Onions Grown in South TexasRegulation of Red Onions and Change in Regulatory Period

SUMMARY: This final rule establishes requirements for red variety

onions grown in South Texas under Marketing Order 959. In recent years,

shipments of poor quality red onions have appeared in the marketplace

and have adversely affected grower prices. This rule will tend to

improve grower prices by providing more desirable quality red onions

for consumers. This rule also extends the termination date of the

order's regulatory period from May 20 to June 15 of each year. More

late season onions are being grown in a portion of the production area,

increasing the need for marketing order quality requirements over a

longer time period. Regulating onions from the production area through

June 15 will help make more desirable onions available to markets.

EFFECTIVE DATE: April 12, 1994.

FOR FURTHER INFORMATION CONTACT: Robert Matthews, Marketing Specialist,

Marketing Order Administration Branch, F&V, AMS, USDA, Room 2523-S,

P.O. Box 96456, Washington, DC, 20090-6456, telephone: (202) 690-0464;

or Belinda G. Garza, McAllen Marketing Field Office, Marketing Order

Administration Branch, F&V, AMS, USDA, 1313 E. Hackberry, McAllen,

Texas 78501; telephone: (210) 682-2833.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 143 and Marketing Order No. 959 (7 CFR Part 959), as

amended, regulating the handling of onions grown in South Texas,

hereinafter referred to as the ``order.'' This order is effective under

the Agricultural Marketing Agreement 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 12778, Civil

Justice Reform. This action is not intended to have retroactive effect.

This rule will not preempt any state or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

action.

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 in equity to review the

Secretary's ruling on the petition, provided a bill in equity is filed

not later than 20 days after date of the entry of the ruling.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this action on small

entities.

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 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 38 handlers of South Texas onions who are subject to

regulation under the marketing order and 97 producers in the regulated

area. Small agricultural service firms, which includes handlers, have

been defined by the Small Business Administration (13 CFR 121.601) as

those having annual receipts of less than $3,500,000, and small

agricultural producers are defined as those having annual receipts of

less than $500,000. The majority of handlers and producers of South

Texas onions may be classified as small entities.

At its November 9, 1993, meeting, the South Texas Onion Committee

(committee) recommended, under the authority of Sec. 959.52(c) of the

order, that red varieties of onions be regulated and also that the

termination date of the regulatory period for all varieties of

regulated onions be extended from May 20 to June 15 of each year.

Red varieties of onions have been exempt from regulation since the

inception of Marketing Order No. 959. The quantities of such onions

produced have usually represented a small portion of the total annual

production in the marketing order's regulated area. However, red

variety acreage has increased significantly in recent seasons.

Moreover, the committee reports that poor quality red onions grown in

the production area have appeared in the marketplace from time to time.

The impact on the industry is two-fold. Poor quality red onions

diminish consumer confidence in the better quality red onions, leading

to fewer sales and lower returns to growers. In addition, a less

favorable consumer opinion of red variety onions often leads to lower

sales for all onions grown in the production area, including yellow and

white varieties which now enjoy an excellent reputation with receivers

and consumers.

Red onions, like yellow onions and white onions, are varieties of

Allium cepa, and are therefore covered by the same U.S. standards

referenced in Sec. 959.322(h). Because of this, the regulatory

requirements set forth in Sec. 959.322 applicable to yellow and white

varieties of onions are appropriate for red varieties also. The

committee believes that by regulating red onions in the same fashion as

yellow and white onions, consumers can be assured of buying better

quality red onions. Thus, increased consumer confidence should result

in improved returns to growers. In addition to grade and size

requirements, the committee also recommended that red varieties be

subject to the same pack, container, inspection, assessment, and

safeguard requirements as yellow and white varieties. In this way, red,

yellow, and white onions will be regulated to the same extent.

The second recommendation concerns the length of the regulatory

period for shipments of onions from the regulated area. Previously,

order regulations were in effect from March 1 through May 20 each year.

District 2 (Laredo-Winter Garden) is in the northern part of the

production area and has a shipping season that extends from May to well

into June. This district is comprised of the Counties of Zapata, Webb,

Jim Hogg, DeWitt, Wilson, Atascosa, Karnes, Val Verde, Frio, Kinney,

Uvalde, Medina, Maverick, Zavala, Dimmit and LaSalle. In the 1980's,

District 2 production was declining and industry members asked to be

relieved from the marketing order requirements after May 20 each

season, instead of the June 15 date in effect at that time. By May 20,

shipments from District No. 1 in the southern part of the production

area usually are finished. Thus, effective for the 1989 and subsequent

seasons, the termination date for the regulatory period was advanced

for the entire production area from June 15 to May 20 (54 FR 8519,

March 1, 1989).

However, committee records indicate an increase in onion shipments

from District 2 during the past three years. The committee members from

District 2 who attended the November meeting stated that shipments

during the May 20 through June 15 period should once again be regulated

so that funds could be assessed to fund the committee's production

research and market development efforts as well as assure the consumer

a quality pack of onions from their district. Shipments from this

district typically account for 10 to 12 percent of the production area

total, and the committee believes that grade, size, container, and

other order requirements are necessary to maintain the quality of South

Texas onions that receivers and consumers have become accustomed to.

Extension of the regulatory period will not affect District 1 handlers

as shipments from that district normally are completed by mid-May.

Currently, handlers may not package or load onions on Sunday during

the period March 1 through May 20 of each season. The committee

recommended not changing this requirement. After May 20, District 2

handlers compete with unregulated shipments from other areas such as

California. Permitting District 2 handlers to package and ship whenever

they can find buyers will help to reduce the competitive advantage of

handlers shipping from outside the regulated area.

Notice of this final rule was published in the March 9, 1994, issue

of the Federal Register (59 FR 11008). Interested persons were invited

to file written comments with respect to the proposal until March 24,

1994. Ten comments were received. One was from Mr. Greg Nelson, of the

Cargil Produce Company, Uvalde, Texas, which is located in District 2.

Mr. Nelson opposed the extension of the regulatory period. He stated

that non-regulated areas such as California, the Vidalia area of

Georgia, New Mexico, Arizona, and the Trans-Pecos area of Texas ship

large quantities of new crop onions. These onions compete with

regulated onions from District 2 (Laredo-Winter Garden). Mr. Nelson

stated that the other shipping areas, being unregulated, have a

significant competitive advantage over District 2 growers and handlers

because those onions do not have to meet grade requirements and the

handlers do not have to pay inspection costs.

Six other comments also opposed the proposed extension of the

regulation period. These comments were received from Mr. Kenneth

Spence, Mr. Robert Willoughby, and Mr. Lee Toombs, all of Batesville;

and from Mr. C.W. Cargil, Mr. Steve Cargil, and Mr. Steve Rambie, from

Uvalde, Texas. All stated that regulating District 2 onions after May

20 would cause a hardship on District 2 growers by giving non-regulated

producing areas a competitive advantage.

At the November 9, 1993, meeting during which this change in

regulatory period was recommended, 11 members were present; the full

committee is composed of 17 members. The committee unanimously

recommended this action, including two members from District 2. For

District 1, one position was not represented by either a member or

alternate; for District 2, two members out of seven were in attendance.

None of the opponents were in attendance.

Although District 2 producers and handlers usually face competition

from non-regulated areas during much of their shipping season, it is

important that handling requirements apply to shipments from that

district to protect the good quality image enjoyed by South Texas

onions in the marketplace and promoted by the committee's market

development program. In the absence of quality and inspection

requirements, low quality onions from District 2 could be shipped. Such

shipments could negatively effect the South Texas industry's market

development efforts and quality image. Also, in the interest of equity

and uniform regulation application, it is desirable that handlers from

District 2 pay assessments in support of these activities. Assessments

paid have helped to provide an on-going production research program

that has benefitted the entire industry with the development of new

onion varieties and new cultural techniques, as well as an effective

market development program that helps increase sales. Therefore, these

comments are denied.

The three remaining comments were from the South Texas Onion

committee, Mr. John R. Bearden, and Mr. B. L. Lackey. These comments

stated that if the rule is not adopted by April 1, the anticipated

beginning of the red onion harvesting and shipping season, poor quality

red onions will be dumped on the market, thereby diminishing consumer

confidence and depressing the market for South Texas onions. After

evaluating the comments, the Department has decided to implement the

committee's recommendation as proposed, and make the final rule

effective upon publication in the Federal Register.

Based on available information, the Administrator of the AMS has

determined that this action will not have a significant economic impact

on a substantial number of small entities.

Section 8(e) of the Act requires that whenever grade, size, quality

or maturity requirements are in effect for onions under a domestic

marketing order, imported onions must meet the same or comparable

requirements, subject to concurrence by the United States Trade

Representative. Because this rule establishes grade, size, quality and

maturity requirements on red onions and changes the regulatory period

under the South Texas onion marketing order, corresponding changes are

needed in the onion import regulation. Such changes have been addressed

in a separate onion import rule.

The information collection requirements contained in the referenced

sections have been previously approved by the Office of Management and

Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and have been

assigned OMB number 0581-0074.

After consideration of all relevant material presented, including

the proposal submitted by the committee, comments received, and other

information, it is hereby found that this regulation, as hereinafter

set forth, will tend to effectuate the declared policy of the Act. It

is further found that good cause exists for not postponing the

effective date of this section until 30 days after publication in the

Federal Register because (1) the shipping season for onions has already

begun and for maximum effectiveness this rule should apply to as many

shipments as possible; (2) the proposed rule was discussed at an open

public meeting, and all interested persons had an opportunity to voice

concerns; and (3) there are no special preparations required of the

handler that cannot be completed by the effective date.

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 hereby

amended as follows:

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

follows:

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

PART 959--ONIONS GROWN IN SOUTH TEXAS

2. In Sec. 959.322, the introductory paragraph is revised to read

as follows:

Sec. 959.322 Handling regulation.

During the period beginning March 1 and ending June 15, no handler

shall handle any onions unless they comply with paragraphs (a) through

(d) or (e) or (f) of this section. In addition, no handler may package

or load onions on Sunday during the period March 1 through May 20.

* * * * *

Dated: April 8, 1994.

Robert C. Keeney,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 94-8890 Filed 4-11-94; 8:45 am]

BILLING CODE 3410-02-P