[Federal Register Volume 63, Number 64 (Friday, April 3, 1998)]
[Rules and Regulations]
[Pages 16390-16392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8786]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 959
[Docket No. FV98-959-1 FIR]
Onions Grown in South Texas; Decreased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, an interim final rule which decreased the
assessment rate established for the South Texas Onion Committee
(Committee) under Marketing Order No. 959 for the 1997-98 and
subsequent fiscal periods. The Committee is responsible for local
administration of the marketing order which regulates the handling of
onions grown in South Texas. Authorization to assess Texas onion
handlers enables the Committee to incur expenses that are reasonable
and necessary to administer the program. The fiscal period began on
August 1 and ends July 31. The assessment rate will remain in effect
indefinitely unless modified, suspended, or terminated.
EFFECTIVE DATE: May 4, 1998.
FOR FURTHER INFORMATION CONTACT: Cynthia Cavazos or Belinda G. Garza,
McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS,
USDA, 1313 East Hackberry, McAllen, Texas 78501; telephone: (956) 682-
2833, Fax: (956) 682-5942; or George Kelhart, Technical Advisor,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456;
telephone: (202) 720-2491, 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, room 2525-S, P.O. Box 96456, Washington, DC 20090-
6456; telephone: (202) 720-2491, Fax: (202) 205-6632.
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 marketing agreement and order are
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 (Department) 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 August 1, 1997, 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 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. Such 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 the date of the entry of the ruling.
This rule continues to decrease the assessment rate established for
the Committee for the 1997-98 and subsequent fiscal periods from $0.07
per 50-pound container or equivalent to $0.05 per 50-pound container or
equivalent.
The Texas onion marketing order provides authority for the
Committee, with the approval of the Department, 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 of 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 1996-97 and subsequent fiscal periods, the Committee
recommended, and the Department approved, an assessment rate that would
continue in effect from fiscal period to fiscal period indefinitely
unless modified, suspended, or terminated by the Secretary upon
recommendation and information submitted by the Committee or other
information available to the Secretary.
The Committee, in a telephone vote, unanimously recommended 1997-98
administrative expenses of $100,000 for personnel, office, and the
travel portion of the compliance budget. These expenses were approved
in July 1997. The assessment rate and funding for research and
promotion projects, and the road guard station maintenance portion of
the compliance budget were to be recommended at a later Committee
meeting.
The Committee subsequently met on November 6, 1997, and unanimously
recommended 1997-98 expenditures of $245,000 and an assessment rate of
$0.05 per 50-pound container or equivalent of onions. In comparison,
last year's budgeted expenditures were $448,000. The assessment rate of
$0.05 is $0.02 less than the rate previously in effect. At the former
rate of $0.07 per 50-pound container or equivalent, the assessment
income would have exceeded anticipated expenses by about $35,000, and
the projected reserve of $220,000 on July 31, 1998, would have exceeded
the level the Committee believes to be adequate to administer the
program. The Committee voted to lower its assessment rate and use more
of the reserve to cover its expenses. The reduced assessment rate is
expected to bring assessment income closer to the amount necessary to
administer the program for the 1997-98 fiscal period.
Major expenses recommended by the Committee for the 1997-98 fiscal
period include $80,912 for personnel and administrative expenses,
$45,000 for compliance, $33,088 for promotion, and $86,000 for onion
breeding research. Budgeted expenses for these items in
[[Page 16391]]
1996-97 were $80,000, $120,000, $150,000, and $98,000, 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 year are estimated at 4 million 50-
pound equivalents, which should provide $200,000 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 $185,000) 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 the
Secretary upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate is effective 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 the
Department. Committee meetings are open to the public and interested
persons may express their views at these meetings. The Department 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 remainder of
the Committee's 1997-98 budget was approved November 24, 1997, and
those for subsequent fiscal periods will be reviewed and, as
appropriate, approved by the Department.
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 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. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 70 producers of South Texas onions in the
production area and approximately 38 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (SBA) (13 CFR 121.601) as
those having annual receipts less than $500,000 and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000.
Since the interim final rule was issued, the Department received
additional information from the Committee on handlers and producers in
the South Texas onion industry. This information is summarized below.
Most of the handlers are vertically integrated corporations involved in
producing, shipping, and marketing onions. For the 1996-97 marketing
year, onions produced on 12,175 acres were shipped by the industry's 38
handlers. The average acreage and median acreage handled was 310 acres
and 177 acres, respectively. In terms of production value, total
revenues from the 38 handlers were estimated to be $23.6 million; with
average and median revenue being $620,000 and $146,000, respectively.
The industry is highly concentrated as the largest 8 handlers (largest
25 percent) controlled 62 percent of the acreage and 77 percent of
onion production.
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 of
alternate crops within a single year.
Based on the SBA's definition of small entities, the Committee
estimates that all the 38 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 $5,000,000
annual receipt threshold. All of the 70 producers may be classified as
small entities based on the SBA definition if only their revenue from
spring onions is considered. When revenue from all sources is
considered, a majority of the producers would not be considered small
entities because the income of many of the producers would exceed the
$500,000 figure.
This rule continues in effect the assessment rate of $0.05 per 50-
pound container or equivalent established for the Committee and
collected from handlers for the 1997-98 and subsequent fiscal periods.
The Committee unanimously recommended 1997-98 expenditures of $245,000
and an assessment rate of $0.05 per 50-pound container or equivalent of
onions. In comparison, last year's budgeted expenditures were $448,000.
The assessment rate of $0.05 is $0.02 less than the rate previously in
effect. At the former assessment rate of $0.07 per 50-pound container
or equivalent and an estimated 1998 onion production of 4 million 50-
pound equivalents, the projected reserve on July 31, 1998, would have
exceeded the level the Committee believes necessary to administer the
program. The Committee decided that an assessment rate of less than
$0.05 would not generate the income necessary to administer the program
with an adequate reserve.
Major expenses recommended by the Committee for the 1997-98 fiscal
period include $80,912 for personnel and administrative expenses,
$45,000 for compliance, $33,088 for promotion, and $86,000 for onion
breeding research. Budgeted expenses for these items in 1996-97 were
$80,000, $120,000, $150,000, and $98,000, respectively.
Onion shipments for the year are estimated at 4 million 50-pound
equivalents, which should provide $200,000 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 $185,000) will be
kept within the maximum permitted by the order (approximately two
fiscal periods' expenses; Sec. 959.43).
Recent price information indicates that the grower price for the
1997-98 marketing season will range between $7.00 and $12.00 per 50-
pound container or equivalent of onions. Therefore, the estimated
assessment revenue for the 1997-98 fiscal period as a percentage of
total grower revenue will range between .714 and .417 percent.
This rule continues to decrease the assessment obligation imposed
on handlers. While this rule imposes some additional costs on handlers,
the costs are minimal and in the form of uniform assessments on all
handlers. Some of the additional costs may be passed on to producers.
However, these costs are
[[Page 16392]]
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 6, 1997, meeting was
a public meeting and all entities, both large and small, were able to
express views on this issue.
This action 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.
The Department has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
An interim final rule concerning this action was published in the
Federal Register on December 30, 1997 (62 FR 67694). The interim final
rule was made available through the Internet by the Office of the
Federal Register. A 60-day comment period was provided for interested
persons to respond to the interim final rule. The comment period ended
March 2, 1998, and no comments were received.
After consideration of all relevant matter presented, including the
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.
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
amended as follows:
PART 959--ONIONS GROWN IN SOUTH TEXAS
Accordingly, the interim final rule amending 7 CFR part 959 which
was published at 62 FR 67694 on December 30, 1997, is adopted as a
final rule without change.
Dated: March 30, 1998.
Sharon Bomer Lauritsen,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-8786 Filed 4-2-98; 8:45 am]
BILLING CODE 3410-02-P
