[Federal Register Volume 67, Number 7 (Thursday, January 10, 2002)]
[Proposed Rules]
[Pages 1317-1319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-575]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV02-959-1 PR]


Onions Grown in South Texas; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the South Texas Onion Committee (Committee) for the 2001-02 and 
subsequent fiscal periods from $0.03 to $0.05 per 50-pound container or 
equivalent of onions handled. The Committee locally administers 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 begins August 1 and ends July 31. The 
assessment rate would remain in effect indefinitely unless modified, 
suspended, or terminated.

DATES: Comments must be received by February 11, 2002.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-8938, or e-mail: [email protected]. Comments should 
reference the docket number and the date and page number of this issue 
of the Federal Register and will be available for public inspection in 
the Office of the Docket Clerk during regular business hours, or can be 
viewed at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, Regional Manager, 
McAllen Marketing Field Office, Fruit and Vegetable Programs, 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, room 2525-S, P.O. Box 96456; Washington, DC 20090-6456; 
telephone: (202) 720-2491, Fax: (202) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
720-8938, 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 order is effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, South Texas 
onion handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as proposed herein would be applicable to all 
assessable onions beginning on August 1, 2001, 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 USDA 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 USDA 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 USDA'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 would increase the assessment rate established for the 
Committee for the 2001-02 and subsequent fiscal periods from $0.03 to 
$0.05 per 50-pound container or equivalent of onions.
    The South Texas onion marketing order provides authority for the 
Committee, with the approval of USDA,

[[Page 1318]]

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 2000-01 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate that would continue 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Committee or other information available to USDA.
    The Committee met on June 12, 2001, and unanimously recommended 
2001-02 expenses of $115,189.85 for personnel, office, compliance, and 
partial promotion expenses. 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 October 10, 2001, and recommended 
2001-02 expenditures of $449,189 and an assessment rate of $0.05 per 
50-pound container or equivalent of onions. Ten of the 11 committee 
members present voted in support of the $0.02 per 50-pound container 
equivalent increase. One committee member abstained from voting. In 
comparison, last year's budgeted expenditures were $306,740. The 
assessment rate of $0.05 is $0.02 higher than the rate currently in 
effect. The Committee recommended the increased rate to fund a major 
market development program to promote the consumption of South Texas 
onions, without having to draw a large amount from reserves. Without 
the increase, the Committee's reserve fund would drop to $52,576. The 
Committee believes that a reserve that low is not adequate for its 
operations.
    The major expenditures recommended by the Committee for the 2001-02 
fiscal period include $75,190 for administrative expenses, $30,000 for 
compliance, $254,000 for promotion, and $90,000 for research projects. 
Budgeted expenses for these items in 2000-01 were $87,109, $27,498, 
$39,500, and $122,200, respectively. In addition, $30,435 was expended 
for a retirement package for the outgoing Committee manager.
    The assessment rate recommended by the Committee was derived by 
dividing anticipated expenses by expected shipments of South Texas 
onions. Onion shipments for the fiscal period are estimated at 7.5 
million 50-pound equivalents, which should provide $375,000 in 
assessment income. Income derived from handler assessments, along with 
interest income and funds from the Committee's authorized reserve, 
would be adequate to cover budgeted expenses. Funds in the reserve 
(currently $276,705) would be kept within the maximum permitted by the 
order (approximately two fiscal periods' expenses, Sec. 959.43).
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Committee or other available 
information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee would 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 USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2001-02 budget and those 
for subsequent fiscal periods would be reviewed and, as appropriate, 
approved by USDA.

Initial 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 rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions 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 78 producers of onions in the production 
area and approximately 40 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration (13 CFR 121.201) as those having annual 
receipts less than $750,000, 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 2000-01 
marketing year, the industry's 40 handlers shipped onions produced on 
15,166 acres with the average and median volume handled being 208,700 
and 177,377 fifty-pound bag equivalents, respectively. In terms of 
production value, total revenues for the 40 handlers were estimated to 
be $73,879,800, with average and median revenues being $1,846,995 and 
$1,569,786, respectively.
    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 of the 40 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 78 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 are 
considered, a majority of the producers would not be considered small 
entities because receipts would exceed $750,000.
    This rule would increase the assessment rate established for the 
Committee and collected from handlers for the 2001-02 and subsequent 
fiscal periods from $0.03 to $0.05 per 50-pound container equivalent of 
onions. The Committee recommended 2001-02 expenditures of $449,189 and 
an assessment rate of $0.05 per 50-pound container or equivalent. The 
proposed assessment rate of $0.05 is $0.02 higher than the 2000-01 
rate. The quantity of

[[Page 1319]]

assessable onions for the 2001-02 fiscal period is estimated at 7.5 
million 50-pound equivalents. Thus, the $0.05 rate should provide 
$375,000 in assessment income. Income derived from handler assessments, 
along with interest income and funds from the Committee's authorized 
reserve, would be adequate to cover budgeted expenses.
    The major expenditures recommended by the Committee for the 2001-02 
fiscal period include $75,190 for administrative expenses, $30,000 for 
compliance, $254,000 for promotion, and $90,000 for research projects. 
Budgeted expenses for these items in 2000-01 were $87,109, $27,498, 
$39,500, and $122,200, respectively. In addition, $30,435 was expended 
for a retirement package for the outgoing Committee manager.
    The Committee recommended the increased rate to fund a major market 
development program to promote the consumption of South Texas onions, 
without having to draw a large amount from reserves. Without the 
increase, the Committee's reserve fund would drop to $52,576. The 
Committee believes that a reserve that low is not adequate for its 
operations.
    The Committee reviewed and recommended 2001-02 expenditures of 
$449,189, which included increases in research and promotion programs. 
Prior to arriving at this budget, the Committee considered information 
from various sources, including the Committee's Executive Committee, 
the Research Subcommittee, and the Market Development Subcommittee. 
Alternative expenditure levels were discussed by these groups, based 
upon the relative value of various research and promotion projects to 
the onion industry. The assessment rate of $0.05 per 50-pound 
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 2001-02 fiscal 
period. This is approximately $74,190 below the anticipated expenses, 
which the Committee determined to be acceptable.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the grower 
price for the 2001-02 fiscal period could range between $6 and $11 per 
50-pound equivalent of onions. Therefore, the estimated assessment 
revenue for the 2001-02 fiscal period as a percentage of total grower 
revenue could range between 0.45 and 0.83 percent.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to producers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Committee's meeting was widely 
publicized throughout the South Texas onion industry and all interested 
persons were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the October 
10, 2001, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit information on the regulatory and 
informational impacts of this action on small businesses.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large production area 
commodity 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule. Thirty days is deemed appropriate 
because: (1) The 2001-02 fiscal period began on August 1, 2001, and the 
marketing order requires that the rate of assessment for each fiscal 
period apply to all assessable onions handled during such fiscal 
period; (2) the Committee needs to have sufficient funds to pay its 
expenses which are incurred on a continuous basis; and (3) handlers are 
aware of this action which was recommended by the Committee at a public 
meeting and is similar to other assessment rate actions issued in past 
years.

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 
proposed to be 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, 2001, an assessment rate of $0.05 per 50-
pound container or equivalent is established for South Texas onions.

    Dated: January 3, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-575 Filed 1-9-02; 8:45 am]
BILLING CODE 3410-02-P