[Federal Register Volume 69, Number 11 (Friday, January 16, 2004)]
[Rules and Regulations]
[Pages 2491-2493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1005]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV03-959-4 FR]


Onions Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule decreases the assessment rate established for the 
South Texas Onion Committee (Committee) for the 2003-04 and subsequent 
fiscal periods from $0.085 to $0.03 per 50-pound 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 on August 1 and ends July 31. The assessment rate will remain in 
effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: January 20, 2004.

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 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, 2003, and continue until amended, suspended, 
or terminated. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule decreases the assessment rate established for the 
Committee for the 2003-04 and subsequent fiscal periods from $0.085 to 
$0.03 per 50-pound 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 2002-03 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate that would continue 
in effect from fiscal

[[Page 2492]]

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 5, 2003, and unanimously recommended 
2003-04 expenditures of $124,661 and an assessment rate of $0.03 per 
50-pound equivalent of onions. In comparison, last year's budgeted 
expenditures were $325,400. The assessment rate of $0.03 is $0.055 
lower than the rate currently in effect. The decrease in the assessment 
rate and budget is primarily due to the discontinuation of funding for 
production research projects and a lower marketing and promotion 
budget. The reduced assessment rate and budget lowers handler costs by 
about $220,000 and keeps the Committee's operating reserve at an 
acceptable level.
    The major expenditures recommended by the Committee for the 2003-04 
fiscal period include $74,661 for personnel and office expenses, 
$30,000 for compliance, and $20,000 for promotion expenses. Budgeted 
expenses for these items in 2002-03 were $72,002, $35,000, and 
$170,500, respectively.
    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 4 
million 50-pound equivalents, which should provide $120,000 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 $256,982) 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 2003-04 budget and those 
for subsequent fiscal periods will be reviewed and, as appropriate, 
approved by USDA.

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 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 37 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 2002-03 
marketing year, the industry's 37 handlers shipped onions produced on 
12,740 acres with the average and median volume handled being 114,454 
and 91,792 fifty-pound equivalents, respectively. In terms of 
production value, total revenues for the 37 handlers were estimated to 
be $73 million, with average and median revenues being $1.97 million 
and $1.58 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 36 of the 37 handlers regulated by the order would be 
considered small entities if only their spring onion revenues are 
considered. However, revenues from other productive enterprises would 
likely push a large number of these handlers above the $5,000,000 
annual receipt threshold. All of the 78 producers may be classified as 
small entities based on the SBA definition if only their revenue from 
spring onions is considered. When revenues from all sources are 
considered, a majority of the producers would not be considered small 
entities because receipts would exceed $750,000.
    This rule decreases the assessment rate established for the 
Committee and collected from handlers for the 2003-04 and subsequent 
fiscal periods from $0.085 to $0.03 per 50-pound equivalent of onions 
handled. The Committee unanimously recommended 2003-04 expenditures of 
$124,661 and an assessment rate of $0.03 per 50-pound equivalent. The 
assessment rate of $0.03 is $0.055 lower than the current rate. The 
quantity of assessable onions for the 2003-04 fiscal period is 
estimated at 4 million 50-pound equivalents. Thus, the $0.03 rate 
should provide $120,000 in assessment income. Income derived from 
handler assessments, along with interest income and funds from the 
Committee's authorized reserve, should be more than adequate to cover 
budgeted expenses.
    The major expenditures recommended by the Committee for the 2003-04 
fiscal period include $74,661 for personnel and office expenses, 
$30,000 for compliance, and $20,000 for promotion expenses. Budgeted 
expenses for these items in 2002-03 were $72,002, $35,000, and 
$170,500, respectively. In addition, the Committee budgeted $47,900 for 
production research in 2002-03.
    The Committee reviewed and unanimously recommended 2003-04 
expenditures of $124,661, which included increases in administrative 
expenses and decreases in the compliance and promotion expenses. The 
Committee did not approve any production research program expenses for 
2003-04. In 2002-03, the Committee budgeted $47,900 for production 
research. Prior to arriving at this budget, the Committee considered 
information from various sources, including the Research and Market 
Development Subcommittee. Numerous alternative expenditure levels were 
discussed based upon the relative value of various promotion projects 
to the onion

[[Page 2493]]

industry. The assessment rate of $0.03 per 50-pound equivalent of 
assessable onions was then determined by dividing the total recommended 
budget by the quantity of assessable onions, estimated at 4 million 50-
pound equivalents for the 2003-04 fiscal period.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the grower 
price for the 2003-04 fiscal period could range between $9.05 and 
$19.05 per 50-pound equivalent of onions. Therefore, the estimated 
assessment revenue for the 2003-04 fiscal period as a percentage of 
total grower revenue could range between .16 and .33 percent.
    This action decreases the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the costs may be passed on to producers. However, decreasing the 
assessment rate reduces the burden on handlers, and may reduce the 
burden on producers. 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 June 5, 
2003, 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 November 21, 2003 (68 FR 65643). Copies of the proposed 
rule were also mailed to all onion handlers on November 24, 2003. 
Finally, the proposal was made available through the Internet by the 
Office of the Federal Register and USDA. A 30-day comment period ending 
December 22, 2003, was provided for interested persons to respond to 
the proposal. One comment in support of the proposal was received. The 
commenter expressed support for the decreased assessment rate due to 
the current economic condition surrounding the agricultural industry.
    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, the 
comment received, 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 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 2003-04 
fiscal period began August 1, 2003, and the marketing order requires 
that the rate of assessment for each fiscal period apply to all 
assessable onions handled during such fiscal period. This action 
decreases the assessment rate for assessable onions beginning with the 
2003-04 fiscal period. Further, handlers are aware of this rule which 
was recommended at a public meeting. Also, a 30-day comment period was 
provided for in the proposed rule and one comment in support of the 
assessment decrease was received.

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

0
For the reasons set forth in the preamble, 7 CFR part 959 is amended as 
follows:

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. Section 959.237 is revised to read as follows:


Sec.  959.237  Assessment rate.

    On and after August 1, 2003, an assessment rate of $0.03 per 50-
pound equivalent is established for South Texas onions.

    Dated: January 12, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-1005 Filed 1-15-04; 8:45 am]
BILLING CODE 3410-02-P