[Federal Register Volume 67, Number 140 (Monday, July 22, 2002)]
[Proposed Rules]
[Pages 47741-47745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18256]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 140 / Monday, July 22, 2002 / 
Proposed Rules  

[[Page 47741]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 956

[Docket No. FV02-956-1 PR]


Sweet Onions Grown in the Walla Walla Valley of Southeast 
Washington and Northeast Oregon; Establishment of Grade and Inspection 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule invites comments on the establishment of grade and 
inspection requirements for Walla Walla sweet onions. This proposed 
rule was recommended by the Walla Walla Sweet Onion Marketing Committee 
(Committee), the agency responsible for local administration of the 
marketing order regulating the handling of sweet onions grown in the 
Walla Walla Valley of Southeast Washington and Northeast Oregon. This 
rule would require that all Walla Walla sweet onions handled prior to 
June 10 of each marketing season be inspected and be at least U.S. 
Commercial grade. By establishing minimum standards early in the 
season, this rule is expected to improve producer returns by ensuring 
that early-season sweet onions are mature and marketable, while 
satisfying the consumer demand for consistently good quality produce. 
The cost of the required inspections would be fully funded by the 
Committee, and there would be no minimum quantity exemption from 
inspection prior to June 10 because the Committee would be funding the 
required inspections.

DATES: Comments must be received by September 20, 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, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; 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: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, suite 385, 
Portland, Oregon 97204-2807; telephone: (503) 326-2724, Fax: (503) 326-
7440; 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 and Order No. 956, both as amended (7 CFR part 956), 
regulating the handling of Walla Walla sweet onions grown in Southeast 
Washington and Northeast Oregon, 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. This rule is not intended to have retroactive effect. 
This rule would 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 establish grade and inspection requirements for 
Walla Walla sweet onions. Specifically, this rule would require that 
all Walla Walla sweet onions shipped prior to June 10 be inspected by 
the Federal-State Inspection Service (Inspection Service) and be at 
least U.S. Commercial grade. The proposed rule also provides that the 
Committee would enter into an agreement with the Inspection Service to 
fund the costs of the inspections required under this rule. And lastly, 
this rule would modify the minimum quantity inspection provision in 
Sec. 956.64 by providing that the provision not apply for shipments 
made prior to June 10 of each marketing season.
    Section 956.61 of the order provides authority for the Committee to 
recommend the establishment, modification, suspension or termination of 
handling regulations and Sec. 956.62 provides authority for the 
issuance of grade and maturity regulations. Section 956.64 provides 
authority for the establishment and modification of minimum quantity 
exemptions. Section 956.70(f) provides for inspection during any period 
in which Walla Walla sweet onions are regulated, as well as providing 
that the Committee may enter into an agreement with the Inspection 
Service with respect to the cost and funding of inspection.
    At a meeting held on February 12, 2002, the Committee passed a 
motion recommending to USDA that: (1) A regulation be established 
requiring that all onions shipped prior to June 10 be inspected and 
certified as being at least U.S. Commercial grade; (2) the cost of the 
required inspections be fully funded

[[Page 47742]]

by the Committee; (3) there be no minimum quantity exemption from 
inspection since the Committee would be funding the required 
inspections; and (4) the Committee be given the authority to 
administratively change the June 10 date to an earlier date. Seven 
members voted in favor of the motion, two in opposition and one member 
abstained. The members supporting the motion believe that the shipment 
of poor quality, immature onions early in the season result in low 
consumer acceptance, hurt repeat purchases, and have a price depressing 
effect on good quality onions. The three members not initially 
supporting grade and inspection requirements wanted additional time to 
evaluate the recommendation and were concerned about the potential cost 
of funding the inspections.
    The Committee met again on February 20, 2002, to discuss ways of 
amending the recommendation to meet the concerns of those who did not 
support the initial recommendation. Individuals not in support of the 
original motion suggested that parameters be established to limit the 
number of inspections, or alternatively, that limits be placed on the 
total amount the Committee would be required to expend on inspections. 
They also expressed concern that not all handlers shipped poor quality 
and immature onions early in the season and that it was important that 
this problem not be viewed as an industry-wide problem.
    There were seven Committee members in attendance at the February 20 
meeting. All of those in attendance, which included two of the members 
opposed to the initial action, voted in favor of a motion recommending 
to USDA that: (1) A regulation be established requiring that all onions 
shipped prior to June 10 be inspected and certified as being at least 
U.S. Commercial grade; (2) the cost of the required inspections be 
fully funded by the Committee; (3) there be no minimum quantity 
exemption from inspection since the Committee would be funding the 
required inspections; and (4) the Committee be given the authority to 
administratively change the June 10 date to an earlier or later date. 
This recommendation was subsequently submitted to USDA. Following 
review of this proposal, USDA notified the Committee, that the 
recommendation to grant the Committee authority to administratively 
change the date when inspections would be required would not be 
proposed because such a change should be subject to rulemaking.
    As a consequence, the Committee met once again on April 9, 2002, 
and with a quorum of seven of the ten members present, unanimously 
recommended that: (1) All Walla Walla sweet onions shipped prior to 
June 10 be inspected and certified as being at least U.S. Commercial 
grade; (2) the cost of the required inspections be fully funded by the 
Committee; and (3) there be no minimum quantity exemption from 
inspection since the Committee would fund the required inspections. 
This modified recommendation dropped the proposed provision containing 
authority for the Committee to administratively change the dates when 
inspections would be required. Further, Committee members determined 
that there was not a need to put a cap on the amount of money the 
Committee would fund for the cost of inspection. Onion shipments prior 
to June 10 are expected to be minimal with inspection costs being 
estimated to approximate $3,000. The Committee plans to provide in its 
budget $4,500 for the cost of inspection in case its shipment estimate 
is low. The Committee calculated that with an estimated inspection fee 
of $0.06 per 50-pound container on small lots, $4,500 would pay for the 
inspection of 75,000 50-pound containers of onions. Committee members 
believed that it was very unlikely that 75,000 50-pound containers of 
onions could be shipped prior to June 10.
    The Walla Walla sweet onion harvesting and marketing season 
generally starts in mid-June and ends late in August, with shipments 
peaking in July. Depending upon cultural practices and weather, a few 
producers may start harvesting and marketing onions in early June. 
Also, depending upon whether the onions were planted in the autumn or 
the spring, harvest may extend past the end of August. There have also 
been some recent attempts at controlled atmosphere storage with sales 
reported as late as November.
    The primary objective of this proposed rule is to prevent 
disorderly marketing conditions caused by the shipment of poor quality, 
immature Walla Walla sweet onions early in the season thereby improving 
producer returns, and providing the consumer with a quality product. A 
secondary objective is to help prevent onions from other production 
areas from being mislabeled and marketed as Walla Walla sweet onions.
    According to the Committee, a few producers and handlers of Walla 
Walla sweet onions harvest and market poor quality, immature onions 
early in the season. Immature onions tend to break down prematurely, 
becoming soft and spongy. Buyers who have purchased poor quality, 
immature onions often delay or fail to make repeat purchases of 
additional Walla Walla sweet onions. Walla Walla sweet onions are non-
storage, summer onions that should be harvested when mature and 
immediately marketed. If buyers refuse to purchase additional Walla 
Walla sweet onions, demand for such onions decreases. Buyer 
dissatisfaction and reduced repeat purchases have a price depressing 
effect on good quality onions. Shipment of poor quality, immature 
onions early in the marketing season can set a negative market tone for 
the entire season that results in depressed producer returns.
    The rule would require all Walla Walla sweet onions handled prior 
to June 10 of each season to be inspected as discussed below. The 
Committee also recommended that there not be a minimum quantity 
exemption from inspection prior to June 10 since the Committee would be 
funding the cost of inspection and because small shipments of poor 
quality, immature onions can be damaging to the market for good quality 
onions. The Committee reports that early-season sales of immature 
onions in the past have been made by both large and small entities.
    Under this proposed rule, the Inspection Service would inspect all 
Walla Walla sweet onions being shipped prior to June 10. The onions 
would have to, at least, meet the requirements of U.S. Commercial grade 
as defined in the U.S. Standards for Grades of Onions (Other than 
Bermuda-Granex-Grano and Creole Type), as amended (7 CFR 51.2830 
through 51.2854.) Any lot of Walla Walla sweet onions meeting a minimum 
of U.S. Commercial grade would be issued an inspection certificate 
validating the shipment of such onions.
    With regard to the early-season onions, the feature the Committee 
is most interested in under the U.S. Commercial grade designation is 
maturity. Under Sec. 51.2841 of the U.S. Standards, ``mature'' is 
defined to mean ``well cured.'' Included in this definition is an 
exception for ``mid-season onions,'' a term used to describe onions 
that
    ``* * * are not customarily held in storage and are considered 
mature when harvested in accordance with good commercial practice at a 
stage which will not result in the onions becoming soft or spongy.'' 
Walla Walla sweet onions are considered a ``mid-season'' onion. The 
USDA's Shipping Point and Market Inspection Instructions for Onions 
further explains that ``mid-season onions'' are onions ``* * * 
harvested during the summer for

[[Page 47743]]

immediate shipment and consumption in only a fairly-well cured state.'' 
These definitions and instructions are designed to provide the 
Inspection Service with the ability to more accurately grade the 
various summer, non-storage onions grown in the northern United States, 
including Walla Walla sweet onions.
    The Committee also believes that this rule would help in the 
monitoring and prevention of any early season mislabeling and sale of 
onions grown outside the defined production area as Walla Walla sweet 
onions. The Committee reports that various roadside produce stands and 
Farmers' Markets located outside the production area have sold onions 
mislabeled as Walla Walla sweet onions that are not produced within the 
order's defined production area. The shipments of poor quality onions 
produced outside the production area that are misrepresented and 
mislabeled as Walla Walla sweet onions are price depressing for Walla 
Walla sweet onions. The Committee believes that requiring a valid 
inspection certificate on all lots of Walla Walla sweet onions being 
shipped prior to June 10 would enhance the Committee's compliance 
efforts in preventing this misrepresentation and mislabeling.
    The Committee also expends funds to help educate consumers and 
retailers regarding Walla Walla sweet onions, including information 
about the marketing season and the current regulation (Sec. 956.162) 
that requires each container of Walla Walla sweet onions to be 
conspicuously marked with the Committee's trademarked logo.
    The Committee believes that the establishment of mandatory early-
season inspection and certification would help ensure that poor 
quality, immature onions are kept out of the market and that poor 
quality onions from other production areas are not misrepresented as 
Walla Walla sweet onions. With the establishment of this regulation, 
the Committee believes the marketing of Walla Walla sweet onions would 
be improved, producer returns would be increased, and consumer 
confidence would be maintained for the entire season.
    This rule also includes a conforming change to Sec. 956.163 
Handling for specified purposes. Section 956.163 currently specifies 
that assessment and container-marking requirements specified in Part 
956 shall not be applicable to shipments of onions for the purposes 
listed in Sec. 956.163. Such purposes include shipments for relief or 
to charitable institutions, livestock feed, processing, seed, and other 
noncompetitive outlets. This conforming change would add handling 
requirements specified in this part to the requirements that do not 
apply to shipments of onions for purposes listed in Sec. 956.163.
    This proposed change would not impact the onion import regulation 
under section 8e of the Act. Section 8e provides that whenever two or 
more marketing orders regulating the same agricultural commodity 
produced in different areas of the United States are concurrently in 
effect, the importation into the United States of any such commodity 
shall be prohibited unless it complies with the grade, size, quality, 
and maturity provisions of the order which, as determined by the 
Secretary, regulates the commodity produced in the area with which the 
imported commodity is in most direct competition. It has been 
previously determined that onions imported during the period March 10 
through June 4 of each year are in most direct competition with onions 
grown in designated counties in South Texas under Marketing Order No. 
959 and that the imported onions must meet the grade, size, quality, 
and maturity requirements imposed under that order. During the period 
June 5 through March 9 of each marketing year, imported onions are in 
most direct competition with onions grown in designated counties in 
Idaho and Malheur County, Oregon, under Marketing Order No. 958, and 
imported onions must comply with the grade, size, quality, and maturity 
requirements imposed under that order.

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 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 37 producers of Walla Walla sweet onions 
and approximately 21 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 of less 
than $750,000, and small agricultural service firms are defined as 
those whose annual receipts are less than $5,000,000.
    According to the Washington Agricultural Statistics Service, 
approximately 576,000 50-pound containers of Walla Walla sweet onions 
were produced for market in 2001 with an average F.O.B. value of $9.70 
per 50-pound container. Thus, in 2001 the industry realized gross 
receipts of about $5,587,000 for the sale of fresh Walla Walla sweet 
onions, providing each of the 21 handlers, on average, gross annual 
receipts of about $266,000. Furthermore, based on the Committee's 
estimate of an average packing cost for Walla Walla sweet onions of 
$2.75 per 50-pound container, returns to producers would have been 
about $6.95 per 50-pound container, or just less than $110,000 on 
average. Based on the foregoing, it can be concluded that a majority of 
handlers and producers of Walla Walla sweet onions may be classified as 
small entities.
    This rule would establish grade and inspection requirements for 
Walla Walla sweet onions. Specifically, this rule would require that 
all Walla Walla sweet onions handled prior to June 10 be U.S. 
Commercial grade, or better. This rule would also provide that the 
current minimum quantity exemption from inspection (2000 pounds per 
shipment) not apply to onion shipments prior to June 10 of each 
marketing season. This rule was unanimously recommended by the 
Committee at a meeting held in Walla Walla, Washington, on April 9, 
2002, following discussions at meetings held on February 12 and 20, 
2002. Authority for the proposed rule is contained in Secs. 956.61, 
956.62, 956.64, and 956.70 of the order.
    The Committee discussed the impact this change could have on 
handlers and producers in terms of cost. This rule would have costs 
associated with it due to the cost of inspection. All handlers, both 
small and large, would be required to have all sweet onions that are 
shipped prior to June 10 inspected and certified. However, the 
Committee is concerned with the impact any regulation would have on the 
industry's small handlers and producers, and recommended that the 
Committee cover the cost of the inspections that would be required by 
this proposed rule. The Committee anticipates that the total annual 
cost of such a regulation would approximate $3,000. The funds 
designated for the early-season inspection costs would originate from 
assessment income and thus be spread out over the entire industry. 
Based on

[[Page 47744]]

the 576,000 50-pound containers of Walla Walla sweet onions produced in 
2001, this could amount to about $0.0052 per 50-pound container of 
sweet onions handled during any given season. The Committee plans on 
incurring this additional cost without increasing the current $0.21 per 
50-pound container assessment rate. The Committee believes that the 
costs associated with this proposed regulation would not be 
significant, and that the benefits would outweigh any costs. As noted 
earlier, poor quality Walla Walla sweet onions, particularly immature 
onions, shipped early in the marketing season are price depressing on 
the shipment of good quality onions and reduce producer returns.
    The Committee discussed alternatives to this rule at all three of 
its meetings, including the establishment of various dates other than 
June 10, various methods of mitigating the impact of the rule on small 
handlers, and not establishing any regulation. The Committee explored 
the idea of establishing a date as early as June 1 and as late as June 
15 as the date prior to which inspections would be required. During 
this discussion, it was thought that a date earlier than June 10 would 
not adequately prevent immature onions from being marketed. In 
addition, the Committee determined that a date later than June 10, 
although decreasing the chance that immature onions would be marketed, 
could be too expensive for the Committee to fund. The Committee decided 
that June 10 was the best date based on the historical start of the 
Walla Walla sweet onion season.
    The Committee considered that each handler pay directly for the 
cost of inspection, but believed that funding through assessments would 
be preferable. Consideration was given to the impact on small handlers. 
The Committee was of the view that funding through assessments would be 
better in terms of any negative impact on small handlers. Other options 
were considered including limiting each handler to two inspections a 
day and establishing an inspection cost ceiling for each handler that, 
once met, would require the handler to pay for any additional 
inspections prior to June 10. However, funding through assessments was 
considered the most reasonable and practical method to fund the 
inspection requirements proposed herein.
    The Committee also discussed how it could annually meet and modify 
the date prior to which inspections would be required. The Committee 
included in its initial recommendation a provision that would allow it 
to administratively modify the date, as established in the rule, to a 
date earlier in the season. At the request of a producer, this 
provision was modified by the Committee at the February 20 meeting to 
include provision that the Committee be able to administratively modify 
the date to either an earlier date or a later date than that 
established by the rule. Under this alternative, the Committee would 
meet annually and take action, if appropriate, to modify this date 
administratively, without utilizing the rulemaking process. USDA 
reviewed the recommendation and notified the Committee that the 
recommendation to grant the Committee authority to administratively 
change the date when inspections would be required would not be 
proposed because such a change should be subject to rulemaking.
    Finally, the Committee discussed and rejected the idea of not 
establishing any early-season inspection requirement because it 
strongly believes that some type of action is needed to help create 
orderly marketing and improve producer returns.
    This rule would establish grade and inspection requirements for 
Walla Walla sweet onions handled prior to June 10. Although inspection 
certificates would be issued by the Inspection Service, this action 
would not impose any additional reporting or recordkeeping requirements 
on either small or large 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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. However, as previously 
mentioned, Walla Walla sweet onions would have to meet certain 
requirements set forth in the standards issued under the Agricultural 
Marketing Act of 1946 (7 CFR 1621 et seq).
    In addition, the Committee's meetings were widely publicized 
throughout the Walla Walla sweet onion industry and all interested 
persons were invited to attend and participate in Committee 
deliberations on all issues. Like all Committee meetings, the Committee 
meetings on February 12, February 20, and April 9, 2002, were public 
meetings and all entities, both large and small, were able to express 
views on this issue. In addition, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    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 60-day comment period is provided to allow interested persons the 
opportunity to respond to this proposal, including any regulatory and 
informational impacts of this action on small businesses. All written 
comments timely received will be considered before a final 
determination is made on this matter.

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 
proposed to be 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. Section 956.163(a) is amended by revising the introductory text 
of paragraph (a) to read as follows:


Sec. 956.163  Handling for specified purposes.

    (a) Assessment, container marking, and handling regulations 
specified in this part shall not be applicable to shipments of onions 
for any of the following purposes:
* * * * *
    3. A new subpart--Handling Regulations--consisting of Sec. 956.362 
is added to read as follows:

Subpart--Handling Regulations


Sec. 956.362  Handling Regulation.

    No person shall handle any quantity of Walla Walla Sweet Onions 
prior to June 10 of each marketing season unless such onions are 
handled in accordance with paragraphs (a) and (b) of this section, or 
unless such onions are handled in accordance with Sec. 956.163.
    (a) Grade requirement. U.S. Commercial grade or better.
    (b) Inspection. No handler shall handle any onions unless such 
onions are inspected by the Federal-State Inspection Service and are 
covered by a valid inspection certificate. The minimum quantity 
exemption provision in Sec. 956.64 of this part shall not apply to any 
quantity of Walla Walla sweet onions shipped prior to June 10 of each 
marketing season. The Committee shall enter into an agreement pursuant 
to

[[Page 47745]]

Sec. 956.70(f) with the Federal-State Inspection Service in which the 
Committee agrees to fund all required inspections prior to June 10 of 
each marketing year.
    (c) Definitions. The term ``U.S. Commercial'' shall have the same 
meaning as when used in the United States Standards for Grades of 
Onions (Other than Bermuda-Granex-Grano and Creole Type), as amended (7 
CFR 51.2830 through 51.2854) including the tolerances set forth 
therein.

    Dated: July 15, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-18256 Filed 7-19-02; 8:45 am]
BILLING CODE 3410-02-P