[Federal Register Volume 72, Number 154 (Friday, August 10, 2007)]
[Proposed Rules]
[Pages 44984-44988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15391]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket Nos. AO-322-A4; AMS-2006-0079; FV06-959-1]


Onions Grown in South Texas; Secretary's Decision and Referendum 
Order on Proposed Amendments to Marketing Agreement No. 143 and Order 
No. 959

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum order.

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SUMMARY: This decision proposes amending the marketing agreement and 
order (order) for onions grown in South Texas, and provides growers 
with the opportunity to vote in a referendum to determine if they favor 
the changes. The amendments are based on those proposed by the South 
Texas Onion Committee (committee), which is responsible for local 
administration of the order. The amendments include: Adding authority 
to the order to establish supplemental assessment rates on specified 
containers of onions; authorizing interest and late payment charges on 
assessments not paid within a prescribed time period; and authorizing 
the committee to engage in marketing promotion and paid advertising 
activities. Two additional amendments were proposed by the Department 
of Agriculture (USDA): Requiring that a continuance referendum be 
conducted every six years to determine grower support for the order; 
and, limiting the number of consecutive terms of office a member can 
serve on the committee. The proposed amendments are intended to improve 
the operation and functioning of the South Texas onion marketing order 
program.

DATES: The referendum will be conducted from September 10 through 
September 28, 2007. The representative period for the purpose of the 
referendum is August 1, 2006 through July 31, 2007.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, Agricultural 
Marketing Service, USDA, 2202 Monterey Street, 102-B, Fresno, 
CA 93721; telephone: (559) 487-5110, Fax: (559) 487-5906, E-mail: 
[email protected]; or Kathleen M. Finn, 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, E-mail: 
[email protected].
    Small businesses may request information on this proceeding 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, E-mail: [email protected].

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding include a 
Notice of Hearing issued on May 23, 2006, and published in the May 30, 
2006, issue of the Federal Register (71 FR 30629), and a Recommended 
Decision issued on March 29, 2007 and published in the April 6, 2007 
issue of the Federal Register (72 FR 17037).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Order 12866.

Preliminary Statement

    The proposed amendments are based on the record of a public hearing 
held on June 15, 2006, in Mission, Texas. The hearing was held to 
consider the proposed amendment of Marketing Agreement No. 143 and 
Order No. 959 regulating the handling of onions grown in South Texas. 
The hearing was held pursuant to the provisions of the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et

[[Page 44985]]

seq.), hereinafter referred to as the ``Act,'' and the applicable rules 
of practice and procedure governing the formulation of marketing 
agreements and orders (7 CFR part 900). The Notice of Hearing contained 
proposals submitted by the committee and by USDA.
    Four proposed amendments to the order were initially submitted by 
the committee to USDA and were included in the Notice of Hearing. 
Proposal number four in the Notice of Hearing pertaining to container 
marking requirements was withdrawn at the hearing. The committee's 
remaining three proposed amendments to the order would: (1) Provide 
authority to establish supplemental assessment rates on specified 
containers of onions; (2) authorize interest and late payment charges 
on assessments not paid within a prescribed time period; and (3) add 
authority for marketing promotion, including paid advertising.
    The USDA proposed two additional amendments that would: Require a 
continuance referendum to be conducted every six years to determine 
grower support for the order; and limit the number of consecutive years 
a member may serve on the committee. USDA also proposed to make such 
changes to the order as may be necessary, if any of the proposed 
changes are adopted, so that all of the order's provisions conform to 
the effectuated amendments.
    Upon the basis of evidence introduced at the hearing and the record 
thereof, the Administrator of AMS on March 29, 2007, filed with the 
Hearing Clerk, U.S. Department of Agriculture, a Recommended Decision 
and Opportunity to File Written Exceptions thereto by May 7, 2007. None 
were filed.

Small Business Considerations

    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, the 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. 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 growers of onions in the production 
area and approximately 38 handlers subject to regulation under the 
order. 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 $1.16 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. 
Likewise, all of the 114 producers may be classified as small entities 
based on the SBA definition if only their revenue from onions is 
considered.
    The committee is comprised of 10 growers and 7 handlers, 
representing both large and small entities. Committee meetings are open 
to the public. All members are able to participate in committee 
deliberations and each has an equal vote in committee decisions. When 
the committee met on October 28, 2004, and recommended the proposed 
amendments, all views expressed by the members and others in attendance 
were considered.
    In addition, the hearing to receive evidence on the proposed 
changes was open to the public and all interested parties were invited 
and encouraged to participate and provide their views.
    The proposed amendments are intended to provide the committee and 
industry with additional tools to aid in the marketing of South Texas 
onions, and to improve the operation and administration of the order. 
Record evidence indicates that the proposed changes are intended to 
benefit all onion producers and handlers under the order, regardless of 
size. Witnesses testified that the impact of any of the proposals, if 
implemented, would be proportionate to individual grower's and 
handler's size, and that both small and large entities would benefit.
    The record shows that the proposal to include authority for 
supplemental rates of assessments on specified containers would not 
have a differential impact on small versus large growers and handlers. 
Any increased assessment costs would be based on the type and volume of 
containers shipped rather than the size of a grower or handler's 
operation. Any supplemental assessment rate would thus be applied 
proportionately to handlers.
    Onions that are packed and sold in cartons receive a higher return 
than onions packed and sold in bags or sacks. There is no known 
relationship between small versus large growers and handlers and the 
types of containers in which they pack their product. If onions packed 
in the higher value cartons were assessed at a higher rate, the 
assessment burden on the industry would be more proportionate to the 
revenues generated by the sales of product in the different types of 
containers.
    In absolute dollar terms, a handler packing and selling only carton 
onions would pay more in assessments than a handler packing and selling 
a comparable volume of bagged onions. However, witnesses testified that 
additional funds generated from the supplemental assessment rate on 
specified containers would be used to promote sales of the product 
packed and sold in those containers. Therefore, the benefits of 
promotion would more directly benefit those paying the supplemental 
assessment. As discussed later in this document, the benefits of such 
promotions would be expected to outweigh the additional costs. 
Assessment revenues generated from supplemental assessment rates on 
specified containers would not be used to subsidize the lower 
assessment revenues generated from sales of the lower value product, 
thereby ensuring equitability between handlers.
    The proposed amendment to authorize the committee to charge 
interest and/or late payment fees on assessments not paid within a 
prescribed time period would not have a differential impact on small 
and large entities. According to the record, late fees and interest 
charges, if implemented, would be based on handlers' timeliness of 
payments, regardless of size. A hearing witness familiar with the 
assessment collection operations under the order stated that there is 
no relationship between a handler's performance with regard to

[[Page 44986]]

timely assessment payment and the size of the handler's business 
operation. Any increased costs would be borne only by those handlers 
that fail to pay their assessments in a timely manner. These potential 
costs would offset any potential advantage handlers could gain by not 
paying their assessments when due and would thus promote equity for all 
handlers. It would provide an incentive to pay on time. This proposed 
amendment is strictly a performance-based measure and would thus be 
applied based on handlers' performance with respect to their payment of 
assessments.
    Adding authority for paid advertising to the order would not 
disproportionately impact small business if such authority is 
implemented. Paid advertising activities would provide another tool the 
committee could use to promote its product. Paid advertising activities 
would be funded from handler assessments, which, as previously 
mentioned, are proportional to the volume of product shipped and thus 
proportional to the handler's relative size. Likewise, funding of the 
activities would be proportional.
    Promotional activities authorized under the order are generic in 
nature. Generic advertising and promotion attempts to influence 
consumer's preferences and perceptions about a product, and if 
successful, ultimately expands the demand for the product. Because 
generic promotion promotes a product category, it benefits all entities 
in the category, especially growers and handlers. As witnesses 
testified, specific benefits of promotion and advertising programs are 
difficult to quantify, and are especially difficult to estimate prior 
to engaging in the activities. However, if more product is ultimately 
sold, both large and small growers and handlers benefit.
    The proposed amendment to limit the number of consecutive terms of 
office that committee members may serve would increase industry 
participation on the committee by allowing more persons the opportunity 
to serve as members of the committee. It would also provide for more 
diverse membership, provide the committee with new perspectives and 
ideas, and increase the number of individuals in the industry with 
committee experience. There would be no additional cost as a result of 
this amendment.
    The proposal to require continuance referenda on a periodic basis 
to ascertain grower support for the order would allow growers to vote 
on whether to continue the operation of the program. This provides a 
means for those whom the order was intended to benefit with an 
opportunity to express their views regarding continuation of the 
marketing order. USDA would conduct the referenda, and thus USDA would 
bear the majority of any associated costs.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impacts of the proposed 
amendments to the order on small entities. The record evidence is that 
while some minimal costs may occur, those costs would be outweighed by 
the benefits expected to accrue to the South Texas onion industry. In 
addition, any additional costs would be proportional to a handler's 
size and would not unduly or disproportionately impact small entities.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. The amendments are 
designed to improve the administration and operation of the order and 
to provide additional tools to assist in the marketing of South Texas 
onions.

Paperwork Reduction Act

    Current information collection requirements for Part 959 are 
currently approved by the Office of Management and Budget (OMB) under 
OMB number 0581-0178, ``Vegetable and Specialty Crops.'' No changes in 
those requirements as a result of this proceeding are anticipated. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    As with other similar 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.

Civil Justice Reform

    The amendments to Marketing Order 959 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If adopted, the proposed 
amendments would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
proposal.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file 
with the Department 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, the 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 the 
Department's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.

Findings and Conclusions

    The material issues, findings and conclusions, rulings, and general 
findings and determinations included in the Recommended Decision set 
forth in the April 6, 2007, issue of the Federal Register are hereby 
approved and adopted.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is the document entitled 
``Order Amending the Order Regulating the Handling of Onions Grown in 
South Texas.'' This document has been decided upon as the detailed and 
appropriate means of effectuating the foregoing findings and 
conclusions.
    It is hereby ordered, That this entire decision be published in the 
Federal Register.

Referendum Order

    It is hereby directed that a referendum be conducted in accordance 
with the procedure for the conduct of referenda (7 CFR 900.400 et seq.) 
to determine whether the annexed order amending the order regulating 
the handling of onions grown in South Texas is approved or favored by 
growers, as defined under the terms of the order, who during the 
representative period were engaged in the production of onions in the 
production area.
    The representative period for the conduct of such referendum is 
hereby determined to be August 1, 2006, through July 31, 2007.
    The agent of the Secretary to conduct such referendum is hereby 
designated to be 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)

[[Page 44987]]

682-5942, or E-mail: [email protected].

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

    Dated: August 2, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.

Order Amending the Order Regulating the Handling of Onions Grown in 
South Texas \1\
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    \1\ This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and 
marketing orders have been met.
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Findings and Determinations

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (a) Findings and Determinations Upon the Basis of the Hearing 
Record.
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601 et seq.), and the applicable 
rules of practice and procedure effective thereunder (7 CFR part 900), 
a public hearing was held upon the proposed amendments to Marketing 
Agreement No. 143 and Order No. 959 (7 CFR part 959), regulating the 
handling of onions grown in South Texas. Upon the basis of the evidence 
introduced at such hearing and the record thereof, it is found that:
    (1) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, and all of the terms and conditions 
thereof, would tend to effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulate the handling of onions grown 
in the production area (designated counties in South Texas) in the same 
manner as, and are applicable only to, persons in the respective 
classes of commercial and industrial activity specified in the 
marketing agreement and order upon which a hearing has been held;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, are limited in their application to the 
smallest regional production area which is practicable, consistent with 
carrying out the declared policy of the Act, and the issuance of 
several orders applicable to subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    (4) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, prescribe, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of onions grown in the production area; and
    (5) All handling of onions grown in the production area as defined 
in the marketing agreement and order, is in the current of interstate 
or foreign commerce or directly burdens, obstructs, or affects such 
commerce.

Order Relative to Handling

    It is therefore ordered, That on and after the effective date 
hereof, all handling of onions grown in South Texas shall be in 
conformity to, and in compliance with, the terms and conditions of the 
said order as hereby proposed to be amended as follows:
    The provisions of the proposed marketing agreement and order 
amending the order contained in the Recommended Decision issued by the 
Administrator on March 29, 2007, and published in the Federal Register 
on April 6, 2007, will be and are the terms and provisions of this 
order amending the order and are set forth in full herein.

PART 959--ONIONS GROWN IN SOUTH TEXAS

    1. The authority citation for 7 CFR part 959 continues to read as 
follows:

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

    2. In Section 959.23, paragraph (a) is revised to read as follows:


Sec.  959.23  Term of office.

    (a) The term of office of committee members and their respective 
alternates shall be for two years and shall begin as of August 1 and 
end as of July 31. The terms shall be so determined that about one-half 
of the total committee membership shall terminate each year. Committee 
members shall not serve more than three consecutive terms. Members who 
have served for three consecutive terms may not serve as members for at 
least one year before becoming eligible to serve again. A person who 
has served less than six consecutive years on the committee may not be 
nominated to a new two-year term if his or her total consecutive years 
on the committee at the end of that new term would exceed six years. 
This limitation on the number of consecutive terms and years does not 
apply to service on the committee prior to the enactment of this 
provision and does not apply to alternates.
* * * * *
    3. Revise paragraph (b) of Sec.  959.42 to read as follows:


Sec.  959.42  Assessments.

* * * * *
    (b) Based upon the recommendation of the committee or other 
available data, the Secretary shall fix a base rate of assessment that 
handlers shall pay on all onions handled during each fiscal period. 
Upon recommendation of the committee, the Secretary may also fix 
supplemental rates on specified containers, including premium 
containers, identified by the committee and used in the production 
area: Provided, That any such supplemental assessment funds shall be 
used, to the extent practicable, for projects and activities related to 
the product upon which such assessments are collected.
* * * * *
    4. Add a new paragraph (e) to Sec.  959.42 to read as follows:


Sec.  959.42  Assessments.

* * * * *
    (e) If a handler does not pay assessments within the time 
prescribed by the committee, the assessment may be increased by a late 
payment charge and/or an interest rate charge at amounts prescribed by 
the committee with approval of the Secretary.

    5. Revise Sec.  959.48 to read as follows:


Sec.  959.48  Research and development.

    The committee, with approval of the Secretary, may establish or 
provide for the establishment of production research, marketing 
research, development projects, and marketing promotion, including paid 
advertising, designed to assist, improve, or promote the marketing, 
distribution, consumption, or efficient production of onions. The 
expenses of such projects shall be paid from funds collected pursuant 
to Sec.  959.42.

    6. In Sec.  959.84, redesignate paragraph (d) as paragraph (e) and 
add a new paragraph (d) to read as follows:


Sec.  959.84  Termination.

* * * * *
    (d) The Secretary shall conduct a referendum within six years after 
the effective date of this paragraph and every sixth year thereafter to 
ascertain

[[Page 44988]]

whether continuance is favored by producers. The Secretary would 
consider termination of this part if less than two-thirds of the 
growers voting in the referendum and growers of less than two-thirds of 
the volume of onions represented in the referendum favor continuance.
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[FR Doc. E7-15391 Filed 8-9-07; 8:45 am]
BILLING CODE 3410-02-P