Melons Grown in South Texas; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV00-979-1 PR]

Melons 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 Melon Committee (Committee) for the 1999-2000 and

subsequent fiscal periods from $0.04 to $0.05 per carton of melons

handled. The Committee is responsible for local administration of the

marketing order which regulates the handling of melons (cantaloupes and

honeydews) grown in South Texas. Authorization to assess melon handlers

enables the Committee to incur expenses that are reasonable and

necessary to administer the program. The fiscal period began October 1

and ends September 30. The assessment rate would remain in effect

indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by February 9, 2000.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698, or E-mail:

[email protected]. 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.

FOR FURTHER INFORMATION CONTACT: Cynthia Cavazos, Marketing Assistant,

McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS,

USDA, 1313 E. 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) 720-5698.

Small businesses may request information on complying 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)

720-5698, or E-mail: Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 156 and Order No. 979, both as amended (7 CFR part 979),

regulating the handling of melons 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

melon 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 melons beginning on October 1, 1999, 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 would increase the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal periods from $0.04 to

$0.05 per carton of melons handled.

The South Texas melon 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 growers and handlers of

South Texas melons. 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 1997-1998 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 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 mail vote, unanimously recommended 1999-2000

expenses of $219,148 for personnel, office, compliance, promotion, and

research expenses. These expenses were approved in September 1999. The

assessment rate and specific funding for research and promotion

projects were to be recommended at a later Committee meeting.

The Committee met on November 4, 1999, and unanimously recommended

1999-2000 expenditures of $265,500 and an assessment rate of $0.05 per

carton of melons. In comparison, 1998-99 budgeted expenditures were

$219,148. The assessment rate of $0.05 is $0.01 higher than the rate

currently in

[[Page 1348]]

effect. The Committee voted to increase its assessment rate because the

current rate would not generate the income needed to administer the

marketing order and would reduce the Committee's reserve funds beyond

the level acceptable to the Committee. Assessment income, along with

funds from the Committee's authorized reserve, would provide the

Committee with adequate funds to meet its 1999-2000 fiscal period's

expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $98,800 for personnel and administrative

expenses, $31,200 for compliance activities, $110,500 for research

projects, and $25,000 for promotional activities. Budgeted expenses for

these items in 1998-99 were $97,600, $32,400, $79,148, and $10,000,

respectively.

The assessment rate recommended by the Committee was derived by

considering anticipated expenses, expected shipments of South Texas

melons, and the amount of funds in the Committee's operating reserve.

Melon shipments for the year are estimated at 4,200,000 cartons, which

should provide $210,000 in assessment income at the $0.05 per carton

rate. Income derived from handler assessments, along with funds from

the Committee's authorized reserve, would be adequate to cover budgeted

expenses for the 1999-2000 fiscal period. Funds in the reserve

(currently $316,208) would be kept within the maximum permitted by the

order (approximately two fiscal periods' expenses; Sec. 979.44).

The proposed assessment rate would 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 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 the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department 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

1999-2000 budget and those for subsequent fiscal periods would 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 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. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 20 growers of South Texas melons in the

production area and 20 handlers subject to regulation under the

marketing order. Small agricultural growers 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.

Most of the handlers are vertically integrated corporations

involved in producing, shipping, and marketing melons. For the 1998-99

marketing year, melons produced on 8,364 acres were shipped by the

industry's 20 handlers with the average acreage being 418 acres and the

median volume handled was 193,867 cartons. In terms of production

value, average revenues for the 20 handlers were estimated to be $2.9

million.

The South Texas melon industry is characterized by growers 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 melons. Alternative crops provide an

opportunity to utilize many of the same facilities and equipment not in

use when the melon production season is complete. For this reason,

typical melon growers and handlers either double-crop melons during

other times of the year or produce alternate commodities, like onions.

Based on the SBA's definition of small entities, the Committee

estimates that a majority of the 20 handlers regulated by the order

would be considered small entities if only their spring melon 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. Of the 20 growers within the production area,

few have sufficient acreage to generate sales in excess of $500,000;

therefore, the majority of growers may be classified as small entities.

This rule would increase the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal periods from $0.04 to $0.05 per carton of melons. The Committee

unanimously recommended 1999-2000 expenditures of $265,500 and an

assessment rate of $0.05 per carton of melons. In comparison, last

year's budgeted expenditures were $219,148. The proposed assessment

rate of $0.05 is $0.01 higher than the rate currently in effect. At the

rate of $0.05 per carton and an estimated 2000 melon production of

4,200,000 cartons, the projected income derived from handler

assessments ($210,000), along with funds from the Committee's

authorized reserve, would be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $98,800 for personnel and administrative

expenses, $31,200 for compliance activities, $110,500 for research

projects, and $25,000 for promotional activities. Budgeted expenses for

these items in 1998-1999 were $97,600, $32,400, $79,148, and $10,000,

respectively.

The Committee voted to increase its assessment rate because the

current rate would not generate the income needed to administer the

marketing order and would reduce the Committee's reserve funds beyond

the level acceptable to the Committee. Assessment income, along with

funds from the Committee's authorized reserve, would provide the

Committee with adequate funds to meet its 1999-2000 fiscal period's

expenses.

The Committee reviewed and unanimously recommended 1999-2000

expenditures of $265,500, which included increases in personnel,

promotion, and research projects. Prior to arriving at this budget, the

Committee considered information from various sources, including the

Research and Post Harvest Subcommittees. Alternative expenditure levels

were discussed by these groups, based upon the relative value of

various research projects to the melon industry. The assessment rate of

$0.05 per carton of assessable melons was then determined by

considering the total recommended budget, the quantity of assessable

melons, estimated at 4,200,000 million cartons for the 1999-2000 fiscal

period,

[[Page 1349]]

and amount of funds in the Committee's operating reserve. The

recommended rate will generate $210,000, which is $55,500 below the

anticipated expenses. The Committee found this acceptable because

reserve funds will be used to make up the deficit.

A review of historical information and preliminary information

pertaining to the upcoming fiscal period indicates that the grower

price for the 1999-2000 marketing season could range between $9.00 and

$12.00 per carton of cantaloupes and between $6.00 and $9.00 per carton

of honeydew melons. Therefore, the estimated assessment revenue for the

1999-2000 fiscal period as a percentage of total grower revenue could

range between .55 and .42 percent for cantaloupes and between .83 and

.55 percent for honeydew melons.

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 melon 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

4, 1999, 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 information on 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 melon

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.

A small business guide on complying with fruit, vegetable, and

specialty crop marketing agreements and orders may be viewed at the

following web site: 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 30-day comment period is provided to allow interested persons to

respond to this proposed rule. Thirty days is deemed appropriate

because: (1) The 1999-2000 fiscal period began on October 1, 1999, and

the marketing order requires that the rate of assessment for each

fiscal period apply to all assessable melons 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 979

Marketing agreements, Melons, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 979 is

proposed to be amended as follows:

PART 979--MELONS GROWN IN SOUTH TEXAS

1. The authority citation for 7 CFR part 979 continues to read as

follows:

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

2. Section 979.219 is revised to read as follows:

Sec. 979.219 Assessment rate.

On and after October 1, 1999, an assessment rate of $0.05 per

carton is established for South Texas melons.

Dated: January 4, 2000.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 00-507 Filed 1-7-00; 8:45 am]

BILLING CODE 3410-02-P