[Federal Register Volume 68, Number 47 (Tuesday, March 11, 2003)]
[Rules and Regulations]
[Pages 11463-11467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5540]



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 Rules and Regulations
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  Federal Register / Vol. 68, No. 47 / Tuesday, March 11, 2003 / Rules 
and Regulations  

[[Page 11463]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV03-959-2 IFR]


Onions Grown in South Texas; Revision of Rules and Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule eliminates all container requirements from the 
handling regulations prescribed under the South Texas onion marketing 
order (order) and makes several conforming and formatting changes. The 
order regulates the handling of onions grown in South Texas and is 
administered locally by the South Texas Onion Committee (Committee). 
This rule provides the industry expanded flexibility to use any and all 
types and sizes of containers, or to ship onions in bulk shipments. 
This change will help handlers compete more effectively in the 
marketplace, better meet buyers' needs, and improve producer returns.

EFFECTIVE DATE: March 12, 2003; comments received by May 12, 2003, will 
be considered prior to issuance of a final rule.

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]. 
All comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made 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, Marketing Order Administration Branch, 
Fruit and Vegetable Programs, AMS, USDA, 1313 E. Hackberry, McAllen, TX 
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. 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 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. A 
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 eliminates all container requirements on onion shipments 
from the handling regulations prescribed under the South Texas onion 
order and makes several conforming and formatting changes. Removing all 
container requirements will provide the industry expanded flexibility 
to use any and all types of containers preferred by consumers, buyers, 
and all retailers, or to ship onions in bulk shipments, which will help 
handlers compete more effectively in the marketplace, better meet 
buyers' needs, and improve producer returns. All shipments will 
continue to be required to meet grade, size, and inspection 
requirements. In addition, this rule will also: (1) Remove outdated 
language from Sec.  959.104; (2) remove all references to containers 
and applicable language from the order's rules and regulations; (3) 
remove an incorrectly referenced paragraph in current Sec.  959.322(d) 
Inspection and replace it with the correct reference; and (4) correct 
the name of the Texas-Federal Inspection Service office. The Committee 
unanimously recommended these changes at its October 8, 2002, meeting 
and clarified the recommendation via a mail vote on October 31, 2002. 
After the October 8 meeting, the Chairman appointed a subcommittee to 
review the Committee's recommendations. The subcommittee met on 
November 5, 2002, and further discussed the reasons why the changes 
should be made.
    Section 959.52(b)(4) of the onion order provides authority to 
regulate size, capacity, weight, dimensions, or pack of the container 
or containers which may be used in the packaging, transportation, sale, 
preparation for market, shipment, or other handling of onions. Sections 
959.52(c) allows for the modification, suspension, or termination of 
such regulations when warranted.
    Section 959.322(c) of the order's rules and regulations outlines 
container requirements for onions. Currently, Sec.  959.322(c)(1) 
through (7) of the

[[Page 11464]]

regulations authorizes ten containers (25-pound, 50-pound, 2-pound, 3-
pound, 5-pound, and 10-pound bags; 20-pound, 25-pound, 40-pound, and 
50-pound cartons) for use by onion handlers. Section 959.322(f)(2) 
exempts gift packages of onions not exceeding 25 pounds per package 
from the container requirements of Sec.  959.322(c) if the onions have 
not previously been handled. Also, Sec.  959.322(f)(4) authorizes the 
Committee to approve other types of containers for experimental or 
testing purposes.
    In recent years, there has been a proliferation in package 
requirements from buyers intent on providing either unique packaging 
for their stores or special carton sizes for their racking or handling 
equipment. American retailers desiring to emulate European marketing 
concepts in display developments (and supporting handling systems) in 
the U.S. and Canadian marketplace have significantly influenced this 
process. The evolution of the club and discount stores, design 
alterations tailored to protecting the commodity from damage during 
shipment and/or store presentation, and the development of new 
packaging materials, for example, returnable plastic containers (RPCs) 
have also greatly influenced the marketplace. The supply side, for 
reasons of efficiency, has resisted this growth when possible. However, 
buyer influence is such that no shipper can or will deny buyers new 
cartons, knowing that other shippers will readily adopt them. The 
shippers are all impacted by the surge in packaging demands. Many 
retailers have asked handlers to pack onions in specific RPCs, master 
containers, and containers other than the currently approved permanent 
containers. Container dimensions can vary slightly depending on the 
manufacturers. During previous seasons, handlers applied for and 
obtained Committee approval to use other containers on an experimental 
basis. Safeguarding the use of such experimental containers is an 
additional burden for the Committee.
    Because this trend seems certain to continue in the future, the 
Committee concluded that the best and most economical resolution of the 
issue concerning the number of containers would be to simply eliminate 
the container requirements, thereby permitting shippers to respond to 
buyer requests as they see fit.
    The trend toward even more unique and specialized packaging 
generally is governed by the desire of the retail community to receive 
produce in ``display-ready'' packaging consistent with the retailer's 
image and marketing plan for each type and size of store. At the same 
time, the packaging must meet the buyer's expectations for structural 
integrity and consistency with that buyer's handling practices. 
Although the increased flexibility does complicate the marketplace, and 
may result in inefficiencies, it is what retailers think consumers 
want, and therefore, is prerequisite to selling onions. Maximum 
efficiency would result from the adoption of a single uniform 
footprint, but an effort over the past two years to win acceptance of 
such a footprint has been virtually abandoned because it is contrary to 
trends in buyer requirements. Furthermore, foodservice buyers also have 
specialized container requirements often different from retailer 
requirements. In the end, however, the confusion is held to a minimum 
by the simple fact that onions normally are sold by weight and grade, 
which is consistent regardless of packaging.
    Eliminating all container requirements in the handling regulations 
will enable the industry to ship onions in any and all containers 
preferred by consumers, buyers, and all retailers, which would benefit 
producers, handlers, buyers, and consumers to Texas onions enabling the 
industry to compete more effectively in the marketplace. This action 
will help the industry in providing consumers with high quality onions, 
promoting buyer satisfaction, and improving producer returns. This 
action will not impact the onion import requirements.
    Removing container requirements requires that all references to 
containers and applicable language also be removed from the order's 
rules and regulations, including references to onions for peeling, 
chopping, and slicing. Reference to these types of fresh processing 
methods will only be made in the introductory text of Sec.  959.322 in 
order to avoid confusion with other types of processing, which re 
exempt from grade, size, and inspection requirements. In addition, 
several conforming and formatting changes are being made to clarify or 
remove some outdated language. Specifically, in Sec.  959.104 Fiscal 
period the first sentence and first part of the second sentence needs 
to be removed. In Sec.  959.322(d)(1), the reference to (f)(3)(ii) 
needs to be removed because no such section exists, and should be 
replaced with the correct reference to shipments for experimental 
purposes. The incorrect section was inadvertently placed in the 
regulation. Also, in paragraph (d)(1) the name of the inspection office 
should be corrected to reflect the correct name of the local inspection 
office and should include the Inspection Service's name referred to in 
the order. In addition, paragraphs (f)(2), (f)(3), and (f)(5) will be 
removed because they will no longer be applicable when container 
requirements are eliminated.

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 action 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 90 producers of onions in the production 
area and approximately 35 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 lass 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 2001-02 
marketing year, the industry's 35 handlers shipped onions produced on 
16,148 acres with the average and median volume handled being 152, 446 
and 136,810 fifty-pound bag equivalents, respectively. In terms of 
production value, total revenues for the 35 handlers were estimated to 
be $39.9 million, with average and median revenues being $1.1 million 
and $1.0 million, 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

[[Page 11465]]

that all of the 35 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 90 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 invites comments on revisions to the rules and 
regulations prescribed under the South Texas onion order. This rule 
eliminates container requirements on onion shipments in Sec.  959.322 
of the order's handling regulations, and makes several conforming and 
formatting changes. Removing all container requirements will provide 
the industry expanded flexibility to use any and all types of 
containers preferred by consumers, buyers, and all retailers, or to 
ship onions in bulk, which will help handlers compete more effectively 
in the marketplace, better meet buyers' needs, and improve producer 
returns. All shipments will continue to be required to meet grade, 
size, and inspection requirements. This rule change will allow South 
Texas onion handlers to supply existing markets and will allow the 
industry to be more competitive in the marketplace. Allowing shipments 
of onions in all types of containers or in bulk is expected to increase 
shipments of Texas onions because there will no longer be any container 
restrictions.
    In addition, this rule will also: (1) Remove outdated language from 
Sec.  959.104; (2) remove all references to containers and applicable 
language from the order's rules and regulations; (3) remove an 
incorrectly referenced paragraph in current Sec.  959.322(d) Inspection 
and replace it with the correct reference; and (4) correct the name of 
the Texas-Federal Inspection Service office. The Committee unanimously 
recommended these changes at its October 8, 2002, meeting and clarified 
the recommendation via a mail vote on October 31, 2002. After the 
October 8 meeting, the Chairman appointed a subcommittee to review the 
Committee's recommendations. The subcommittee met on November 5, 2002, 
and further discussed the reasons why the changes should be made.
    Section 959.52(b)(4) of the onion order provides authority to 
regulate size, capacity, weight, dimensions, or pack of the container 
or containers which may be used in the packaging, transportation, sale, 
preparation for market, shipment, or other handling of onions. Section 
959.52(c) allows for the modification, suspension, or termination of 
such regulations when warranted.
    Section 959.322(c) of the order's rules and regulations outlines 
container requirements for onions. Currently, Sec.  959.322(c)(1) 
through (7) of the regulations authorizes ten containers (25-pound, 50-
pound, 2-pound, 3-pound, 5-pound, and 10-pound bags; 20-pound, 25-
pound, 40-pound, and 50-pound cartons) for use by onion handlers.
    Section 959.322(f)(2) exempts gift packages of onions not exceeding 
25 pounds per package from the container requirements of Sec.  
959.322(c) if the onions have not previously been handled. Also, Sec.  
959.322(f)(4) authorizes the Committee to approve other types of 
containers for experimental or testing purposes.
    In recent years, there has been a proliferation in package 
requirements from buyers intent on providing either unique packaging 
for their stores or special carton sizes for their racking or handling 
equipment. American retailers desiring to emulate European marketing 
concepts in display developments (and supporting handling systems) in 
the U.S. and Canadian marketplace have significantly influenced this 
process. The evolution of the club and discount stores, design 
alterations tailored to protecting the commodity from damage during 
shipment and/or store presentation, and the development of new 
packaging materials, for example, returnable plastic containers (RPCs) 
have also greatly influenced the marketplace. The supply side, for 
reasons of efficiency, has resisted this growth when possible. However, 
buyer influence is such that no shipper can or will deny buyers new 
cartons, knowing that other shippers will readily adopt them. The 
shippers are all impacted by the surge in packaging demands. Many 
retailers have asked handlers to pack onions in specific RPCs, master 
containers, and containers other than the currently approved permanent 
containers. Container dimensions can vary slightly depending upon the 
manufacturer. During previous seasons, handlers applied for and 
obtained Committee approval to use these containers on an experimental 
basis. Safeguarding the use of such experimental containers is an 
additional burden for the Committee.
    Because this trend seems certain to continue in the future, the 
Committee concluded that the best and most economical resolution of the 
issue concerning the number of containers would be to simply eliminate 
the container requirements, thereby permitting shippers to respond to 
buyer requests as they see fit.
    The trend toward even more unique and specialized packaging 
generally is governed by the desire of the retail community to receive 
produce in ``display-ready'' packaging consistent with the retailer's 
image and marketing plan for each type and size or store. At the same 
time, the packaging must meet the buyer's expectations for structural 
integrity and consistency with that buyer's handling practices. 
Although the increased flexibility does complicate the marketplace, and 
quite obviously results in inefficiencies, it is what retailers think 
consumers want, and, therefore, is prerequisite to selling onions. 
Maximum efficiency would result from the adoption of a single uniform 
footprint, but an effort over the past two years to win acceptance of 
such a footprint has been virtually abandoned because it is contrary to 
trends in buyer requirements. Furthermore, foodservice buyers also have 
specialized container requirements often different from retailer 
requirements. In the end, however, the confusion is held to a minimum 
by the simple fact that onions normally are sold by weight and grade, 
which is consistent regardless of packaging.
    Eliminating all container requirements in the handling regulations 
will enable the industry to ship onions in any and all containers 
preferred by consumers, buyers, and all retailers, which would benefit 
producers, handlers, buyers, and consumers of Texas onions enabling the 
industry to compete more effectively in the marketplace. This action 
will not impact the onion import requirements. Removing container 
requirements requires that all references to containers and applicable 
language also be removed from the order's rules and regulations. 
References to containers for onions for peeling, chopping, and slicing 
are also removed. Reference to these types of fresh processing methods 
will only be made in the introductory text of Sec.  959.322 in order to 
avoid confusion with other types of processing, which are exempt from 
grade, size, and inspection requirements and to correct Sec.  
959.322(g)(1). In addition, several conforming and formatting changes 
are being made to clarify or remove some outdated language. 
Specifically, in Sec.  959.104 Fiscal period the first sentence and 
first part of the second sentence need to be

[[Page 11466]]

removed. In Sec.  959.322(d)(1), the reference to (f)(3)(ii) needs to 
be removed because no such section exists, and should be replaced with 
the correct reference to shipments for experimental purposes. The 
incorrect section was inadvertently placed in the regulation. Also, in 
paragraph (d)(1) the name of the inspection office should be corrected 
to reflect the correct name of the local inspection office and should 
include the Inspection Service's name referred to in the order. In 
addition, paragraphs (f)(2), (f)(3), and (f)(5) will be removed because 
they will no longer be applicable when container requirements are 
eliminated.
    The opportunities and benefits of this rule are expected to be 
equally available to all onion handlers and regardless of their size of 
operation. The recommended changes will benefit the entire South Texas 
onion industry.
    The alternatives would be to suspend the container requirements for 
a certain period of time or leave the regulations as they are. However, 
the Committee believed that the best action would be to eliminate all 
requirements completely to provide expanded flexibility.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large 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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule.
    Further, 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. Like 
all Committee meetings, the October 8, 2002, meeting was a public 
meeting and all entities, both large and small, were able to express 
their views on this issue. Also, the Committee has a number of 
appointed subcommittees to review certain issues and make 
recommendations to the Committee. Finally, 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 question about the compliance guide 
should be sent to Jay Guerber at the previously mentioned address in 
the FOR FURTHER INFORMATION CONTACT section.
    This rule invites comments on revisions to the rules and 
regulations currently prescribed under the South Texas onion marketing 
order. Any comments received will be considered prior to finalization 
of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim final 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 upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes requirements by providing additional 
marketing flexibility for the industry to ship onions; (2) this rule 
should be in place as soon as possible because the 2003 season begins 
March 1, 2003; (3) the Committee unanimously recommended these changes 
at a public meeting and interested parties had an opportunity to 
provide input; and (4) this rule provides a 60-day comment period and 
any comments received will be considered prior to finalization of this 
rule.

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 959.104 is revised to read as follows:


Sec.  959.104  Fiscal period.

    The fiscal period shall begin August 1 of each year and end July 31 
of the following year, both dates inclusive.


Sec.  959.237  [Amended]

    3. In Sec.  959.237, remove the words ``container or''.
    4. Section 959.322 is amended by:
    A. Revising the introductory paragraph;
    B. Removing paragraph (c);
    C. Redesignating paragraph (d) as paragraph (c), and revising newly 
redesignated paragraph (c)(1);
    D. Redesignating paragraph (e) as paragraph (d);
    E. Redesignating paragraph (f) as paragraph (e), and revising 
redesignated paragraph (e);
    F. Redesignating paragraph (g) as paragraph (f), and revising the 
introductory texts of newly redesignated paragraphs (f) and (f)(4); and
    G. Redesignating paragraph (h) as paragraph (g) to read as follows:


Sec.  959.322  Handling regulation.

    During the period beginning March 1 and ending June 4, no handler 
shall handle any onions, including onions for peeling, chopping, and 
slicing, unless they comply with paragraphs (a) through (c) or (d) or 
(e) of this section.
* * * * *
    (c) Inspection. (1) No handler may handle any onions regulated 
hereunder, except pursuant to paragraphs (d), (e)(1), or (e)(2)(i) of 
this section unless an inspection certificate has been issued by the 
Federal or Federal-State Inspection Service, Texas Cooperative 
Inspection Program, covering them and the certificate is valid at the 
time of shipment. City destinations shall be listed on inspection 
certificates and release forms.
* * * * *
    (e) Special purpose shipments. (1) The minimum grade, size, 
quality, and inspection requirements set forth in paragraphs (a) 
through (c) of this section shall not be applicable to shipments of 
onions for charity, relief and processing if handled in accordance with 
paragraph (f) of this section.
    (2) Experimental shipments. Upon approval by the committee, onions 
may be shipped for experimental purposes exempt from regulations issued 
pursuant to Sec. Sec.  959.42, 959.52 and 959.60, provided they are 
handled in accordance with the safeguard provisions of paragraph (f) of 
this section.
    (3) Onions failing to meet requirements. Onions failing to meet the 
grade and size requirements of this section, and not exempt under 
paragraphs (d) or (e) of this section, may be handled only pursuant to 
Sec.  959.126. Such onions not handled in accordance with paragraph (f) 
of this section shall be mechanically mutilated at the packing shed 
rendering them unsuitable for fresh market.
    (f) Safeguards. Each handler making shipments of onions for relief, 
charity, processing, or experimental purposes shall:
* * * * *

[[Page 11467]]

    (4) In addition to provisions in the preceding paragraphs, each 
handler making shipments for processing shall:
* * * * *

    Dated: March 4, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-5540 Filed 3-7-03; 9:08 am]
BILLING CODE 3410-02-M