[Federal Register Volume 63, Number 223 (Thursday, November 19, 1998)]
[Proposed Rules]
[Pages 64215-64222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30907]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 956
[Docket Nos. 98AMA-FV-956-1; FV98-956-1]
Sweet Onions Grown in the Walla Walla Valley of Southeast
Washington and Northeast Oregon; Secretary's Decision and Referendum
Order on Proposed Amendment of Marketing Agreement and Order No. 956
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule and referendum order.
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SUMMARY: This decision proposes amendments to the marketing agreement
and order (order) for sweet onions and provides Walla Walla Sweet Onion
producers with the opportunity to vote in a referendum to determine if
they favor the proposed amendments. The proposed amendments were
submitted by the Walla Walla Sweet Onion Committee (committee), the
agency responsible for local administration of the order. The proposed
changes would broaden the scope of the order by adding authority for
grade, size, quality, maturity, and pack regulations, mandatory
inspection, marketing policy statements, and minimum quantity
exemptions. In addition, a proposal is included to make a minor change
in the committee's name. These changes are being proposed to improve
the operation and functioning of the Walla Walla Sweet Onion marketing
order program.
DATES: The referendum shall be conducted from November 25, 1998,
through December 10, 1998. The representative period for the purpose of
the referendum herein ordered is June 1, 1997, through May 31, 1998.
FOR FURTHER INFORMATION CONTACT: Robert Curry, Marketing Specialist,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, Northwest Marketing Field Office, 1220 S.W. Third Avenue,
room 369, Portland, Oregon 97204; telephone: (503) 326-2724, or Fax:
(503) 326-7440; or Kathleen M. Finn, Marketing Specialist, Marketing
Order Administration Branch, Fruit and
[[Page 64216]]
Vegetable Programs, AMS, USDA, room 2525-S, Washington, D.C. 20250-
0200; telephone: (202) 720-2491, or Fax: (202) 205-6632. Small
businesses may request information on compliance with this regulation
by contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,
Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 205-
6632.
SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice
of Hearing issued on March 25, 1998, and published in the April 1,
1998, issue of the Federal Register (63 FR 15787). Recommended Decision
and Opportunity to File Written Exceptions issued on September 17,
1998, and published in the Federal Register on September 23, 1998 (63
FR 50802).
This administrative action is governed by the provisions of
sections 556 and 557 of Title 5 of the United States Code and,
therefore, is excluded from the requirements of Executive Order 12866.
Preliminary Statement
The proposed amendments were formulated on the record of a public
hearing held in Walla Walla, Washington, on April 7, 1998, to consider
the proposed amendment of Marketing Agreement and Order No. 956,
regulating the handling of sweet onions grown in the Walla Walla Valley
of Southeast Washington and Northeast Oregon, hereinafter referred to
collectively as the ``order.'' The hearing was held pursuant to the
provisions of the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601 et seq.), hereinafter referred to as the Act, and
the applicable rules of practice and procedure governing proceedings to
formulate marketing agreements and marketing orders (7 CFR part 900).
The Notice of Hearing contained amendment proposals submitted by the
committee and the U.S. Department of Agriculture.
The committee's proposals would add the authority for grade, size,
quality, maturity, and pack regulations, mandatory inspection,
marketing policy statements, and minimum quantity exemptions. In
addition, the committee proposed changing its name from the Walla Walla
Sweet Onion Committee to the Walla Walla Sweet Onion Marketing
Committee.
Also, the Fruit and Vegetable Programs of the Agricultural
Marketing Service (AMS), U.S. Department of Agriculture, proposed to
allow such changes as may be necessary to the order, if any or all of
the above amendments are adopted, so that all of its provisions conform
with the proposed amendment. No conforming changes have been deemed
necessary.
Upon the basis of evidence introduced at the hearing and the record
thereof, the Administrator of the Agricultural Marketing Service (AMS)
on September 17, 1998, filed with the Hearing Clerk, U.S. Department of
Agriculture, a Recommended Decision and Opportunity to File Written
Exceptions thereto by October 23, 1998. None were received.
Small Business Considerations
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the 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 producers
have been defined by the Small Business Administration (SBA) (13 CFR
121.601) as those having annual receipts of less than $500,000. Small
agricultural service firms, which include handlers regulated under the
order, are defined as those with annual receipts of less than
$5,000,000.
Interested persons were invited to present evidence at the hearing
on the probable regulatory and informational impact of the proposed
amendments on small businesses. The record indicates that growers and
handlers would not be unduly burdened by any additional regulatory
requirements, including those pertaining to reporting and
recordkeeping, that might result from this proceeding.
During the 1996-97 crop year, approximately 33 handlers were
regulated under Marketing Order No. 956. In addition, there were about
64 producers of Walla Walla sweet onions in the production area.
Marketing orders and amendments thereto are unique in that they are
normally brought about through group action of essentially small
entities for their own benefit. Thus, both the RFA and the Act are
compatible with respect to small entities.
Twenty-four of the 33 handlers are also producers who handle their
own onions. There are seven commercial packinghouses that pack
approximately 90 percent of all Walla Walla sweet onions. In the 1996-
97 season, the average f.o.b. price for Walla Walla sweet onions was
$8.70 per 50-pound sack. Total production for the 1996-97 season was
666,000 50-pound containers. A handler who packed over 550,000 50-pound
units would exceed the SBA definition of a small handler. According to
record evidence, there are two dominant handlers in the industry and at
least one of these handlers could be considered a large handler under
this definition. The record revealed that all Walla Walla sweet onion
growers would be considered small producers. Therefore, it can be
concluded that the majority of growers and handlers would be considered
small businesses.
The marketing order, promulgated in 1995, currently defines the
production area where onions must be grown to be designated as Walla
Walla sweet onions. It also provides the authority to fund research and
promotion activities through assessments on handlers, as well as
establish container regulations. Although the marketing order as
currently written addresses some of the marketing problems facing the
industry, the Walla Walla sweet onion industry continues to experience
marketing problems.
Economic data presented on the record indicates that the acres
planted have decreased from 1,800 in 1988 to 900 acres planted in 1997.
This is a 50% decrease since 1988. Similarly, acres harvested have
decreased from 1,600 in 1988 to 900 in 1997.
In addition, the data shows production has decreased dramatically
from 1,280,000 50-pound containers in 1988 to 666,000 50-pound
containers in 1997. This is a 48% decrease in production in the last 10
years.
Total crop values have declined from $9,345,000 in 1989 to
$5,794,000 in 1997. This is a 38% decrease in total crop values in 9
years.
U.S. per capita consumption of fresh onions has increased from 10.7
pounds per year in 1981 to 17.5 pounds per year in 1997. This is a 64%
increase in per capita use of fresh onions, while the production of
Walla Walla sweet onions has decreased. This increased consumption
shows that this industry has the potential to improve.
In addition, economic data shows that competition from other sweet
onion producing areas has increased dramatically. Producers of Walla
Walla sweet onions have lost market share to other sweet onions such as
Georgia Vidalia onions, California Imperial onions, Hawaii Maui Sweets,
New Mex. Sweets from New Mexico, and Texas hybrid 1015Y's.
The acres harvested and production of Vidalia onions have increased
by 236% and 447%, respectively, since 1989. The Vidalia sweet onion
industry's normal harvesting and shipping season begins in the middle
of April and ends in late July. The Vidalia onion industry has
[[Page 64217]]
been successful in extending its shipping season into September and
October by establishing controlled atmosphere storage capabilities.
This may be having a price dampening effect on Walla Walla sweet onions
because of the overlap of shipping seasons and direct competition
caused by the extended season of Vidalia onions.
Of the six sweet onion-producing areas in the U.S., Walla Walla
sweet onion prices are lower than Maui, Vidalia and Texas onions. In
addition, the economic report presented on the record shows that
Vidalia onions always receive higher prices than Walla Walla sweet
onions with an average price differential of $5 per 50-pound container.
The Walla Walla sweet onion season begins in middle or late June
and continues until the end of July. The shipping season lasts for
approximately six weeks. Prices for Walla Walla sweet onions at the
beginning of the season start relatively high. As the season
progresses, prices generally fall. This seasonal price behavior has
resulted in producers harvesting onions before they are fully matured.
This has led to poor quality onions being sold on the market that make
an unfavorable impression on consumers, supermarkets, and other outlets
that handle Walla Walla sweet onions. In addition, this situation
appears to have shortened the marketing season.
The quality at the beginning of the season has a tendency to set
the market tone for the remainder of the season. If quality is high at
the beginning of the season, this makes a favorable impression on
buyers as well as consumers. With high quality onions at the start of
the season, consumers are likely to become repeat customers. However,
if quality is low at the beginning of the season, receivers as well as
consumers are disappointed. Initial low quality will result in
consumers shopping for alternative sweet onions and they will not be
repeat purchasers.
Minimum quality and size requirements are established under
marketing orders to ensure that substandard produce does not find its
way to the market and destroy consumer confidence and harm producers'
returns. The objective of implementing quality control and size
provisions under marketing orders is to make the markets work more
efficiently, improve quality, and to market preferred sizes. The use of
quality and size standards through a grading scheme benefits consumers
by assuring the buyers that they are getting high quality produce of
desirable size. This helps build consumer demand in the long run.
Minimum quality and size standards are deemed desirable because they
prevent the shipment of poor quality produce, which ends up harming
producers' ability to sell their product and consumers' willingness to
buy.
The reputation of Walla Walla sweet onions has deteriorated over
the recent years due to the poor quality of some of the onions
marketed. Record evidence indicated that a surveillance project
conducted during the 1997 harvest season by the Washington State
Department of Agriculture on behalf of the committee noted that a
significant amount of onions sold within the immediate Walla Walla area
did not meet minimum U.S. standards. Walla Walla sweet onions usually
meet at least U.S. No. 2 grade, but only a small volume meets U.S. No.
1 grade.
Establishing quality and size provisions under the Walla Walla
sweet onion marketing order would provide an incentive for producers to
allow their onions to fully mature, resulting in a higher quality of
onion marketed. Establishing quality and size requirements would ensure
consistent quality and acceptable sizes of onions throughout the
season. This tends to benefit consumers through a higher quality of
onion and benefits producers with a higher demand for their product. In
the long run, high quality, seasonal produce builds name recognition
and helps enhance demand.
The Walla Walla sweet onion industry has attempted to voluntarily
implement quality control. Prior to implementation of the marketing
order, the Walla Walla Sweet Onion Commission, a voluntary organization
composed of producers and handlers, implemented quality rules for its
members. These rules restricted the sale of U.S. No. 2 grade onions and
culls from fresh market use, and included random inspections. Common
defects that caused the onions to fail to meet these requirements were
seed stems, immaturity, and decay. Because of the voluntary nature of
these imposed regulations, this project was unsuccessful.
Currently, the marketing order allows only onions grown in the
designated production area to be marketed as Walla Walla sweet onions.
Research activities as well as promotional activities are also
authorized under the current order. Broadening the scope of the order
by authorizing minimum quality and size requirements would add another
marketing tool to help the industry solve marketing problems,
especially those related to quality. Minimum quality and size
requirements would allow the industry to improve their name recognition
with a quality product. Amending the order by authorizing the
establishment of minimum quality and size requirements would help to
expand markets and deliver a more consistent quality product of
desirable size to the consumer.
Without any quality and size provisions in place, industry members
can place substandard product on the market that is severely impacting
the credibility and marketability of all Walla Walla sweet onions.
Because of these current practices, the industry is experiencing
problems establishing and maintaining markets in areas that have
traditionally been strong. The industry has lost markets due to poor
quality, short shelf life and increased competition from other sweet
onion producing areas.
Minimum quality and size requirements would help alleviate some of
these problems and work to improve producer returns by strengthening
consumer and retail demand. Mandatory inspection requirements would
make all producers and handlers responsible for the quality of the
industry's output. Poor quality would not be mixed with better quality.
The record revealed that most handlers are already sorting by size. The
Department's Market News Service reports prices for jumbo and medium
onions, which further indicates that handlers are sorting by size. Most
handlers also pack to a certain quality standards, usually based on
U.S. grade standards. Therefore, handlers would not be required to
drastically modify their packing operations or purchase new equipment.
The committee considered grower and handler costs very seriously and
even discussed the cost burden between larger and smaller handlers. The
minimum quantity exemption should address such concerns.
Growers may be faced with a potential cost item related to improved
equipment that could be needed in order to meet minimum quality or size
standards. A handler testified that growers could update their
mechanical seeders so that the seeds could be planted equidistant from
each other, which would result in onions with better shape, more
uniformity and larger size. There are increasingly more growers that
are purchasing this equipment or contracting with other growers that
have the seeders. Seed coating or pelleting is another alternative for
better seed placement, which is less expensive than the purchase of a
highly advanced seeder. The seed coating adds a clay-like
[[Page 64218]]
material to the exterior of the seed, so that the seeders do not cause
two or three seeds to drop at the same time. It appears that costs
associated with growers modifying their cultural practices to abide by
minimum quality and size standards would be minimal and offset by
improved producer returns.
A witness for the committee testified that the benefits of
including the authority for minimum quality and size standards would
far outweigh any negative impact to producers and handlers and the
industry could start rebuilding markets and creating new ones.
The Federal-State Inspection Service Office that is responsible for
inspecting Walla Walla sweet onions is currently located in Pasco,
Washington, less than 50 miles from Walla Walla. According to record
testimony, inspectors would be staffed in Walla Walla during the season
if mandatory inspection was implemented.
Inspection costs in the State of Washington are computed on an
hourly basis or a per unit basis, whichever is greater. If the hourly
rate is used, the rate applies to the total number of the inspector's
hours, including travel time. Depending upon the workload, inspectors
could be based in Walla Walla during the season, which would lessen
travel costs. Record testimony indicated that the hourly inspection
rate is $26, with a two-hour minimum, or $52, for inspection or $208
for an eight-hour day. However, the State of Washington Agriculture
Code regulations appearing at Chapter 16-400-210 WAC provide that the
hourly inspection rate is $23, with no minimum time required. In
accordance with the Rules of Practice and Procedure governing the
formulation of marketing agreements and orders (7 CFR Part 900),
official notice has been taken of the fees set forth in the State of
Washington regulations at Chapter 16-400-210 WAC. The fee schedule will
be used in our analysis. On a per unit basis, the inspection fee is
$.04 per 50-pound unit.
As stated above, inspection costs are computed on an hourly basis
or a per unit basis, whichever is greater. For example, if an
inspection was requested on 100 50-pound containers and the inspection
lasted one hour, the per unit cost for inspecting the lot would be $4,
and the per hour cost would be $23. Under this scenario, the handler
would be charged $23 for the inspection, the greater amount. This would
average $.23 per unit.
Under the current fee schedule, it would be necessary for the
inspection office to inspect over 4,600 50-pound units of onions per
day in order to maintain the fee at $.04 per 50-pound unit. If handlers
do not handle over 4,600 50-pound units per day, their inspection costs
would be computed at the hourly rate. Even for handlers who normally
handle that volume, there would be times during the season,
particularly in the beginning and end of the season, where the volume
of onions inspected would not be at a level where the $.04 per 50-pound
unit could be used. The fees would convert to the hourly rate.
Record testimony indicated that the committee is concerned with
increased costs associated with these proposals, particularly, the
costs of inspection. The committee discussed options to address these
concerns and developed two remedies intended to alleviate the cost
burdens on small handlers. First, the committee recommended adding
authority in the order for the committee to contract with the Federal-
State Inspection Service and pay for all inspections of Walla Walla
sweet onions. Second, the committee recommended an exemption from
inspection for handlers of small lots of onions.
Under the scenario of contracting with the inspection service, each
handler would pay a separate assessment for inspection costs at a per
unit price. All handlers would pay the same price per bag for
inspection, whether exempt or not. Under such a contract, the larger
volume handlers would pay more of the inspection costs because they
handle so many more units of onions. In this manner, the burden of
inspection costs for smaller volume handlers could be minimized. This
was discussed with representatives of the inspection service.
A Washington State inspector confirmed that travel costs would be
lessened if an inspector was based in Walla Walla. However, the
inspector indicated that $.04 per 50-pound unit would be the minimum
cost for the inspection. Costs could increase depending on the
workload. If the workload was light, such as late in the season when
the quantities of onions are diminishing, it could be more costly for
an inspector to conduct inspections on smaller lots. It could be
necessary to convert the cost to an hourly cost, which would exceed
$.04 per 50-pound unit.
There have been discussions regarding contractual relationships
with the inspection service but factors such as inspection of small
quantities would need to be addressed in the contract. The inspector
testified that the inspection office must cover the cost of inspectors
and if there was not a full day's work in Walla Walla, the inspector
would need to travel elsewhere. These situations would need to be
factored into any contractual agreements. A witness for the proposals
testified that because of the variables associated with inspecting
Walla Walla sweet onions, it is estimated the cost of inspection would
range between $.04 and $.06 per 50-pound unit if the per unit price
were used in a contractual agreement. The committee could consider only
contracting with the inspection service during the busiest parts of the
season in order to keep the inspection cost lower. The committee could
also consider only regulating for part of the season.
Another option the committee developed to address the issues of
costs on small handlers would provide an exemption for handlers who
handle up to, but not more than 2,000 pounds of Walla Walla sweet
onions per shipment. These handlers would be exempt from inspection
requirements, but these exempt onions would still be required to meet
the quality and size requirements in effect at the time of shipment.
Handlers could make more than one exempt shipment per day as long as
each shipment was at or below the 2,000-pound exemption. These exempt
onions would not be exempt from assessments. The committee would be
able to recommend modification of the minimum quantity exemption
through informal rulemaking, if necessary. The committee would be
responsible for monitoring compliance with this proposal. If necessary,
the committee would conduct spot inspections at the committee's expense
to ensure that inspection-exempt onions were meeting the established
quality and size regulations.
Record testimony indicated the implementation of these proposals
could necessitate that the committee increase the manager's work hours
in order to monitor compliance with these provisions. This could result
in the need to recommend an increase in the marketing order assessment
rate. However, an increase is not expected because the increased
production, demand, and expanded markets would help to supply ample
funds to administer the program without increasing the assessment rate.
When the committee was considering amending the marketing order to
include quality and size requirements, a compliance subcommittee was
appointed to address concerns of small producers and handlers. The
subcommittee is composed of producers and handlers who developed the
[[Page 64219]]
minimum quantity exemption provisions of the committee's proposals. The
subcommittee considered different options during their deliberations
and determined that the current proposed amendments were the most
advantageous to small growers and handlers while still allowing quality
objectives to be met.
Inspection requirements would not apply to shipments of Walla Walla
sweet onions that are 2,000 pounds or less. However, these onions would
be required to meet any minimum requirements in effect at the time of
shipment. This would be enforced through periodic spot examinations
conducted by the committee. A general consensus among industry members
was that establishing a minimum quantity exemption was necessary to
relieve any undue financial burden on small volume handlers. The
committee would be responsible for monitoring compliance with this
proposal by conducting spot inspections, if necessary, at the
committee's expense. It is estimated that compliance with these
proposals could increase administrative costs for the committee by
$3,000, or a 3 percent increase in the current committee budget.
As previously stated, 7 commercial handlers pack 90 percent of the
industry's crop. Approximately 26 handlers handle the remaining 10
percent. With the 2,000 pound inspection exemption implemented, it is
estimated that 50 percent of the remaining 26 handlers would be exempt
from mandatory inspection. This represents approximately 42 acres or
25,000 50-lb. units, which is 5 percent of the crop. Therefore, it
appears that at least 13 handlers would be exempt from inspection,
while 95 percent of the production would still be inspected. This
proposed amendment would minimize the impact on small handlers without
jeopardizing quality objectives.
These exempt onions would not be exempt from assessments. In
addition, exempt onions would still be required to meet the minimum
quality and size requirements established by the committee and approved
by the Secretary. Committee staff would conduct spot inspections to
monitor the exempt handlers' activities. The proposal allows for
modification of this provision depending on industry needs. The
committee does not believe it would ever recommend not having a minimum
quantity exemption.
A witness for the proposals testified that the only cost increase
would be the cost of inspection. He further stated that the cost of
inspection is a minor cost item, compared to labor and growing costs.
Walla Walla sweet onion production is labor-intensive and high cost. A
premium price is necessary for the onions to pay the costs of
production.
This witness testified that a grower normally has $1,800 to $2,000
an acre invested in production prior to harvest. Using this estimate
and assuming a yield of 190 50-pound units per acre, inspection costs
(estimated at $.04 to $.06 per 50-pound unit) are estimated to be $7.60
to $11.40 per acre, or an estimated 0.4 to 0.6 percent increase of pre-
harvest cost.
Following is an example of possible costs associated with
implementing quality and size standards. Testimony revealed that if a
U.S. Commercial grade were established as a minimum quality standard, 5
to 10 percent of the onions would not meet that grade and would have to
be disposed of in secondary outlets. Using last year's production
figures (1996-97), 666,000 50-pound containers were produced for sale.
If 10 percent would not make U.S. Commercial grade, 66,600 50-pound
containers would need to be disposed of in secondary outlets. It is
estimated that 5 percent of the crop, or 33,300 pounds, would be exempt
from inspection. Therefore, approximately 566,100 50-pound containers
would need to be inspected. Using the high inspection cost estimate of
$.06 per container, inspection costs for the entire crop would be
$33,966. Seven commercial packing houses pack 90 percent of the crop
which would account for $30,569.40 of the costs. The remaining 26 small
handlers would be responsible for the remaining inspection costs of
$3,396.60, or approximately $131 per handler for inspection fees for
that season.
Minimum quality and size standards would maintain the integrity of
the product so that the commodities' overall quality image is not
diminished by a low quality sample. The principle objective of a
grading system is to make the market work more efficiently. Minimum
quality and size requirements would improve information between buyers
and sellers. Contracts could be made based on grade specifications, and
buyers need not personally inspect each lot of product. Standardization
of quality and size reduces uncertainty between buyers and sellers, and
this helps reduce marketing costs. The goal of an effective grading
system is to improve quality and size. Minimum quality and size
standards would help ensure that substandard produce does not find its
way to the market and destroy consumer confidence and harm producers'
returns.
The ability of producers of Walla Walla sweet onions to increase
the demand for their product depends on their ability to differentiate
their product and to create a favorable image (including quality) with
consumers. In recent years, this favorable image has deteriorated.
Culling out low quality produce of undesirable size, even though the
demand for it may be elastic, may increase total returns. The price
increase from the higher quality sold is expected to be large enough to
offset the effect of the reduced quantity sold, even after the costs of
culling are covered.
Record evidence also shows that the collection of information under
the marketing order would not be effected if the amendments were made
to the marketing order. No increase in information collection would
occur with the adoption of the amendments alone. However, if these
proposals are implemented and the committee recommends regulations to
impose quality and size requirements, it is possible that additional
information would be needed from handlers to aid in administering the
program effectively. It is also possible that because inspection
certificates would be received by the committee, needed information
could be collected from the certificates and the information collection
requirements could be reduced. Whatever information collection changes
result from any regulations, the committee and the Department would
submit such changes to the Office of Management and Budget (OMB) for
approval. Current information collection requirements for Part 956 are
approved by OMB under OMB number 0581-0172.
The proposed amendment to modify the name of the committee from the
Walla Walla Sweet Onion Committee to the Walla Walla Sweet Onion
Marketing Committee would have no regulatory impact on handlers or
growers.
Accordingly, this action would not impose any additional reporting
or recordkeeping requirements on either small or large Walla Walla
sweet 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 Department has not identified any relevant Federal rules that
duplicate, overlap or conflict with this proposed rule. All of these
amendments are designed to enhance the administration and functioning
of the marketing order to the benefit of the industry.
[[Page 64220]]
While the implementation of quality and size requirements may
impose some additional costs on handlers, the costs are minimal and
uniform on all handlers. Some of these costs may be passed on to
growers. However, these costs would be offset by the benefits derived
by the operation of the marketing order. In addition, the meetings
regarding these proposals as well as the hearing date were widely
publicized throughout the Walla Walla sweet onion production area
industry and all interested persons were invited to attend the meetings
and the hearing and participate in committee deliberations on all
issues. All committee meetings and the hearing were public forums and
all entities, both large and small, were able to express views on these
issues. Finally, interested persons were invited to submit information
on the regulatory and informational impacts of this action on small
businesses.
Civil Justice Reform
The amendments 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 the amendments.
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 the Secretary 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 Secretary 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 Secretary's
ruling on the petition, provided an action is filed not later than 20
days after 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 September 23, 1998, issue of the Federal Register (63 FR
50802) 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 Sweet Onions
Grown in the Walla Walla Valley of Southeast Washington and Northeast
Oregon.'' 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 part 900.400 et
seq.) to determine whether the issuance of the annexed order amending
the order regulating the handling of sweet onions grown in the Walla
Walla Valley of Southeast Washington and Northeast Oregon, is approved
or favored by producers, as defined under the terms of the order, who
during the representative period were engaged in the production of
sweet onions grown in the production area.
The representative period for the conduct of such referendum is
hereby determined to be June 1, 1997, through May 31, 1998.
The agents of the Secretary to conduct such referendum are hereby
designated to be Robert Curry, Marketing Specialist, and Gary Olson,
Regional Manager, Northwest Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220
S.W. Third Avenue, room 369, Portland, Oregon 97204; telephone (503)
326-2724.
List of Subjects in 7 CFR Part 956
Marketing agreements, Onions, Reporting and recordkeeping
requirements.
Dated: November 13, 1998.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
Order Amending the Order Regulating the Handling of Sweet Onions
Grown in the Walla Walla Valley of Southeast Washington and
Northeast Oregon 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 and determinations hereinafter set forth are
supplementary and in addition to the findings and determinations
previously made in connection with the issuance of the order; and all
of 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 the Marketing
Agreement and Order No. 956 (7 CFR part 956), regulating the handling
of sweet onions grown in the Walla Walla Valley of Southeast Washington
and Northeast Oregon.
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 hereby proposed to be
amended, and all of the terms and conditions thereof, will tend to
effectuate the declared policy of the Act;
(2) The marketing agreement and order, as hereby proposed to be
amended, regulate the handling of sweet onions grown in the production
area in the same manner as, and is applicable only to persons in the
respective classes of commercial and industrial activity specified in
the marketing order upon which hearings have been held;
(3) The marketing agreement and order, as hereby proposed to be
amended, are limited in 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; and
(4) The marketing agreement and order, as hereby proposed to be
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 sweet onions grown in the production area; and
(5) All handling of sweet onions grown in the production area is in
the current of interstate or foreign commerce or directly burdens,
obstructs, or affects such commerce.
[[Page 64221]]
Order Relative to Handling
It is therefore ordered, That on and after the effective date
hereof, all handling of sweet onions grown in the Walla Walla Valley of
Southeast Washington and Northeast Oregon, 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:
With one exception, the provisions of the proposed marketing
agreement and the order amending the order contained in the Recommended
Decision issued by the Administrator on September 17, 1998, and
published in the Federal Register on September 23, 1998, shall be and
are the terms and provisions of this order amending the order and are
set forth in full herein. One change is made herein for clarity in
Sec. 956.70(a).
PART 956--SWEET ONIONS GROWN IN THE WALLA WALLA VALLEY OF SOUTHEAST
WASHINGTON AND NORTHEAST OREGON
1. The authority citation for 7 CFR part 956 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. In part 956, Sec. 956.14 is added and reserved, and new
Secs. 956.15 and 956.16 are added to read as follows:
Sec. 956.15 Grade and size.
Grade means any of the officially established grades of onions,
including maturity requirements and size means any of the officially
established sizes of onions as set forth in the United States standards
for grades of onions or amendments thereto, or modifications thereof,
or variations based thereon, or States of Washington or Oregon
standards of onions or amendments thereto or modifications thereof or
variations based thereon, recommended by the committee and approved by
the Secretary.
Sec. 956.16 Pack.
Pack means a quantity of Walla Walla Sweet Onions specified by
grade, size, weight, or count, or by type or condition of container, or
any combination of these recommended by the committee and approved by
the Secretary.
Sec. 956.20 [Amended]
3. In Sec. 956.20, paragraph (a) is amended by adding the word
``Marketing'' immediately following the word ``Onion'' in the first
sentence.
4. In part 956, a new Sec. 956.60 is added to read as follows:
Sec. 956.60 Marketing policy.
(a) Preparation. Prior to each marketing season, the committee
shall consider and prepare a proposed policy for the marketing of Walla
Walla Sweet Onions. In developing its marketing policy, the committee
shall investigate relevant supply and demand conditions for Walla Walla
Sweet Onions. In such investigations, the committee shall give
appropriate consideration to the following:
(1) Market prices for sweet onions, including prices by variety,
grade, size, quality, and maturity, and by different packs;
(2) Supply of sweet onions by grade, size, quality, maturity, and
variety in the production area and in other sweet onion producing
sections;
(3) The trend and level of consumer income;
(4) Establishing and maintaining orderly marketing conditions for
Walla Walla Sweet Onions;
(5) Orderly marketing of Walla Walla Sweet Onions as will be in the
public interest; and
(6) Other relevant factors.
(b) Reports. (1) The committee shall submit a report to the
Secretary setting forth the aforesaid marketing policy, and the
committee shall notify producers and handlers of the contents of such
report.
(2) In the event it becomes advisable to shift from such marketing
policy because of changed supply and demand conditions, the committee
shall prepare an amended or revised marketing policy in accordance with
the manner previously outlined. The committee shall submit a report
thereon to the Secretary and notify producers and handlers of the
contents of such report on the revised or amended marketing policy.
5. Section 956.62 is revised to read as follows:
Sec. 956.62 Issuance of regulations.
(a) Except as otherwise provided in this part, the Secretary shall
limit the shipment of Walla Walla Sweet Onions by any one or more of
the methods hereinafter set forth whenever the Secretary finds from the
recommendations and information submitted by the committee, or from
other available information, that such regulation would tend to
effectuate the declared policy of the Act. Such limitation may:
(1) Regulate in any or all portions of the production area, the
handling of particular grades, sizes, qualities, or maturities of any
or all varieties of Walla Walla Sweet Onions, or combinations thereof,
during any period or periods;
(2) Regulate the handling of particular grades, sizes, qualities,
or maturities of Walla Walla Sweet Onions differently, for different
varieties or packs, or for any combination of the foregoing, during any
period or periods;
(3) Provide a method, through rules and regulations issued pursuant
to this part, for fixing the size, capacity, weight, dimensions,
markings or pack of the container or containers, which may be used in
the packaging or handling of Walla Walla Sweet Onions, including
appropriate logo or other container markings to identify the contents
thereof;
(4) Regulate the handling of Walla Walla Sweet Onions by
establishing, in terms of grades, sizes, or both, minimum standards of
quality and maturity.
(b) The Secretary may amend any regulation issued under this part
whenever the Secretary finds that such amendment would tend to
effectuate the declared policy of the Act. The Secretary may also
terminate or suspend any regulation or amendment thereof whenever the
Secretary finds that such regulation or amendment obstructs or no
longer tends to effectuate the declared policy of the Act.
6. Section 956.64 is revised to read as follows:
Sec. 956.64 Minimum quantities.
During any period in which shipments of Walla Walla Sweet Onions
are regulated pursuant to this part, each handler may handle up to, but
not to exceed, 2,000 pounds of Walla Walla Sweet Onions per shipment
without regard to the inspection requirements of this part: Provided,
That such Walla Walla Sweet Onion shipments meet the minimum
requirements in effect at the time of the shipment pursuant to
Sec. 956.62. The committee, with the approval of the Secretary, may
recommend modifications to this section and the establishment of such
other minimum quantities below which Walla Walla Sweet Onion shipments
will be free from the requirements in, or pursuant to, Secs. 956.42,
956.62, 956.63, and 956.70, or any combination thereof.
7. In part 956, a new center heading and Sec. 956.70 are added to
read as follows:
Inspection
Sec. 956.70 Inspection and certification.
(a) During any period in which shipments of Walla Walla Sweet
Onions are regulated pursuant to this subpart, no handler shall handle
Walla Walla Sweet Onions unless such onions are inspected by an
authorized representative of the Federal-State Inspection Service, or
such other inspection service as the Secretary shall designate and are
covered by a valid
[[Page 64222]]
inspection certificate, except when relieved from such requirements
pursuant to Secs. 956.63 or 956.64, or both. Upon recommendation of the
committee, with approval of the Secretary, inspection providers and
certification requirements may be modified to facilitate the handling
of Walla Walla Sweet Onions.
(b) Regrading, resorting, or repacking any lot of Walla Walla Sweet
Onions shall invalidate prior inspection certificates insofar as the
requirements of this section are concerned. No handler shall ship Walla
Walla Sweet Onions after they have been regraded, resorted, repacked,
or in any other way further prepared for market, unless such onions are
inspected by an authorized representative of the Federal-State
Inspection Service, or such other inspection service as the Secretary
shall designate: Provided, That such inspection requirements on
regraded, resorted, or repacked Walla Walla Sweet Onions may be
modified, suspended, or terminated under rules and regulations
recommended by the committee, and approved by the Secretary.
(c) Upon recommendation of the committee, and approval of the
Secretary, all Walla Walla Sweet Onions that are required to be
inspected and certified in accordance with this section shall be
identified by appropriate seals, stamps, tags, or other identification
to be furnished by the committee and affixed to the containers by the
handler under the direction and supervision of the Federal-State or
Federal inspector, or the committee. Master containers may bear the
identification instead of the individual containers within said master
container.
(d) Insofar as the requirements of this section are concerned, the
length of time for which an inspection certificate is valid may be
established by the committee with the approval of the Secretary.
(e) When Walla Walla Sweet Onions are inspected in accordance with
the requirements of this section, a copy of each inspection certificate
issued shall be made available to the committee by the inspection
service.
(f) The committee may enter into an agreement with an inspection
service with respect to the costs of the inspection as provided by
paragraph (a) of this section, and may collect from handlers their
respective pro rata shares of such costs.
[FR Doc. 98-30907 Filed 11-18-98; 8:45 am]
BILLING CODE 3410-02-D
