[Federal Register Volume 67, Number 50 (Thursday, March 14, 2002)]
[Rules and Regulations]
[Pages 11401-11403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6146]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV02-959-1 FR]


Onions Grown in South Texas; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases 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 began August 1 and ends July 31. The assessment rate 
will remain in effect indefinitely unless modified, suspended, or 
terminated.

EFFECTIVE DATE: March 15, 2002.

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, 1400 Independence Avenue, SW, STOP 0237, Washington, DC 
20250-0237; 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, 1400 Independence 
Avenue, SW, STOP 0237, Washington, DC 20250-0237; 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 issued herein will be applicable to all assessable 
onions beginning August 1, 2001, and continuing 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 increases 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 handled.
    The South Texas onion marketing order provides authority for the 
Committee, with the approval of USDA, 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

[[Page 11402]]

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 
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, 
should be adequate to cover budgeted expenses. Funds in the reserve 
(currently $276,705) 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 USDA 
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 USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA 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 2001-02 budget has been 
approved and those for subsequent fiscal periods will be reviewed and, 
as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to the 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 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 (SBA) (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 production 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 increases 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 
assessment rate of $0.05 is $0.02 higher than the 2000-01 rate. The 
quantity of 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, should be adequate to cover budgeted 
expenses. Funds in the reserve (currently $276,705) will be kept within 
the maximum permitted by the order (approximately two fiscal periods' 
expenses, Sec. 959.43).
    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,

[[Page 11403]]

$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 an increase in its promotion program. 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 2002 shipping season 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 increases 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 
are 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.
    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.
    USDA 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 January 10, 2002 (67 FR 1317). 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 and USDA. A 30-day comment period ending February 
11, 2002, 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: 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 is 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 2001-02 
fiscal period began 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. In addition, the 
Committee needs to have sufficient funds to pay its expenses, which are 
incurred on a continuous basis. Further, handlers are aware of this 
rule which was recommended by the Committee at a public meeting and is 
similar to other assessment rate actions issued in past years. 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, 2001, an assessment rate of $0.05 per 50-
pound container or equivalent is established for South Texas onions.

    Dated: March 11, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-6146 Filed 3-13-02; 8:45 am]
BILLING CODE 3410-02-P