[Federal Register Volume 73, Number 41 (Friday, February 29, 2008)]
[Proposed Rules]
[Pages 11060-11062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-898]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. AMS-FV-07-0151; FV08-959-1 PR]


Onions Grown in South Texas; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate established for 
the South Texas Onion Committee (Committee) for the 2007-08 and 
subsequent fiscal periods from $0.02 to $0.03 per 50-pound equivalent 
of onions handled. The Committee locally administers the marketing 
order which regulates the handling of onions grown in South Texas. 
Assessments upon onion handlers are used by the Committee to fund 
reasonable and necessary expenses of the program. The fiscal period 
begins August 1 and ends July 31. The assessment rate would remain in 
effect indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by March 17, 2008.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. Comments should reference the docket number and 
the date and page number of this issue of the Federal Register and will 
be available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, Regional Manager, 
Texas Marketing Field Office, 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 Order 
No. 959, as amended (7 CFR part 959), regulating the handling of onions 
grown in South Texas, hereinafter referred to as the ``order.'' The 
order is effective under the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, South Texas 
onion handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as proposed herein would be applicable to all 
assessable onions beginning on August 1, 2007, and continue until 
amended, suspended, or terminated. This rule will not preempt any State 
or local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule would increase the assessment rate established for the 
Committee for the 2007-08 and subsequent fiscal periods from $0.02 to 
$0.03 per 50-pound equivalent of onions.
    The South Texas onion marketing order provides authority for the 
Committee, with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members of the Committee are producers and handlers of 
South Texas onions. They are familiar with the Committee's needs and 
with the costs for goods and services in their local area and are thus 
in a position to formulate an appropriate budget and assessment rate. 
The assessment rate is formulated and discussed in a public meeting. 
Thus, all directly affected persons have an opportunity to participate 
and provide input.
    For the 2004-05 and subsequent fiscal periods, the Committee 
recommended, and USDA approved, an assessment rate that would continue 
in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by USDA

[[Page 11061]]

upon recommendation and information submitted by the Committee or other 
information available to USDA.
    The Committee met on November 16, 2007, and unanimously recommended 
2007-08 expenditures of $202,315 and an assessment rate of $0.03 per 
50-pound equivalent of onions. In comparison, last year's budgeted 
expenditures were $193,315. The assessment rate of $0.03 is $0.01 
higher than the rate currently in effect. The Committee recommended the 
increased rate to continue to support the increased budget for research 
started last season, while reducing the amount of funds drawn from the 
Committee's authorized reserve. Without the increase, the Committee's 
reserve funds would drop to $114,728. The Committee believes a reserve 
that low is not adequate for its operations.
    The major expenditures recommended by the Committee for the 2007-08 
fiscal period include $64,315 for personnel and office expenses, 
$45,000 for compliance, $25,000 for promotion, and $30,000 for 
research. Budgeted expenses for these items in 2006-07 were $62,315, 
$43,000, $25,000, and $25,000, respectively.
    The assessment rate recommended by the Committee was derived by 
dividing anticipated expenses by expected shipments of South Texas 
onions. Onion shipments for the fiscal period are estimated at 
5,775,000 fifty-pound equivalents, which should provide $173,250 in 
assessment income. Income derived from handler assessments, along with 
interest income and funds from the Committee's authorized reserve, 
would be adequate to cover budgeted expenses. Funds in the reserve 
(currently $196,543) would be kept within the maximum permitted by the 
order (approximately two fiscal periods' expenses, Sec.  959.43).
    The proposed assessment rate would continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Committee or other available 
information.
    Although this assessment rate would be in effect for an indefinite 
period, the Committee would continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or USDA. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. USDA would evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking would 
be undertaken as necessary. The Committee's 2007-08 budget and those 
for subsequent fiscal periods would be reviewed and, as appropriate, 
approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 118 producers of onions in the production 
area and approximately 34 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration (SBA) (13 CFR 121.201) as those having annual 
receipts less than $750,000, and small agricultural service firms are 
defined as those whose annual receipts are less than $6,500,000.
     Most of the handlers are vertically integrated corporations 
involved in producing, shipping, and marketing onions. For the 2006-07 
marketing year, the industry's 34 handlers shipped onions produced on 
12,460 acres with the average and median volume handled being 179,457 
and 171,537 fifty-pound equivalents, respectively. In terms of 
production value, total revenues for the 34 handlers were estimated to 
be $86.7 million, with average and median revenues being $2.55 million 
and $2.35 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 32 of the 34 (94 percent) handlers regulated by the 
order would be considered small entities if only their spring onion 
revenues are considered. However, revenues from other productive 
enterprises would likely push a large number of these handlers above 
the $6,500,000 annual receipt threshold. All of the 118 producers may 
be classified as small entities based on the SBA definition if only 
their revenue from spring onions is considered. When revenues from all 
sources are considered, a majority of the producers would not be 
considered small entities because receipts would exceed $750,000.
    This rule would increase the assessment rate established for the 
Committee and collected from handlers for the 2007-08 and subsequent 
fiscal periods from $0.02 to $0.03 per 50-pound equivalent. The 
Committee unanimously recommended 2007-08 expenditures of $202,315 and 
an assessment rate of $0.03 per 50-pound equivalent. The proposed 
assessment rate of $0.03 is $0.01 higher than the current rate. The 
quantity of assessable onions for the 2007-08 fiscal period is 
estimated at 5,775,000 fifty-pound equivalents. Thus, the $0.03 rate 
should provide $173,250 in assessment income. Income derived from 
handler assessments, along with interest income and funds from the 
Committee's authorized reserve, would be more than adequate to cover 
budgeted expenses.
    The major expenditures recommended by the Committee for the 2007-08 
fiscal period include $64,315 for personnel and office expenses, 
$45,000 for compliance, $25,000 for promotion, and $30,000 for 
research. Budgeted expenses for these items in 2006-07 were $62,315, 
$43,000, $25,000, and $25,000, respectively.
    The Committee recommended the increased rate to continue funding a 
research project begun last year without having to draw a large amount 
from reserves. Without the increase, the Committee's reserve funds 
would drop to $114,728. The Committee believes a reserve that low is 
not adequate for its operations.
    The Committee reviewed and unanimously recommended 2007-08 
expenditures of $202,315, which included increases in the management 
fee, compliance, and research. Numerous alternative expenditure levels 
were discussed based upon the relative value of the research project to 
the onion industry. The assessment rate of $0.03 per 50-pound 
equivalent of assessable onions was then determined

[[Page 11062]]

by dividing the total recommended budget by the quantity of assessable 
onions, estimated at 5,775,000 fifty-pound equivalents for the 2007-08 
fiscal period. The assessment rate should generate $173,250 in income. 
Considering income from interest and assessments, total income should 
be approximately $24,065 below the anticipated expenses, which the 
Committee determined to be acceptable.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the grower 
price for the 2007-08 fiscal period could range between $10.00 and 
$28.00 per 50-pound equivalent of onions. Therefore, the estimated 
assessment revenue for the 2007-08 fiscal period as a percentage of 
total grower revenue could range between .11 and .30 percent.
    This action would increase the assessment obligation imposed on 
handlers. While assessments impose some additional costs on handlers, 
the costs are minimal and uniform on all handlers. Some of the 
additional costs may be passed on to producers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Committee's meeting was widely 
publicized throughout the South Texas onion industry and all interested 
persons were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the November 
16, 2007, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit comments on this proposed rule, including 
the regulatory and informational impacts of this action on small 
businesses.
    This proposed rule would impose no additional reporting or 
recordkeeping requirements on either small or large South Texas onion 
handlers. As with all Federal marketing order programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposed rule. Fifteen days is deemed appropriate 
because: (1) The 2007-08 fiscal period began on August 1, 2007, and the 
marketing order requires that the rate of assessment for each fiscal 
period apply to all assessable onions handled during such fiscal 
period; (2) the Committee needs to have sufficient funds to pay its 
expenses which are incurred on a continuous basis; and (3) handlers are 
aware of this action which was unanimously recommended by the Committee 
at a public meeting and is similar to other assessment rate actions 
issued in past years.

List of Subjects in 7 CFR Part 959

    Marketing agreements, Onions, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 959 is 
proposed to be amended as follows:

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. Section 959.237 is revised to read as follows:


Sec.  959.237  Assessment rate.

    On and after August 1, 2007, an assessment rate of $0.03 per 50-
pound equivalent is established for South Texas onions.

    Dated: February 26, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 08-898 Filed 2-26-08; 3:31 pm]
BILLING CODE 3410-02-P