[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Rules and Regulations]
[Pages 37065-37069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15738]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV03-959-2 FIR]


Onions Grown in South Texas; Revision of Rules and Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, with a minor change, an interim final rule that eliminated all 
container requirements from the handling regulations prescribed under 
the South Texas onion marketing order (order) and made 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 continues in effect the 
elimination of all container requirements from the handling regulations 
and several conforming changes. This action continues to provide the 
industry expanded flexibility to use any and all types and sizes of 
containers, or to ship onions in bulk. It also is expected to continue 
helping handlers compete more effectively in the marketplace, better 
meet buyers' needs, and help improve producer returns during the 2003 
and future seasons.

EFFECTIVE DATE: July 23, 2003.

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, 
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

[[Page 37066]]

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 continues in effect the elimination of all container 
requirements on onion shipments from the handling regulations 
prescribed under the South Texas onion order and several conforming and 
formatting changes. Removing all container requirements provides 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 help improve producer 
returns. All shipments will continue to be required to meet grade, 
size, and inspection requirements. In addition, this rule also 
continues to: (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 
recommendations 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, shipments, or other handling of onions. Section 
959.52(c) allows for the modification, suspension, or termination of 
such regulations when warranted.
    Before the issuance of the interim final rule, Sec.  959.322(c) of 
the order's rules and regulations outlined container requirements for 
onions. Section 959.322(c)(1) through (7) of the regulations authorized 
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) exempted gift packages of 
onions not exceeding 25 pounds per package from the container 
requirements of Sec.  959.322(c) if the onions had not previously been 
handled. Also, Sec.  959.32(f)(4) authorized 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 
shipments 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 was 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 
enables the industry to ship onions in any and all containers preferred 
by consumers, buyers, and all retailers, which benefits producers, 
handlers, buyers, and consumers of Texas onions and enables the 
industry to compete more effectively in the marketplace. This action 
continues to help the industry in providing consumers with high quality 
onions, promoting buyer satisfaction, and improving producer returns. 
This action does not impact the onion import requirements.
    Removing container requirements required 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 is only 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. In addition, several 
conforming and formatting changes were made to clarify or remove some

[[Page 37067]]

outdated language. Specifically, in Sec.  959.104 Fiscal period the 
first sentence and first part of the second sentence were removed. In 
Sec.  959.322(d)(1), the reference to (f)(3)(ii) was removed because no 
such paragraph existed and was replaced with the correct reference to 
shipments for experimental purposes. The incorrect reference was 
inadvertently placed in the regulation. Also, in paragraph (d)(1) the 
name of the inspection office was corrected to reflect the correct name 
of the local inspection office and the Inspection Service's name 
referred to in the order. In addition, paragraphs (f)(2), (f)(3), and 
(f)(5) were removed because they are no longer applicable now that 
container requirements have been eliminated.
    In the interim final rule, newly redesignated paragraph (c)(1) of 
Sec.  959.322 on inspection was revised to include exceptions for 
activities under paragraphs (d), (e)(1), and (e)(2)(i) of this section. 
The last reference should have been (e)(2) and it is corrected by this 
action.

Final 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 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 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 of 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 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 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 entitles 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 revises the rules and regulations prescribed under the 
South Texas onion order. This rule continues to eliminate container 
requirements on onion shipments in Sec.  959.322 of the order's 
handling regulations, and several conforming and formatting changes. 
Removing all container requirements provides 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 
helps handlers compete more effectively in the marketplace, better meet 
buyers' needs, and helps improve producer returns. All shipments will 
continue to be required to meet grade, size, and inspection 
requirements. This rule change allows South Texas onion handlers to 
supply existing markets and allows the industry to be more competitive 
in the marketplace. Allowing shipments of onions in all types of 
containers or in bulk will increase shipments of Texas onions because 
there are no longer any container restrictions.
    In addition, this rule continues to: (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 replaces 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.
    Previously, Sec.  959.322(c) of the order's rules and regulations 
outlined container requirements for onions. Section 959.322(c)(1) 
through (7) of the regulations authorized 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) exempted gift packages of onions not 
exceeding 25 pounds per package from the container requirements of 
Sec.  959.322(c) if the onions had not previously been handled. Also, 
Sec.  959.322(f)(4) authorized 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

[[Page 37068]]

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 was 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 
enables the industry to ship onions in any and all containers preferred 
by consumers, buyers, and all retailers, which benefits producers, 
handlers, buyers, and consumers of Texas onions and enables the 
industry to compete more effectively in the marketplace. This action 
does 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 
were also removed. Reference to these types of fresh processing methods 
only was 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. In addition, several 
conforming and formatting changes were 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 were removed. In 
Sec.  959.322(d)(1), the reference to (f)(3)(ii) was removed because no 
such paragraph existed, and was replaced with the correct reference to 
shipments for experimental purposes. The incorrect reference had 
inadvertently been placed in the regulation. Also, in paragraph (d)(1) 
the name of the inspection office was corrected to reflect the correct 
name of the local inspection office and the Inspection Service's name 
referred to in the order. In addition, paragraphs (f)(2), (f)(3), and 
(f)(5) were removed because they are no longer applicable now that 
container requirements have been eliminated.
    The opportunities and benefits of this rule will be equally 
available to all onion handlers regardless of their size of operation. 
The recommended changes benefit the entire South Texas onion industry.
    The alternatives were 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 was 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, as noted in the initial 
regulatory flexibility analysis, 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 and these meeting also are open to the 
public. In this case, a subcommittee met on November 5, 2002, to 
further discuss this action. Finally, interested persons were invited 
to submit information on the regulatory and informational impacts of 
this action on small businesses.
    An interim final rule concerning this action was published in the 
Federal Register on March 11, 2003. Copies of the rule were mailed by 
the Committee's staff to all Committee members and alternates and to 
the entire South Texas onion industry. In addition, the rule was made 
available through the Internet by the Office of the Federal Register 
and USDA. This rule provided a 60-day comment period which ended May 
12, 2003. 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 Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, with a minor change, as published in 
the Federal Register (68 FR 11463, March 11, 2003) will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.


0
Accordingly, the interim final rule amending 7 CFR part 959, which was 
published at 68 FR 11463 on March 11, 2003, is adopted as a final rule 
with the following change:

PART 959--ONIONS GROWN IN SOUTH TEXAS

0
1. The authority citation for 7 CFR part 959 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

0
2. In Sec.  959.322, paragraph (c)(1), ``(e)(2)(i)'' is revised to read 
``(e)(2)''.


[[Page 37069]]


    Dated: June 17, 2003.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 03-15738 Filed 6-20-03; 8:45 am]
BILLING CODE 3410-02-P