[Federal Register Volume 69, Number 55 (Monday, March 22, 2004)]
[Proposed Rules]
[Pages 13269-13272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6323]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV04-979-1 PR]


Melons Grown in South Texas; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the South Texas Melon Committee (Committee) for the 2003-04 and 
subsequent fiscal periods from $0.06 to $0.09 per carton of melons 
handled. The Committee locally administers the marketing order which 
regulates the handling of melons grown in South Texas. Authorization to 
assess melon handlers enables the Committee to incur expenses that are 
reasonable and necessary to administer the program. The fiscal period 
begins October 1 and ends September 30. The assessment rate would 
remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Comments must be received by April 6, 2004.

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] 
or www.regulations.gov. 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: Belinda G. Garza, Regional Manager, 
McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS, 
USDA, 1313 E. Hackberry, McAllen, Texas 78501; telephone: (956) 682-
2833, Fax: (956) 682-5942; or George Kelhart, Technical Advisor, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; telephone: (202) 720-2491, Fax: (202) 720-8938.
    Small businesses may request information on complying with this

[[Page 13270]]

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. 156 and Order No. 979 (7 CFR part 979), regulating the 
handling of melons 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 
melon handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as proposed herein would be applicable to all 
assessable melons beginning on October 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 would increase the assessment rate established for the 
Committee for the 2003-04 and subsequent fiscal periods from $0.06 to 
$0.09 per carton of melons handled.
    The South Texas melon 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 growers and handlers of South 
Texas melons. 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 2001-02 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate that would continue 
in effect from fiscal 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 September 11, 2003, and unanimously 
recommended 2003-04 expenses of $89,859 for personnel, office, 
compliance, and partial market development expenses to be funded by the 
continuing assessment rate of $0.06 per carton. Specific funding for 
production research and market development projects were to be 
recommended at a later Committee meeting.
    The Committee subsequently met on January 14, 2004, and recommended 
2003-04 expenditures of $351,859 and an assessment rate of $0.09 per 
carton of melons handled. In comparison, last year's budgeted 
expenditures were $313,853. The assessment rate of $0.09 is $0.03 
higher than the rate currently in effect. The Committee recommended the 
increased rate to fund a variety of market development and production 
research projects, without having to draw a large amount from reserves. 
Without the increase, the Committee's reserve fund would drop to 
$50,017, which is lower than what the Committee needs for operations. 
This amount is derived by taking the current reserve ($193,776), adding 
the $203,100 in assessment income based on the old rate (3,385,000 x 
$0.06 per carton) and anticipated interest totaling $5,000, and then 
subtracting the 2003-04 budget of $351,859. With the new rate, $304,650 
in assessment income would be generated, and the reserve fund would 
only drop to $151,567.
    The major expenditures recommended by the Committee for the 2003-04 
fiscal period include $59,859 for administrative expenses, $20,000 for 
compliance, $160,000 for market development, and $112,000 for 
production research projects. Budgeted expenses for these items in 
2002-03 were $59,859, $20,000, $137,000, and $100,800, respectively.
    The assessment rate recommended by the Committee was derived by 
considering anticipated expenses, expected shipments of South Texas 
melons, anticipated interest income, and the amount of funds in the 
Committee's operating reserve. As mentioned earlier, melon shipments 
for the fiscal period are estimated at 3,385,000, which should provide 
$304,650 in assessment income at the $0.09 per carton rate. Income 
derived from handler assessments, along with interest income and funds 
from the Committee's authorized reserve, would be adequate to cover 
budgeted expenses. Funds in the reserve (currently $193,776) would be 
kept within the maximum permitted by the order (approximately two 
fiscal periods' expenses, Sec.  979.44).
    The proposed assessment rate would 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 would be in effect for an indefinite 
period, the Committee would 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 would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2003-04 budget and those 
for subsequent fiscal periods would be reviewed and, as appropriate, 
approved by USDA.

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

[[Page 13271]]

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 33 growers of melons in the production area 
and approximately 25 handlers subject to regulation under the marketing 
order. Small agricultural growers 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 growing, shipping, and marketing melons. For the 2002-03 
marketing year, the industry's 25 handlers shipped melons produced on 
5,945 acres with the average and median volume handled being 111,651 
and 32,215 cartons, respectively. In terms of production value, total 
revenue for the 25 handlers was estimated to be $25.6 million, with the 
average and median revenues being $1.02 million and $296,000, 
respectively.
    The South Texas melon industry is characterized by growers 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 melons. Alternative crops provide an 
opportunity to utilize many of the same facilities and equipment not in 
use when the melon production season is complete. For this reason, 
typical melon growers and handlers either double-crop melons during 
other times of the year or produce alternate crops, like onions.
    Based on the SBA's definition of small entities, the Committee 
estimates that 23 of the 25 handlers regulated by the order would be 
considered small entities if only their spring melon revenues are 
considered. However, revenues from other productive enterprises could 
likely push a large number of these handlers above the $5,000,000 
annual receipt threshold. Of the 33 growers within the production area, 
few have sufficient acreage to generate sales in excess of $750,000; 
therefore, the majority of growers may be classified as small entities.
    This rule would increase the assessment rate established for the 
Committee and collected from handlers for the 2003-04 and subsequent 
fiscal periods from $0.06 to $0.09 per carton handled. The Committee 
recommended 2003-04 expenditures of $351,859 and an assessment rate of 
$0.09 per carton. The proposed assessment rate of $0.09 is $0.03 higher 
than the current rate. At the rate of $0.09 per carton and an estimated 
2003-04 melon production of 3,385,000 cartons, the projected income 
derived from handler assessments ($304,650), along with interest and 
funds from the Committee's authorized reserve, would be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the Committee for the 2003-04 
fiscal period include $59,859 for administrative expenses, $20,000 for 
compliance, $160,000 for market development, and $112,000 for 
production research projects. Budgeted expenses for these items in 
2002-03 were $59,859, $20,000, $137,000, and $100,800, respectively.
    The Committee recommended the increased rate to fund a variety of 
production research projects, without having to draw a large amount 
from reserves. Without the increase, the Committee's reserve fund would 
drop to $50,017, which is lower than what the Committee needs for 
operations. With the increased rate, the reserve fund would only drop 
to $151,567.
    The Committee voted to increase its assessment rate because the 
current rate would reduce the Committee's reserve funds to an 
unacceptable level. Assessment income, along with interest and funds 
from the Committee's authorized reserve, would provide the Committee 
with adequate funds to meet its 2003-04 fiscal period's expenses.
    The Committee reviewed and unanimously recommended 2003-04 
expenditures of $351,859, which included an increase in its market 
development and production research programs. Prior to arriving at this 
budget, the Committee considered information from various sources, 
including the Research and Market Development Subcommittee. Alternative 
expenditure levels were discussed by these groups, based upon the 
relative value of various production research and market development 
projects to the melon industry. The assessment rate of $0.09 per carton 
of assessable melons was then determined by considering the total 
recommended budget, the quantity of assessable melons estimated at 
3,385,000 cartons for the 2003-04 fiscal period, anticipated interest 
income, and the funds in the Committee's operating reserve. The 
recommended rate will generate $304,650, which is $47,209 below the 
anticipated expenses. The Committee found this acceptable because 
interest and reserve funds will be used to make up the deficit.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the grower 
price for the 2003-04 marketing season could range between $6.68 and 
$7.60 per carton of cantaloupes and between $5.40 and $6.33 per carton 
of honeydew melons. Therefore, the estimated assessment revenue for the 
2003-04 fiscal period as a percentage of total grower revenue could 
range between 1.2 and 1.3 percent for cantaloupes and between 1.4 and 
1.7 percent for honeydew melons.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to growers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Committee's meetings were widely 
publicized throughout the South Texas melon industry and all interested 
persons were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the September 
11, 2003, and January 14, 2004, meetings were public meetings and all 
entities, both large and small, were able to express views on this 
issue. Finally, interested persons are invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large production area 
commodity 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 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 15-day comment period is provided to allow interested persons to 
respond to this proposed rule. Fifteen days is deemed appropriate 
because: (1) The 2003-04 fiscal period began on October 1, 2003, and 
the marketing order requires that the rate of assessment for each 
fiscal period apply to all assessable

[[Page 13272]]

melons handled during such fiscal period; (2) the Committee needs to 
have sufficient funds to pay its expenses which are incurred on a 
continuous basis; and (3) handlers are aware of this action which was 
recommended by the Committee at a public meeting and is similar to 
other assessment rate actions issued in past years.

List of Subjects in 7 CFR Part 979

    Marketing agreements, Melons, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 979 is 
proposed to be amended as follows:

PART 979--MELONS GROWN IN SOUTH TEXAS

    1. The authority citation for 7 CFR part 979 continues to read as 
follows:

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

    2. Section 979.219 is revised to read as follows:


Sec.  979.219  Assessment rate.

    On and after October 1, 2003, an assessment rate of $0.09 per 
carton is established for South Texas melons.

    Dated: March 15, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-6323 Filed 3-19-04; 8:45 am]
BILLING CODE 3410-02-P