[Federal Register Volume 69, Number 250 (Thursday, December 30, 2004)]
[Rules and Regulations]
[Pages 78296-78298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-28631]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV05-959-1 IFR]


Onions Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate established for the 
South Texas Onion Committee (Committee) for the 2004-05 and subsequent 
fiscal periods from $0.03 to $0.02 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 August 1 and ends July 31. The assessment rate will remain in 
effect indefinitely unless modified, suspended, or terminated.

DATES: Effective January 3, 2005. Comments received by February 28, 
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. 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, 
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. 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, 2004, 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 2004-05 and subsequent fiscal periods from $0.03 to 
$0.02 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 2003-04 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 June 3, 2004, and unanimously recommended 
2004-05 fiscal period expenditures of $145,291 and an assessment rate 
of $0.03 per 50-pound equivalent of onions. The Committee subsequently 
met on October 28, 2004, and unanimously recommended a revised budget 
of $141,819 and a reduced assessment rate of $0.02 per 50-pound 
equivalent of onions. In comparison, last year's budgeted expenditures 
were $139,661. The recommended assessment rate is $0.01 lower than the 
rate currently in effect. The decrease in the assessment rate is 
primarily due to the 2005 onion crop expected to be larger than 
previously estimated (5 million 50-pound equivalents vs. 4 million 50-
pound equivalents). The reduced assessment rate and budget will lower 
handler costs by about $50,000 and will keep the Committee's reserves 
at an acceptable level. At the current rate of assessment, assessment 
and interest income would exceed anticipated expenses by about $11,000, 
and the projected reserve on July 31, 2005, would exceed the level 
authorized by the order.
    The major expenditures recommended by the Committee for the 2004-05 
fiscal period include $76,819 for personnel and office expenses, 
$30,000 for compliance, and $35,000 for

[[Page 78297]]

promotion expenses. Budgeted expenses for these items in 2003-04 were 
$74,661, $30,000, and $35,000, respectively.
    The assessment rate recommended by the Committee was derived by 
considering anticipated expenses and production levels of South Texas 
onions, and additional pertinent factors. In its recommendation, the 
Committee utilized an estimate of 5 million 50-pound equivalents of 
assessable onions for the 2004-05 fiscal period. If realized, this will 
provide estimated assessment revenue of $100,000 from all handlers. In 
addition, it is anticipated that $41,819 will be provided by interest 
income and reserve funds. When combined, revenue from these sources 
will be adequate to cover budgeted expenses. Funds in the reserve 
(currently $277,746) will be kept within the maximum of approximately 
two fiscal periods' expenses as required by Sec.  959.43 of the order.
    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 is effective 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 2004-05 budget and those 
for subsequent fiscal periods will 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 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 113 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 2003-04 
marketing year, the industry's 37 handlers shipped onions produced on 
14,436 acres with the average and median volume handled being 137,530 
and 111,545 fifty-pound equivalents, respectively. In terms of 
production value, total revenues for the 37 handlers were estimated to 
be $42.5 million, with average and median revenues being $1.14 million 
and $931,400, 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 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 113 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 2004-05 and subsequent 
fiscal periods from $0.03 to $0.02 per 50-pound equivalent of onions 
handled. The Committee unanimously recommended 2004-05 expenditures of 
$141,819 and an assessment rate of $0.02 per 50-pound equivalent of 
onions handled. The recommended assessment rate is $0.01 lower than the 
rate currently in effect. The quantity of assessable onions for the 
2004-05 fiscal period is estimated at 5 million 50-pound equivalents. 
Thus, the $0.02 rate should provide $100,000 in assessment income. 
Income derived from handler assessments, along with interest income and 
funds from the Committee's authorized reserve, will be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the Committee for the 2004-05 
fiscal period include $76,819 for personnel and office expenses, 
$30,000 for compliance, and $35,000 for promotion expenses. Budgeted 
expenses for these items in 2003-04 were $74,661, $30,000, and $35,000, 
respectively.
    The Committee reviewed and unanimously recommended 2004-05 
expenditures of $141,819, which include a decrease in administrative 
expenses. The assessment rate of $0.02 per 50-pound equivalent of 
assessable onions recommended by the Committee was determined by 
considering anticipated expenses and production levels of South Texas 
onions. The Committee utilized an estimate of 5 million 50-pound 
equivalents of assessable onions for the 2004-05 fiscal period, which, 
if realized, will provide estimated assessment revenue of $100,000 from 
all handlers. In addition, it is anticipated that $41,819 will be 
provided by interest income and reserve funds. When combined, revenue 
from these sources will be adequate to cover budgeted expenses.
    The Committee discussed alternative expenditure levels, but 
determined that the recommended expenses were reasonable and necessary 
to adequately cover program operations. Other assessment rates were not 
considered because the Committee had substantially lowered its 
assessment rate the previous fiscal year.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the season 
average f.o.b. price for the 2004-05 fiscal period could range between 
$9.25 and $19.05 per 50-pound equivalent of onions (range of Texas 
f.o.b. onion prices for 2001 through 2003). Therefore, the estimated 
assessment revenue for the 2004-05 fiscal period as a percentage of 
total

[[Page 78298]]

f.o.b. revenue could range between .10 and .22 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 October 
28, 2004, meeting was a public meeting 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 action 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 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 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 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 2004-05 fiscal period began on August 1, 
2004, and the marketing order requires that the rate of assessment for 
each fiscal period apply to all assessable onions handled during such 
fiscal period; (2) this action decreases the assessment rate for 
assessable onions beginning with the 2004-05 fiscal period; (3) 
handlers are aware of this action which was unanimously recommended by 
the Committee at a public meeting and is similar to other assessment 
rate actions issued in past years; and (4) this interim final rule 
provides a 60-day comment period, and all comments timely 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.


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, 2004, an assessment rate of $0.02 per 50-
pound equivalent is established for South Texas onions.

    Dated: December 23, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-28631 Filed 12-29-04; 8:45 am]
BILLING CODE 3410-02-P