[Federal Register Volume 65, Number 11 (Tuesday, January 18, 2000)]
[Rules and Regulations]
[Pages 2526-2529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1049]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV00-959-1 FR]


Onions Grown in South Texas; Decreased Assessment Rate

AGENCY:  Agricultural Marketing Service, USDA.

ACTION:  Final rule.

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SUMMARY:  This rule decreases the assessment rate established for the 
South Texas Onion Committee (Committee) for the 1999-2000 and 
subsequent fiscal periods from $0.05 to $0.04 per 50-pound container or 
equivalent of onions handled. The Committee is responsible for local 
administration of the marketing order which regulates the handling of 
onions grown in South Texas. Authorization to assess onion handlers 
enables the Committee to incur expenses that are reasonable and 
necessary to administer the program. The fiscal period began August 1 
and ends July 31. The assessment rate will remain in effect 
indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE:  January 19, 2000.

FOR FURTHER INFORMATION CONTACT:  Cynthia Cavazos, Marketing Assistant, 
McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, 1313 E. Hackberry; telephone: (956) 682-2833, Fax: (956) 682-
5942; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 720-5698.
    Small businesses may request information on complying 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) 
720-5698, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION:  This rule is issued under Marketing 
Agreement No. 143 and Order No. 959, both as amended (7 CFR part 959), 
regulating the handling of onions grown in South Texas, hereinafter 
referred to as the ``order.'' The marketing agreement and order are 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''

[[Page 2527]]

    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, South Texas 
onion handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate issued herein will be applicable to all assessable 
onions beginning August 1, 1999, and continue until amended, suspended, 
or terminated. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. Such handler is afforded the opportunity for a hearing on 
the petition. After the hearing the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction to review the 
Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    This rule decreases the assessment rate established for the 
Committee for the 1999-2000 and subsequent fiscal periods from $0.05 to 
$0.04 per 50-pound container or equivalent of onions handled.
    The South Texas onion marketing order provides authority for the 
Committee, with the approval of the Department, to formulate an annual 
budget of expenses and collect assessments from handlers to administer 
the program. The members of the Committee are producers and handlers of 
South Texas onions. They are familiar with the Committee's needs and 
with the costs for goods and services in their local area and are thus 
in a position to formulate an appropriate budget and assessment rate. 
The assessment rate is formulated and discussed in a public meeting. 
Thus, all directly affected persons have an opportunity to participate 
and provide input.
    For the 1997-98 and subsequent fiscal periods, the Committee 
recommended, and the Department approved, an assessment rate of $0.05 
per 50-pound container or equivalent that would continue in effect from 
fiscal period to fiscal period unless modified, suspended, or 
terminated by the Secretary upon recommendation and information 
submitted by the Committee or other information available to the 
Secretary.
    The Committee, in a mail vote, unanimously recommended 1999-2000 
expenses of $271,000 for personnel, office, compliance, promotion, and 
research expenses. These expenses were approved in July 1999. The 
assessment rate and specific funding for research and promotion 
projects were to be recommended at a later Committee meeting.
    The Committee subsequently met on September 16, 1999, and 
recommended 1999-2000 expenditures of $301,000 and an assessment rate 
of $0.04 per 50-pound container or equivalent of onions. In comparison, 
last year's budgeted expenditures were $271,000. The assessment rate of 
$0.04 is $0.01 lower than the rate currently in effect. The Committee 
voted to lower its assessment rate because at the current rate of 
assessment, income would have exceeded anticipated expenses by about 
$74,000 and the projected reserve on July 31, 2000 ($458,720), would 
have exceeded the level the Committee believed to be adequate to 
administer the program.
    The major expenditures recommended by the Committee for the 1999-
2000 fiscal period include $97,200 for administrative expenses, $34,800 
for compliance, $36,000 for promotion, and $133,000 for research 
projects. Budgeted expenses for these items in 1998-99 were $94,000, 
$36,000, $33,000, and $108,000, respectively.
    The assessment rate recommended by the Committee was derived by 
dividing anticipated expenses by expected shipments of South Texas 
onions. Onion shipments for the year are estimated at 7.5 million 50-
pound equivalents, which should provide $300,000 in assessment income. 
Income derived from handler assessments, along with interest income and 
funds from the Committee's authorized reserve, should be adequate to 
cover budgeted expenses. Funds in the reserve (currently $384,720) will 
be kept within the maximum permitted by the order (approximately two 
fiscal periods' expenses; Sec. 959.43).
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and information submitted by the 
Committee or other available information.
    Although this assessment rate will be in effect for an indefinite 
period, the Committee will continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or the 
Department. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department will 
evaluate Committee recommendations and other available information to 
determine whether modification of the assessment rate is needed. 
Further rulemaking will be undertaken as necessary. The Committee's 
1999-2000 budget and those for subsequent fiscal periods will be 
reviewed and, as appropriate, approved by the Department.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 80 producers of South Texas onions in the 
production area and approximately 37 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (SBA) (13 CFR 121.601) as 
those having annual receipts less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000.
    Most of the handlers are vertically integrated corporations 
involved in producing, shipping, and marketing onions. For the 1998-99 
marketing year, onions produced on 13,782 acres were shipped by the 
industry's 37 handlers with the average and median volume handled being 
147,669 and 102,478 fifty-pound bag equivalents, respectively. In terms 
of production value, total revenues for the 37 handlers were estimated 
to be $43.7 million, with average and median revenues being $1.1 
million, and $820,000, respectively.

[[Page 2528]]

    The South Texas onion industry is characterized by producers and 
handlers whose farming operations generally involve more than one 
commodity, and whose income from farming operations is not exclusively 
dependent on the production of onions. Alternative crops provide an 
opportunity to utilize many of the same facilities and equipment not in 
use when the onion production season is complete. For this reason, 
typical onion producers and handlers either produce multiple crops or 
alternate crops within a single year.
    Based on the SBA's definition of small entities, the Committee 
estimates that all the 37 handlers regulated by the order would be 
considered small entities if only their spring onion revenues are 
considered. However, revenues from other productive enterprises would 
likely push a large number of these handlers above the $5,000,000 
annual receipt threshold. All of the 80 producers may be classified as 
small entities based on the SBA definition if only their revenue from 
spring onions is considered. When revenues from all sources is 
considered, a majority of the producers would not be considered small 
entities because receipts would exceed $500,000.
    This rule decreases the assessment rate established for the 
Committee and collected from handlers for the 1999-2000 and subsequent 
fiscal periods from $0.05 to $0.04 per 50-pound container or equivalent 
of onions. The Committee recommended 1999-2000 expenditures of $301,000 
and an assessment rate of $0.04 per 50-pound container or equivalent. 
The assessment rate of $0.04 is $0.01 lower than the 1998-99 rate. The 
quantity of assessable onions for the 1999-2000 fiscal period is 
estimated at 7.5 million 50-pound equivalents. Income derived from 
handler assessments, along with interest income and funds from the 
Committee's authorized reserve, should be adequate to cover budgeted 
expenses.
    The major expenditures recommended by the Committee for the 1999-
2000 fiscal period include $97,200 for administrative expenses, $34,800 
for compliance, $36,000 for promotion, and $133,000 for research 
projects. Budgeted expenses for these items in 1998-99 were $94,000, 
$36,000, $33,000, and $108,000, respectively.
    The Committee voted to lower its assessment rate because at the 
current rate of assessment, income would have exceeded anticipated 
expenses by about $74,000 and the projected reserve on July 31, 2000 
($458,720), would have exceeded the level the Committee believed to be 
adequate to administer the program.
    The Committee's recommended 1999-2000 expenditures of $301,000, 
include increases in administrative and office salaries, and research 
programs. Prior to arriving at this budget, the Committee considered 
information from various sources, including the Research Subcommittee 
and the Market Development Subcommittee. Alternative expenditure levels 
were discussed by these groups, based upon the relative value of 
various research projects to the onion industry. The assessment rate of 
$0.04 per 50-pound carton or equivalent of assessable onions was then 
determined by dividing the total recommended budget by the quantity of 
assessable onions, estimated at 7.5 million 50-pound equivalents for 
the 1999-2000 fiscal period. This is approximately $1,000 below the 
anticipated expenses, which the Committee determined to be acceptable. 
Funds from the Committee's reserve would be used to make up the 
expected deficit.
    A review of historical production and marketing information 
indicates that the grower price for the 1999 marketing season could 
range between $7.00 and $12.00 per 50-pound container or equivalent of 
onions. Therefore, the estimated assessment revenue for the 1999-2000 
fiscal period as a percentage of total grower revenue could range 
between .571 and .333 percent.
    This action decreases the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the costs may be passed on to producers. However, decreasing the 
assessment rate reduces the burden on handlers, and may reduce the 
burden on producers. In addition, the Committee's meeting was widely 
publicized throughout the South Texas onion industry and all interested 
persons were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the September 
16, 1999, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large South Texas onion handlers. As 
with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    A proposed rule concerning this action was published in the Federal 
Register on November 26, 1999 (64 FR 66411). Copies of the proposed 
rule were also mailed or sent via facsimile to all onion handlers. 
Finally, the proposal was made available through the Internet by the 
Office of the Federal Register. A 30-day comment period ending December 
27, 1999, was provided for interested persons to respond to the 
proposal. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    Pursuant to 5 U.S.C. 553, it also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because the 1999-2000 
fiscal period began August 1, 1999, and the marketing order requires 
that the rate of assessment for each fiscal period apply to all 
assessable onions handled during such fiscal period. This action 
decreases the rate beginning with the 1999-2000 fiscal period. Further, 
handlers are aware of this rule which was recommended at a public 
meeting. Also, a 30-day comment period was provided for in the proposed 
rule, and no comments were received.

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 959 is 
amended as follows:

PART 959--ONIONS GROWN IN SOUTH TEXAS

    1. The authority citation for 7 CFR part 959 continues to read as 
follows:


    Authority:  7 U.S.C. 601-674.
    2. Section 959.237 is revised to read as follows:


Sec. 959.237  Assessment rate.

    On and after August 1, 1999, an assessment rate of $0.04 per 50-
pound

[[Page 2529]]

container or equivalent is established for South Texas onions.

    Dated: January 11, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-1049 Filed 1-14-00; 8:45 am]
BILLING CODE 3410-02-P