department has not 
identified any relevant Federal rules and duplicate, overlap or 
conflict with this rule.
    Further, the committee's meeting was publicized throughout the 
melon industry and all interested persons were invited to attend the 
meeting and participate in committee deliberations. Like all committee 
meetings, the March 30, 1999, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue. The committee itself is composed of 10 members, of which 9 
are growers and handlers, and one represents the public. Also, the 
committee has a subcommittee to review certain issues and make 
recommendations to the committee. The subcommittee met on January 28, 
1999, and discussed this issue in detail. The meeting was a public 
meeting and both large and small entities were able to participate and 
express their views.
    An interim final rule concerning this action was published in the 
Federal Register on May 4, 1999. Copies of the rule were mailed by the 
committee's staff to all committee members and melon handlers. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register. That rule provided for a 60-day comment 
period which ended July 6, 1999. No comments were received.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing an interim final rule, without change, was published in the 
Federal Register (64 FR 23754, May 4, 1999) will tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 981

    Marketing agreements, Melons, Reporting and recordkeeping 
requirements.

PART 979--MELONS GROWN IN SOUTH TEXAS

    Accordingly, the intermin final rule amending 7 CFR part 979 which 
was published at 64 FR 23754 on May 4, 1999, is adopted as a final rule 
without change.

    Dated: July 23, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-19353 Filed 7-28-99; 8:45 am]
BILLING CODE 3410-02-M