[Federal Register Volume 72, Number 166 (Tuesday, August 28, 2007)]
[Rules and Regulations]
[Pages 49136-49139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-4162]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

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


Onions Grown in South Texas; Change in Regulatory Period

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 revising the regulatory 
period for minimum grade, size, quality, and maturity requirements 
applicable to onions grown in South Texas under Marketing Order No. 959 
(order). Prior to implementation of the interim final rule, the 
regulatory period for South Texas onions was 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. 
This rule continues in effect the action that extended the regulatory 
period through July 15. The South Texas Onion Committee (Committee), 
which locally administers the order, unanimously recommended the 
change.

EFFECTIVE DATE: September 27, 2007.

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.''
    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 49137]]

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, 
continues in effect the action that extended 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 were, prior to 
implementation of the interim final rule, 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 extended beyond June 4 into mid-
July. Because the previous regulatory period did not cover the 
production season completely, not all onion shipments occurring after 
June 4 were 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 
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 previous South Texas regulatory period during which the 
aforementioned regulations were in effect ran from March 1 through June 
4, annually. A final rule published on May 17, 1996 (61 FR 24877), 
established that 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 provides 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 
continued to voluntarily request inspection of their onions after June 
4 to ensure product quality past the previous regulatory period. 
Because the industry was already voluntarily having their onions 
inspected, the extension is not expected to negatively impact the 
industry and this change aligns order requirements with actual industry 
operations.
    Collecting assessments for an additional five weeks provides 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 allows 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.

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 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 $1.6 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

[[Page 49138]]

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 continues in effect the action that extended 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, continues in effect the 
action that extended 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 will meet all order requirements from 
March 1 through July 15 of each year. Prior to implementation of the 
interim final rule, the regulations required 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 extended beyond June 4 into mid-
July. Because the previous regulatory period did not cover the 
production season completely, not all onion shipments occurring after 
June 4 were subject to mandatory inspection under the order. Extending 
the regulatory period ensures that all South Texas onions will be 
inspected to order specifications.
    Prior to implementation of the interim final rule, many South Texas 
onion handlers voluntarily requested inspection of their onions after 
June 4 to ensure product quality. Because the industry was already 
voluntarily having their onions inspected, the extension is not 
expected to negatively impact the industry and this change aligns order 
requirements with present day industry operations.
    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.
    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 allows 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 the 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 $1.6 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 have been to not extend the 
regulatory period beyond the prior end date of June 4. However, the 
Committee believed that not extending the regulatory period would have 
resulted in a significant portion of the South Texas onion crop not 
being consistently regulated.
    While most handlers were extending inspection beyond the June 4 
regulatory deadline on a voluntary basis, such inspection was not 
required. By extending the regulatory period, such inspection became 
mandatory. Mandatory inspection ensures 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 benefits 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. 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.
    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.
    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 were public meetings and all entities, both large 
and small, were able to express their views. Furthermore, interested 
persons were invited to submit information on the regulatory and 
informational impacts of this action on small businesses.

[[Page 49139]]

    An interim final rule concerning this action was published in the 
Federal Register on May 7, 2007. Copies of the rule were mailed by the 
Committee's staff to all Committee members, onion handlers, and 
interested persons. 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 July 6, 2007. No 
comments were received.
    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 continues in effect the action that extended the 
regulatory period under the South Texas onion marketing order.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (72 FR 25677, May 7, 2007) will tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 959

    Onions, Marketing agreements, Reporting and recordkeeping 
requirements.

PART 959--ONIONS GROWN IN SOUTH TEXAS

    Accordingly, the interim final rule amending 7 CFR part 959 which 
was published at 72 FR 25677 on May 7, 2007, is adopted as a final rule 
without change.

    Dated: August 21, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-4162 Filed 8-27-07; 8:45 am]
BILLING CODE 3410-02-M