[Federal Register Volume 69, Number 227 (Friday, November 26, 2004)]
[Rules and Regulations]
[Pages 68761-68764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26120]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV05-979-1 IFR]


Melons Grown in South Texas; Temporary Suspension of Handling and 
Assessment Collection Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule suspends, for the 2004-05 fiscal period, the minimum 
grade, quality, maturity, container, pack, inspection, assessment 
collection, and other related requirements currently prescribed under 
the South Texas melon (cantaloupes and honeydews) marketing order 
(order). It also suspends reporting requirements, except for the 
acreage planting reports, which will continue to be required during the 
suspension period. The order regulates the handling of melons grown in 
South Texas and is administered locally by the South Texas Melon 
Committee (Committee). This rule will reduce handler costs while the 
industry evaluates whether the marketing order should be continued.

DATES: Effective November 27, 2004. Comments received by January 25, 
2005 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; E-mail: [email protected]; or 
Internet: http://www.regulations.gov. 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, Texas 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. 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. 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

[[Page 68762]]

the petition, provided an action is filed not later than 20 days after 
the date of the entry of the ruling.
    This rule suspends, for the remainder of the 2004-05 fiscal period, 
the minimum grade, quality, maturity, container, pack, inspection, and 
other related requirements currently prescribed under the South Texas 
melon order. For the purpose of this rule, these requirements are 
referred to as handling requirements. It also suspends the assessment 
collection and all reporting requirements, with the exception of the 
acreage planting reports, which will continue to be required during the 
suspension period. This rule will reduce industry expenses, while the 
industry evaluates whether the marketing order should be continued.
    Section 979.52 of the order provides authority for grade, size, 
maturity, quality, and pack regulations for any variety of melons grown 
in the production area during any period. Section 979.52 also 
authorizes the modification, suspension, or termination of regulations 
issued under the order. Authority to terminate or suspend provisions of 
the order is specified in Sec.  979.84.
    Section 979.60 provides that whenever melons are regulated pursuant 
to Sec.  979.52, such melons must be inspected by the Federal-State 
Inspection Service, and certified as meeting the applicable 
requirements of such regulations. The cost of such inspection and 
certification is borne by handlers.
    Under the order, fresh market shipments of South Texas melons are 
required to be inspected and are subject to minimum grade, quality, 
maturity, and container and pack requirements. Section 979.304 Handling 
regulation (7 CFR part 979.304) states that no handler shall handle 
cantaloupes grown in the production area unless such cantaloupes meet 
the requirements specified for U.S. Commercial grade or better, except 
that not more than 8 percent serious damage including not more than 5 
percent decay will be permitted. Honeydew melons must also meet the 
requirements U.S. Commercial grade except that not more than 20 percent 
serious damage may be allowed including not more than 10 percent for 
melons affected by decay. In addition, the combined juice from the 
edible portion of a sample of honeydews selected at random shall 
contain not less than 8 percent soluble solids as determined by an 
approved hand refractometer. Individual containers of honeydew melons 
may contain no less than 25 percent U.S. Commercial grade or better 
quality. Individual containers of cantaloupe and honeydew melons may 
contain not more than double the specified lot tolerance for scorable 
defects.
    The order's container and pack requirements are also specified in 
Sec.  979.304. Cantaloupes and honeydew melons must be packed in 
fiberboard cartons of specified dimensions. Each carton must be marked 
to indicate the count; the name, address, and zip code of the shipper; 
the name of the product; and the words ``Produce of U.S.A.'' or 
``Product of U.S.A.'' Additionally, if the carton is not clean and 
bright in appearance without marks, stains, or other evidence of 
previous use, the carton must be marked with the words ``USED BOX''. 
Honeydew melons may also be packed in bulk containers with specified 
dimensions.
    Section 979.304 further includes a minimum quantity exemption of 
120 pounds per day, and reporting and safeguard requirements for 
special purpose and experimental shipments. Related provisions appear 
in the regulations in Sec.  979.106 Registered handlers; Sec.  979.152 
Handling of culls; and Sec.  979.155 Safeguards.
    The Committee meets prior to and during each season to consider 
recommendations for modification, suspension, or termination of the 
regulatory requirements that have been issued on a continuing basis for 
South Texas melons. Committee meetings are open to the public and 
interested persons may express their views at these meetings. USDA 
reviews Committee recommendations and information submitted by the 
Committee and other available information, and determines whether 
modification, suspension, or termination of the regulatory requirements 
would tend to effectuate the declared policy of the Act.
    At its September 16, 2004, meeting, the Committee unanimously 
recommended suspending, for the 2004-2005 fiscal period, the handling, 
assessment collection, and all reporting requirements, except for the 
acreage planting reporting requirement. The 2004-05 fiscal period began 
October 1, 2004, and ends September 30, 2005.
    The objective of the handling and inspection requirements is to 
ensure that only acceptable quality cantaloupe and honeydew melons 
enter fresh market channels, thereby ensuring consumer satisfaction, 
increasing sales, and improving returns to growers. While the industry 
continues to believe that quality is an important factor in maintaining 
sales, the Committee believes that the cost of inspection and 
certification (mandated when minimum requirements are in effect) may 
exceed the benefits derived, especially in view of reduced melon 
acreage and yields in recent years.
    The South Texas cantaloupe and honeydew melon industry has been 
shrinking due to the inability to provide dependable supplies because 
of adverse weather conditions, a lack of success in breeding improved 
quality melons buyers desire, and intense foreign and domestic 
competition. South Texas historically had enjoyed a marketing window of 
approximately six weeks beginning about May 1 each season. That window 
has steadily eroded in recent years due to strong competition and 
quality problems with Texas melons. As a result, acreage has decreased 
dramatically from a high of 27,463 acres in 1987 to 4,780 in 2004. The 
number of producers and handlers also has declined.
    The Committee recommended suspending the regulations and assessment 
collections for one fiscal period in hopes that new plants might be 
developed and help revive the industry. Some in the industry believe 
that the order is no longer needed. The suspensions are designed to 
decrease handler costs, while the industry evaluates whether the 
marketing order should be continued.
    Underlying economics for the South Texas melon industry do not 
justify continuing the regulations for 2004-05. Too little revenue can 
be generated for an effective marketing and promotion program, and 
buyer demands have superseded the regulations in dictating quality 
requirements. Buyers have been requesting better quality melons.
    This rule will enable handlers to ship melons without regard to the 
minimum grade, quality, maturity, container, pack, inspection, and 
related requirements for the 2004-2005 fiscal period. It will decrease 
industry expenses associated with inspection and assessments. This rule 
will not restrict handlers from seeking inspection on a voluntary 
basis.
    Consistent with the temporary suspension of Sec.  979.304, this 
rule also suspends Sec.  979.106, Sec.  979.152, and Sec.  979.155 of 
the rules and regulations in effect under the order for the 2004-2005. 
Section 979.106 provides for the registration of handlers, Sec.  
979.152 details procedures for the handling of cull melons, and Sec.  
979.155 provides safeguard requirements for special purpose shipments 
and establishes reporting and recordkeeping requirements when such 
exemptions are in place.
    In addition, this rule also suspends Sec.  979.219 requiring that 
an assessment rate of $0.09 per carton of melons be collected from 
South Texas melon

[[Page 68763]]

handlers. Consistent with suspension of Sec.  979.219, Sec.  979.112 
specifying late payment charges on delinquent assessments is also 
suspended. Authorization to assess melon handlers enables the Committee 
to incur expenses that are necessary to administer the marketing order. 
With the suspension of handling, inspection, and assessment 
requirements, a limited Committee budget will be needed for program 
administration and the collection of the acreage planting reports.
    For the period of the suspension, the Committee recommended a 
reduced budget of $70,959 to cover anticipated expenses. Adequate funds 
to cover these expenses are currently in the Committee's reserves.

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 16 handlers of South Texas melons who are 
subject to regulation under the marketing order and approximately 29 
melon growers in the regulated area. Small agricultural service firms 
are defined by the Small Business Administration (SBA) (13 CFR 121.201) 
as those having annual receipts of less than $5,000,000, and small 
agricultural growers are defined as those having annual receipts of 
less than $750,000.
    Most of the handlers are vertically integrated corporations 
involved in growing, shipping, and marketing melons. For the 2003-04 
marketing year, the industry's 16 handlers shipped melons produced on 
4,780 acres with the average and median volume handled being 89,012 and 
10,655 containers, respectively. In terms of production value, total 
revenue for the 16 handlers was estimated to be $12,175,919, with the 
average and median revenues being $760,996 and $91,094, 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 alternative crops, like onions.
    Based on the SBA's definition of small entities, the Committee 
estimates that all of the 16 handlers regulated by the order would be 
considered small entities if only their spring melon revenues are 
considered. However, revenues from other productive enterprises might 
push a number of these handlers above the $5,000,000 annual receipt 
threshold. Of the 29 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.
    At its September 16, 2004, meeting, the Committee unanimously 
recommended suspending, for the 2004-2005 fiscal period, the handling, 
assessment collection, and all reporting requirements, except for the 
acreage planting reporting requirement. The Committee requested that 
the rule be effective for the 2004-05 fiscal period, which began 
October 1, 2004, and ends September 30, 2005.
    The objective of the handling and inspection requirements is to 
ensure that only acceptable quality cantaloupe and honeydew melons 
enter fresh market channels, thereby ensuring consumer satisfaction, 
increasing sales, and improving returns to growers. While the industry 
continues to believe that quality is an important factor in maintaining 
sales, the Committee believes that the cost of inspection and 
certification (mandated when minimum requirements are in effect) may 
exceed the benefits derived, especially in view of reduced melon 
acreage and yields in recent years. This results in reduced melon 
shipments and reduced assessment income.
    The South Texas cantaloupe and honeydew melon industry has been 
shrinking due to the inability to provide dependable supplies because 
of adverse weather conditions, a lack of success in breeding improved 
quality melons buyers desire, and intense foreign and domestic 
competition. South Texas historically had enjoyed a marketing window of 
approximately six weeks beginning about May 1 each season. That window 
has steadily eroded in recent years due to strong competition and 
quality problems in Texas melons. As a result, acreage has decreased 
dramatically from a high of 27,463 acres in 1987 to 4,780 in 2004. The 
number of producers and handlers also has declined. Some in the 
industry believe that the marketing order is no longer needed.
    Underlying economics for the South Texas melon industry do not 
justify continuing the regulations for 2004-05. Too little assessment 
revenue can be generated for an effective marketing and promotion 
program, and buyer demands have superseded the regulations in dictating 
quality requirements.
    This rule will enable handlers to ship melons without regard to the 
minimum grade, quality, maturity, container, pack, inspection, and 
related requirements for one fiscal period. It will decrease industry 
expenses associated with inspection and assessments. This rule will not 
restrict handlers from seeking inspection on a voluntary basis.
    In addition, this rule also suspends Sec.  979.219 requiring that 
an assessment rate of $0.09 per carton of melons be collected from 
South Texas melon handlers. Consistent with suspension of Sec.  
979.219, Sec.  979.112 specifying late payment charges on delinquent 
assessments is also suspended. Authorization to assess melon handlers 
enables the Committee to incur expenses that are necessary to 
administer the marketing order.
    With the suspension of handling, inspection, and assessment 
requirements, a limited Committee budget will be needed for program 
administration and collection of acreage planting reports. For the 
period of the suspension, the Committee recommended a reduced budget of 
$70,959 to cover anticipated expenses. Adequate funds to cover these 
expenses are currently in the Committee's reserves.
    The Committee anticipates that this rule will not negatively impact 
small businesses. This rule will suspend minimum grade, quality, 
maturity, container, pack, inspection, assessment collection, some 
reporting, and other related requirements. Further, this rule will 
allow handlers and growers the choice to obtain inspection for melons, 
as needed, thereby reducing costs for the industry. The total cost of 
inspection and certification for fresh shipments of South Texas melons 
during the 2003-04 marketing season was $46,000. These costs will not 
be incurred during the 2004-2005 season.
    The suspension of the assessment collection requirements for the 
2004-05 season will also result in some cost savings. Assessment 
collections during

[[Page 68764]]

the 2003-04 season totaled $102,988. Absent the suspension of Sec.  
979.219, assessments collected during the 2004-05 season would have 
been about $292,840.
    The Committee considered suspension of the marketing order, but 
wished to continue receiving data on plantings for a one-year period 
before deciding whether the order should be continued.
    It is possible that the Committee might recommend that the order be 
terminated after the 2004-2005 season if conditions do not improve. 
Some Committee members felt that termination was premature, while 
others felt the order should be immediately eliminated. The Committee 
recommended the suspension of regulations for one fiscal period as an 
orderly and reasonable compromise. This will enable the committee to 
study the impact of suspension, allow the continued collection of data 
on acreage projections, and minimize disruption if the Committee 
chooses to recommend termination after the 2004-2005 fiscal period.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements being suspended by 
this rule were approved previously by the Office of Management and 
Budget (OMB) and assigned OMB No. 0581-0178. Suspension of some of the 
reporting requirements is expected to reduce the reporting burden on 
small or large South Texas melon handlers by 6.12 hours, and should 
further reduce industry expenses. During the suspension period, 
handlers will not have to file the following forms with the Committee: 
Application for Registered Handler (1.74 burden hours); Certification 
for Handling Melons for Processing (0.70 burden hours); Relief or 
Charity Certification for Handling Melons Which Fail to Meet the South 
Texas Rules and Regulations (0.35 burden hours); Certificate of 
Privilege (0.83 burden hours); and Special Purpose Shipment (2.50 
hours). This rule will not impose any additional reporting or 
recordkeeping requirements on either small or large melon 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 melon industry and all interested persons were invited to attend 
the meeting and participate in Committee deliberations. Like all 
Committee meetings, the September 16, 2004, meeting was a public 
meeting and all entities, both large and small, were able to express 
their views on this issue. 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 questions 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 suspension of the handling, 
assessment collection, and some reporting regulations currently 
prescribed under the South Texas melon 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 
the regulations suspended by this interim final rule, as hereinafter 
set forth, no longer 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) The rule suspends the current handling, assessment 
collection, some reporting requirements, and related regulations for 
South Texas melons for the remainder of the 2004-2005 fiscal period; 
(2) this rule was recommended by the Committee at an open public 
meeting and all interested persons had an opportunity to express their 
views and provide input; (3) South Texas melon handlers are aware of 
this rule and need no additional time to comply with the relaxed 
requirements; 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 979

    Marketing agreements, Melons, Reporting and recordkeeping 
requirements.


0
For the reasons set forth in the preamble, 7 CFR part 979 is amended as 
follows:

PART 979--MELONS GROWN IN SOUTH TEXAS

0
1. The authority citation for 7 CFR part 979 continues to read as 
follows:

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


0
2. In Part 979, Sec. Sec.  979.106, 979.112, 979.152, 979.155, 979.219, 
and 979.304 are suspended in their entirety effective November 27, 
2004, through September 30, 2005.

    Dated: November 19, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-26120 Filed 11-24-04; 8:45 am]
BILLING CODE 3410-02-P