[Federal Register Volume 72, Number 87 (Monday, May 7, 2007)]
[Rules and Regulations]
[Pages 25677-25680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8626]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 87 / Monday, May 7, 2007 / Rules and 
Regulations  

[[Page 25677]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. AMS-FV-06-0214; FV07-959-1 IFR]


Onions Grown in South Texas; Change in Regulatory Period

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule revises the regulatory period for minimum grade, 
size, quality, and maturity requirements applicable to onions grown in 
South Texas under Marketing Order No. 959 (order). The current 
regulatory period for South Texas onions is March 1 through June 4 of 
each year. Changes in available varieties, growing seasons, and 
marketing opportunities over the years have resulted in a prolonged 
onion shipping season that now extends beyond June 4 into mid-July. The 
new regulatory period will extend through July 15. The South Texas 
Onion Committee (Committee), which locally administers the order, 
unanimously recommended the change.

DATES: Effective May 8, 2007. Comments received by July 6, 2007 will be 
considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action. 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 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 available for public inspection in the Office of the Docket 
Clerk during regular business hours, or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, Regional Manager, 
Texas Marketing Field Office, Marketing Order Administration Branch, 
Fruit and Vegetable Programs, AMS, USDA; Telephone: (956) 682-2833, 
Fax: (956) 682-5942, or e-mail: [email protected].
    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. This action 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 action, which was unanimously recommended by the Committee, 
extends the regulatory period when minimum grade, size, quality, and 
maturity requirements apply to onions grown under the order in South 
Texas.
    Under the terms of the order, fresh market shipments of onions 
grown in a 35-county production area in South Texas are currently 
subject to handling regulations during the period March 1 through June 
4 of each year. According to the Committee, changes in available 
varieties, growing seasons, and marketing opportunities over the years 
have resulted in a prolonged onion shipping season that now extends 
beyond June 4 into mid-July. Because the current regulatory period does 
not cover the present production season completely, not all onion 
shipments occurring after June 4 are currently subject to order 
requirements.
    According to USDA Market News data, 40 percent of South Texas 
onions shipped in 2005 from District 2, or roughly 11 percent of total 
shipments for the production area, occurred after June 4. In 2006, 30 
percent of onions shipped from District 2, or approximately 10 percent 
of total shipments for the production area, were shipped after June 4.
    Section 959.110 of the order's rules and regulations apportions the 
35 counties between two onion-growing areas known as District 1, 
designated as the Coastal Bend-Lower Valley area, and District 2, 
designated as the Laredo-Winter Garden area. District 1 is comprised of 
the counties of Victoria, Calhoun, Goliad, Refugio, Bee, Live Oak, San 
Patricio, Aransas, Jim Wells, Nueces, Kleberg, Brooks, Kenedy, Duval, 
McMullen, Cameron, Hidalgo, Starr, and Willacy. District 2 includes the 
counties of Zapata, Webb, Jim Hogg, De Witt, Wilson, Atascosa, Karnes, 
Val Verde, Frio, Kinney, Uvalde, Medina, Maverick, Zavala, Dimmit, and 
LaSalle.
    Section 959.52(b) of the order provides authority to limit the 
handling of any grade, size, quality, maturity, or pack of onions 
within the production area during any period. Section 959.322 outlines 
the regulatory requirements authorized under Sec.  959.52(b). Such

[[Page 25678]]

grade requirements are based on the U.S. Standards for Grades of 
Bermuda-Granex-Grano Type Onions (7 CFR part 51.3195-3212), or the U.S. 
Standards for Grades of Onions (Other than Bermuda-Granex-Grano and 
Creole Types) (7 CFR part 51.2830-2854).
    Currently, these handling regulations provide that shipments may 
not exceed 20 percent defects of U.S. No. 1 grade. In percentage grade 
lots, tolerances for serious damage shall not exceed 10 percent 
including not more than 2 percent decay. Double the lot tolerance is 
permitted in individual packages in percentage grade lots. Applications 
of tolerances in U.S. onion standards apply to in-grade lots.
    Minimum size requirements for different size designations are 
outlined in the regulations. Specifically, for white onions only, the 
minimum diameter is 1 inch to 2\1/4\ inches maximum diameter. For other 
than white onions, the minimum diameter for repacker onions is 1\3/4\ 
inches to 3 inches maximum with 60 percent or more 2 inches in diameter 
or larger, 2 to 3\1/2\ inches for medium, 3 inches or larger for jumbo 
or large onions, and 3\3/4\ inches or larger for colossal.
    The regulations further specify that tolerances for size in the 
U.S. onion standards shall apply except that for repacker and medium 
sizes, not more than 20 percent, by weight, of onions in any lot may be 
larger than the maximum diameter specified.
    The current South Texas regulatory period during which the 
aforementioned regulations are in effect runs from March 1 through June 
4, annually. A final rule published on May 17, 1996 (61 FR 24877), 
established this regulatory period to promote the orderly marketing of 
onions.
    Extending the end date of the regulatory period from June 4 to July 
15 each year will provide the consumer with quality onions for a longer 
period of time because the entire production area will be regulated 
throughout its shipping period. Normally, South Texas onion handlers 
continue to voluntarily request inspection of their onions after June 4 
to ensure product quality past the current regulatory period. Because 
the industry is already voluntarily having their onions inspected, the 
extension is not expected to negatively impact the industry and this 
change will align order requirements with present day industry 
operations.
    Collecting assessments for an additional five weeks will provide 
the Committee with additional assessment revenue. Based on USDA Market 
News shipment 2005 data, an additional 1,086,600 fifty-pound equivalent 
cartons would have been assessed if the extended regulatory period had 
been in effect. At the current assessment rate of $0.02 per carton, 
this amount would have generated an additional $21,732 in assessment 
revenue. Similarly, Market News data for 2006 indicates that an 
additional 863,400 cartons would have been assessed between June 4 and 
July 15, and would have resulted in $17,268 of additional assessment 
revenue.
    The additional revenue collected as a result of an extended 
regulatory period in 2007 will allow the Committee to further promote 
onions and conduct more research projects, making it advantageous to 
the industry as well as the consumer. All producers will realize a 
better return for a quality pack through research and market 
development projects funded by the collection of assessments through 
July 15.

Initial Regulatory Flexibility Analysis

    Pursuant to the 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 so 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. Small agricultural growers have been 
defined by the Small Business Administration (SBA) (13 CFR 121.201) as 
those having annual receipts of less than $750,000. Small agricultural 
service firms are defined as those with annual receipts of less than 
$6,500,000.
    There are approximately 114 producers of onions in the production 
area and approximately 38 handlers subject to regulation under the 
order.
    Most of the handlers are vertically integrated corporations 
involved in producing, shipping, and marketing onions. For the 2005-06 
marketing year, the industry's 38 handlers shipped onions produced on 
17,694 acres with the average and median volume handled being 182,148 
and 174,437 fifty-pound equivalents, respectively. In terms of 
production value, total revenues for the 38 handlers were estimated to 
be $44.2 million, with average and median revenues being $l.6 million 
and $1.12 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 all of the 38 handlers regulated by the order would be 
considered small entities if only their onion revenues are considered. 
However, revenues from other productive enterprises would likely push a 
number of these handlers above the $6,500,000 annual receipt threshold. 
All of the 114 producers may be classified as small entities based on 
the SBA definition if only their revenue from onions is considered.
    This rule extends the end date of the order's regulatory period 
from June 4 to July 15 of each year for Texas onions shipped to the 
fresh market. This action, which was unanimously recommended by the 
Committee, extends the regulatory period when minimum grade, size, 
quality, and maturity requirements apply to onions grown under the 
order. Authorization to implement such regulations is provided in Sec.  
959.52(b) of the order. Regulatory requirements authorized under this 
section are provided in Sec.  959.322.
    This action provides that fresh onion shipments from the entire 
South Texas onion production area meet all order requirements from 
March 1 through July 15 of each year. The current regulations require 
that onions grown in the production area meet order requirements from 
March 1 through June 4 of each year.
    According to the Committee, changes in available varieties, growing 
seasons, and marketing opportunities over the years have resulted in a 
prolonged onion shipping season that now extends beyond June 4 into 
mid-July. Because the current regulatory period does not cover the 
present production season completely, not all onion shipments occurring 
after June 4 are currently subject to mandatory inspection under the 
order. Extending the regulatory period will ensure that all South Texas 
onions would be inspected to order specifications.
    Many South Texas onion handlers currently continue to voluntarily 
request inspection of their onions after June 4 to ensure product 
quality. Because the industry is already

[[Page 25679]]

voluntarily having their onions inspected, the extension is not 
expected to negatively impact the industry and this change will align 
order requirements with present day industry operations.
    According to USDA Market News data, forty percent of South Texas 
onions shipped in 2005 from District 2, or roughly 11 percent of total 
shipments for the production area, occurred after June 4. In 2006, 30 
percent of onions shipped from District 2, or approximately 10 percent 
of total shipments for the production area, were shipped after June 4.
    This action is also expected to support Committee promotional and 
research activities and benefit consumers. The Committee has indicated 
that collecting assessments for an additional five weeks will provide 
them with additional assessment revenue.
    Based on USDA Market News shipment 2005 data, an additional 
1,086,600 fifty-pound equivalent cartons would have been assessed if 
the extended regulatory period had then been in effect. At the current 
assessment rate of $0.02 per carton, this amount would have generated 
an additional $21,732 in assessment revenue. Similarly, Market News 
data for 2006 indicates that an additional 863,400 cartons would have 
been assessed between June 4 and July 15, 2006, and would have resulted 
in $17,268 of additional assessment revenue.
    The additional revenue will allow the Committee to further promote 
onions and conduct more research projects, making it advantageous to 
the industry as well as the consumer. All producers will realize a 
better return for a quality pack through research and market 
development projects funded by the collection of assessments through 
July 15.
    The additional five weeks of assessment collection is not expected 
to significantly burden South Texas Onion handlers. A burden 
calculation of the additional assessments that would have been 
collected in 2006 if the regulatory period had been in effect for that 
season indicates that the additional assessment payments by handlers 
would have equaled 0.039 percent of total of 2006 production value 
[($17,268/$44.2 million) x 100 = 0.039]. Total 2006 revenues for the 38 
handlers were estimated to be $44.2 million, with average and median 
revenues being $l.6 million and $1.12 million, respectively.
    Extending the end date of the regulatory period from June 4 to July 
15 each year will also provide the consumer with quality onions for a 
longer period of time because the entire production area will be 
regulated throughout its shipping period.
    One alternative to this action would be to not extend the 
regulatory period beyond the current end date of June 4. However, the 
Committee believes that not extending the regulatory period would 
result in a significant portion of the South Texas onion crop not being 
consistently regulated.
    While most handlers currently extend inspection beyond the June 4 
regulatory deadline on a voluntary basis, such inspection is not 
required. By extending the regulatory period, such inspection would be 
mandatory. Mandatory inspection will ensure orderly marketing of all 
South Texas onions since all handlers and product will be required to 
fulfill the same inspection requirements and product standards under 
the order for the entire production period. Therefore, USDA determined 
that the end date of the regulatory period for South Texas onions 
should be extended from June 4 to July 15.
    While this action will impose some additional costs on South Texas 
onion handlers and producers, the costs are expected to be minimal, and 
will be offset by the benefits of the action. The Committee believes 
that this modification will benefit consumers, producers, and handlers. 
The benefits of this action are not expected to be disproportionately 
greater or lesser for small entities than for large entities.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large 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.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
    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 South Texas onion industry and all interested persons were invited 
to attend the meeting and participate in Committee deliberations. All 
Committee meetings are public meetings and all entities, both large and 
small, are able to express their views. 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 the extension of the regulatory 
period under the South Texas onion 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 recommendations, and other information, it is found 
that this interim final 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) This rule should be implemented as soon as possible since 
the South Texas onion regulatory period began March 1, 2007; (2) the 
rule will benefit the onion industry by aligning the regulatory period 
with current production practices; (3) the Committee discussed this 
issue and unanimously recommended this change at a public meeting and 
interested parties had an opportunity to provide input at the meeting; 
and (4) the 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 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:
0
1. The authority citation for 7 CFR part 959 continues to read as 
follows:

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

PART 959--ONIONS GROWN IN SOUTH TEXAS

0
2. In Sec.  959.322, the introductory text is revised to read as 
follows:


Sec.  959.322  Handling regulation.

    During the period beginning March 1 and ending July 15, no handler 
shall

[[Page 25680]]

handle any onions, including onions for peeling, chopping, and slicing, 
unless they comply with paragraphs (a) through (c) or (d) or (e) of 
this section.
* * * * *

    Dated: May 1, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E7-8626 Filed 5-4-07; 8:45 am]
BILLING CODE 3410-02-P