[Federal Register Volume 70, Number 35 (Wednesday, February 23, 2005)]
[Rules and Regulations]
[Pages 8709-8712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3389]



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  Federal Register / Vol. 70, No. 35 / Wednesday, February 23, 2005 / 
Rules and Regulations  

[[Page 8709]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV05-979-1 FIR]


Melons Grown in South Texas; Temporary Suspension of Handling and 
Assessment Collection 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, without change, an interim final rule suspending, 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 continues in effect the 
action that suspends reporting requirements, except for the acreage 
planting reports, which 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 reduces handler costs while the industry 
evaluates whether the marketing order should be continued.

EFFECTIVE DATE: March 25, 2005.

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.''
    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 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 action that suspends, for the 
remainder of the 2004-05 fiscal period, the minimum grade, quality, 
maturity, container, pack, inspection, and other related requirements 
previously prescribed under the South Texas melon order. For the 
purpose of this rule, these requirements are referred to as handling 
requirements. It also continues in effect the suspension of the 
assessment collection and all reporting requirements, with the 
exception of the acreage planting reports, which continue to be 
required during the suspension period. This rule reduces 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.
    Prior to November 27, 2004, fresh market shipments of South Texas 
melons were required to be inspected and were subject to minimum grade, 
quality, maturity, and container and pack requirements. Section 979.304 
Handling regulation (7 CFR part 979.304) stated that no handler could 
handle cantaloupes grown in the production area unless such cantaloupes 
met 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 would be permitted. Honeydew melons were also 
required to meet the requirements of U.S. Commercial grade except that 
not more than 20 percent serious damage was 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 could contain not less than 8 percent soluble solids as 
determined by an approved hand refractometer. Individual containers of 
honeydew melons could contain no less than 25 percent U.S. Commercial 
grade or better quality. Individual containers

[[Page 8710]]

of cantaloupe and honeydew melons could contain not more than double 
the specified lot tolerance for scorable defects.
    The order's container and pack requirements were also specified in 
Sec.  979.304. Cantaloupes and honeydew melons were required to be 
packed in fiberboard cartons of specified dimensions. Each carton was 
required to 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 was 
not clean and bright in appearance without marks, stains, or other 
evidence of previous use, the carton was required to be marked with the 
words ``USED BOX.'' Honeydew melons were also required to be packed in 
bulk containers with specified dimensions.
    Section 979.304 further included a minimum quantity exemption of 
120 pounds per day, and reporting and safeguard requirements for 
special purpose and experimental shipments. Related provisions appeared 
in the regulations in Sec.  979.106 Registered handler; 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 2004-05 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) would 
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 did not 
justify continuing the regulations for 2004-05. Too little revenue 
would 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 continues in effect the action that enables handlers to 
ship melons without regard to the minimum grade, quality, maturity, 
container, pack, inspection, and related requirements for the remainder 
of the 2004-05 fiscal period. It continues in effect the action that 
decreases industry expenses associated with inspection and assessments. 
This rule does not restrict handlers from seeking inspection on a 
voluntary basis.
    Consistent with the temporary suspension of Sec.  979.304, this 
rule also continues in effect the action that suspends Sec.  979.106, 
Sec.  979.152, and Sec.  979.155 of the rules and regulations in effect 
under the order for the 2004-05 fiscal period. Section 979.106 provided 
for the registration of handlers, Sec.  979.152 detailed procedures for 
the handling of cull melons, and Sec.  979.155 provided safeguard 
requirements for special purpose shipments and established reporting 
and recordkeeping requirements when such exemptions were in place.
    In addition, this rule also continues in effect the action that 
temporarily 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 is 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.

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 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,

[[Page 8711]]

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 2004-05 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 was to 
ensure that only acceptable quality cantaloupe and honeydew melons 
entered 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) would 
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 did not 
justify continuing the regulations for 2004-05. Too little assessment 
revenue would be generated for an effective marketing and promotion 
program, and buyer demands have superseded the regulations in dictating 
quality requirements.
    This rule continues in effect the action that enables handlers to 
ship melons without regard to the minimum grade, quality, maturity, 
container, pack, inspection, and related requirements for the remainder 
of the 2004-05 fiscal period. It decreases industry expenses associated 
with inspection and assessments. This rule does not restrict handlers 
from seeking inspection on a voluntary basis.
    In addition, this rule also continues in effect the action that 
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 the suspension of Sec.  979.219, Sec.  979.112 
specifying late payment charges on delinquent assessments continues to 
be 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 is 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 continues in effect the action that 
suspends minimum grade, quality, maturity, container, pack, inspection, 
assessment collection, some reporting, and other related requirements. 
Further, this rule continues in effect the action that allows 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 2004-05 season.
    The suspension of the assessment collection requirements for the 
2004-05 season also results in some cost savings. Assessment 
collections during 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 2004-05 fiscal period 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 2004-05 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

[[Page 8712]]

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, 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 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.
    An interim final rule concerning this action was published in the 
Federal Register on November 26, 2004. Copies of the rule were mailed 
by the Committee's staff to all Committee members and melon handlers. 
In addition, the rule was made available through the Internet by USDA 
and the Office of the Federal Register. That rule provided for a 60-day 
comment period which ended January 25, 2005. One comment was received 
during that period. The comment concerned melon imports from Mexico and 
is, therefore, not applicable to this rulemaking action because the 
South Texas melon marketing order does not impact melon imports. The 
comment also stated that the Committee should be disbanded. The 
Committee is authorized under the marketing order and the Act. No 
changes are made as a result of the comment.
    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 
the regulations suspended in this final rule, which adopts, without 
change, the interim final rule, as published in the Federal Register 
(69 FR 68761, November 26, 2004), no longer tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 979

    Marketing agreements, Melons, Reporting and recordkeeping 
requirements.

PART 979--MELONS GROWN IN SOUTH TEXAS

0
Accordingly, the interim final rule amending 7 CFR part 979 which was 
published at 69 FR 68761 on November 26, 2004, is adopted as a final 
rule without change.

    Dated: February 16, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-3389 Filed 2-22-05; 8:45 am]
BILLING CODE 3410-02-P