[Federal Register Volume 73, Number 76 (Friday, April 18, 2008)]
[Rules and Regulations]
[Pages 21023-21026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-1149]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

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


Onions Grown in South Texas; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases 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 will remain

[[Page 21024]]

in effect indefinitely unless modified, suspended, or terminated.

DATES: Effective Date: April 21, 2008.

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 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 issued herein will 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 increases 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 handled.
    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 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, will 
be adequate to cover budgeted expenses. Funds in the reserve (currently 
$196,543) will be kept within the maximum permitted by the order 
(approximately two fiscal periods' expenses, Sec.  959.43).
    The assessment rate established in this rule will 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 will be in effect for an indefinite 
period, the Committee will 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 will evaluate Committee 
recommendations and other available information to determine whether 
modification of the assessment rate is needed. Further rulemaking will 
be undertaken as necessary. The Committee's 2007-08 budget and those 
for subsequent fiscal periods will be reviewed and, as appropriate, 
approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (5 U.S.C. 601-612) (RFA), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this rule 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.
    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

[[Page 21025]]

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 increases 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 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, will 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 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 will 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 increases 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 
are 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.
    This rule imposes 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 proposed rule concerning this action was published in the Federal 
Register on February 29, 2008 (73 FR 11060). Committee staff mailed 
copies of the proposed rule to all South Texas onion handlers and 
producers. In addition, the proposal was made available through the 
Internet by USDA and the Office of the Federal Register. A 15-day 
comment period ending March 17, 2008, was provided for interested 
persons to respond to the proposal. Two comments were received. One 
supported the proposed increase and one opposed the proposal.
    The commenter in support of the assessment rate increase stated 
that the proposed increase is very modest in light of constantly 
increasing costs. The commenter noted that planted South Texas onion 
acreage remains volatile, but has shown an overall decline, which 
further impacts on the Committee's revenues.
    The commenter opposing the increase did not state the reason why he 
was not in favor of the increase, only that it should remain the same. 
However, we believe that the assessment increase, as recommended by the 
Committee, is reasonable and necessary.
    Accordingly, no changes will be made to the rule as proposed.
    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

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information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    Pursuant to 5 U.S.C. 553, it also found and determined that good 
cause exists for not postponing the effective date of this rule until 
30 days after publication in the Federal Register because 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 onions 
handled during such fiscal period. In addition, the Committee needs to 
have sufficient funds to pay its expenses which are incurred on a 
continuous basis. Further, handlers are aware of this action which was 
unanimously recommended at a public meeting and is similar to other 
assessment rate actions issued in past fiscal periods. Also, a 15-day 
comment period was provided for in the proposed 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:

PART 959--ONIONS GROWN IN SOUTH TEXAS

0
1. The authority citation for 7 CFR part 959 continues to read as 
follows:

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


0
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: April 15, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 08-1149 Filed 4-15-08; 12:13 pm]
BILLING CODE 3410-02-P