Onions Grown in Certain Designated Counties in Idaho, and Malheur County, Oregon; Relaxation of Pack and Marking Requirements

SUMMARY: This interim final rule permits bulk shipments of U.S.

Commercial and U.S. No. 2 grade onions which contain more than 30

percent U.S. No. 1 grade onions. A bulk shipment is one in which the

onions are packed in containers weighing 60 pounds or more. This rule

also removes the requirement that bulk containers of onions packed as

U.S. Commercial grade shall have the grade marked permanently and

conspicuously on the containers. These changes are intended to improve

the marketing of such onions, reduce handler packing costs, and

increase returns to growers. These changes were recommended by the

Idaho-Eastern Oregon Onion Committee (committee), the agency

responsible for the local administration of the marketing order for

onions grown in certain designated counties in Idaho, and Malheur

County, Oregon.

DATES: Effective August 1, 1996; comments received by August 30, 1996

will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; FAX (202) 720-5698. All comments

should reference the docket number and the date and page number of this

issue of the Federal Register and will be made available for public

inspection in the Office of the Docket Clerk during regular business

hours.

FOR FURTHER INFORMATION CONTACT: Gary D. Olson, Northwest Marketing

Field Office, Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,

Portland, Oregon 97204-2807; Telephone: (503) 326-2724, FAX: (503) 326-

7440; or Robert F. Matthews, Marketing Order Administration Branch,

Fruit and Vegetable Division, AMS, USDA, room 2525, South Building,

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

Fax: (202) 720-5698. Small businesses may request information on

compliance with this regulation by contacting: Jay Guerber, Marketing

Order Administration Branch, Fruit and Vegetable Division, AMS, P.O.

Box 96456, Room 2523-S, Washington, D.C. 20090-6456; telephone (202)

720-2491, Fax No. (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 130 and Marketing Order No. 958 (7 CFR part 958), as

amended, regulating the handling of onions grown in certain designated

counties in Idaho and Malheur County, Oregon, hereinafter referred to

as the ``order.'' The order is effective under the Agricultural

Marketing Agreement Act of 1937, as amended (7 U.S.C 601-674),

hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule 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

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. 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.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the 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 approximately 34 handlers who are subject to regulation

under the order and approximately 550 producers in the production area.

Small agricultural service firms, which includes handlers of Idaho-

Eastern Oregon onions, have been defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts of less

than $5,000,000, and small agricultural producers are defined as those

whose annual receipts are less than $500,000. The majority of Idaho-

Eastern Oregon onion handlers and producers may be classified as small

entities.

This interim final rule removes pack and container marking

requirements for shipments of bulk containers. Bulk containers contain

60 pounds or more of onions. Currently, shipments of all varieties of

onions (except red) which grade U.S. Commercial or U.S. No. 2 may not

contain more then 30 percent U.S. No. 1 grade onions, regardless of

container size. The intent of this requirement is to lessen the chances

of market confusion by providing a clear distinction between onions

packed as U.S. No. 1, the highest grade shipped from the production

area, and those onions packed at the U.S. Commercial

[[Page 39840]]

or U.S. No. 2 grade levels. Also, containers of onions of the U.S.

Commercial grade must be prominently and conspicuously marked to

further achieve the distinction between the various grades packed and

shipped from the production area.

Industry experience indicates that it is not important to limit the

percentage of U.S. No. 1 onions in marketing bulk containers, because

such onions normally go to firms that peel, slice, dice, chop, or

otherwise prepare them for use in salad bars, fast food, or similar

retail outlets. Shipments for the wholesale, retail, repacker, and

export trade generally are made in containers weighing less than 60

pounds. Thus, the risk of confusion among buyers as to the quality of

onions for traditional bulk shipment market outlets is quite low.

Absent these changes, bulk shipments of onions containing more than 30

percent U.S. No. 1 grade onions would require handlers to repack the

onions to meet the 30 percent tolerance and thereby incur additional

expenses. This rule will especially benefit small handlers shipping

bulk containers because such handlers normally operate with fewer

packing lines and pack fewer onions. This makes it more difficult for

small handlers to repack lots to meet the 30 percent U.S. No. 1

tolerance compared to larger handlers.

With the reduced packing costs, and greater marketing flexibility

expected to result from these changes, small and large handlers in the

Idaho-Eastern Oregon onion industry will be able to compete more

effectively in the marketplace. Therefore, the AMS has determined that

this action will not have a significant economic impact on a

substantial number of small entities. Interested persons are invited to

submit information on the regulatory and informational impacts of this

action on small businesses.

Section 958.52 of the order authorizes the issuance of grade, size,

quality, container markings, pack, and container regulations for any

variety or varieties of onions grown in the production area. Section

958.51 authorizes the modification, suspension, or termination of

regulations issued under section 958.52.

This rule amends paragraphs (a)(1)(ii) and (a)(3)(i) of section

958.328 by removing, for onions packed in containers weighing 60 pounds

or greater, the current requirement that all varieties of onions

(except red) which grade U.S. No. 2 or U.S. Commercial may not be

shipped if more than 30 percent of the lot is comprised of onions of

U.S. No. 1 quality. This rule also amends paragraph (b) of section

958.328 by removing, for onions packed in containers weighing 60 pounds

or greater, the current requirement that onions packed as U.S.

Commercial grade shall have the grade marked permanently and

conspicuously on such containers. These requirements would continue for

onions shipped in containers weighing less than 60 pounds.

The committee unanimously recommended these changes at its June 18,

1996, meeting. The committee meets prior to and during each season to

consider recommendations for modification, suspension, or termination

of the regulatory requirements for Idaho-Eastern Oregon onions which

have been issued on a continuing basis. Committee meetings are open to

the public and interested persons may express their views at these

meetings. The Department reviews committee recommendations and

information submitted by the committee and other available information,

and determines whether modification, suspension, or termination of the

regulatory requirements would tend to effectuate the declared policy of

the Act.

The current requirement that all varieties of onions (except red)

which grade U.S. No. 2 or U.S. Commercial may not be shipped if more

than 30 percent of the lot is comprised of onions of U.S. No. 1 quality

is intended to reduce market confusion by providing a clear distinction

between onions packed as U.S. No. 1 and those packed at the U.S. No. 2

and U.S. Commercial grade levels. The goal of providing a clear

distinction between packs in the marketplace is further achieved by

requiring that onions packed as U.S. Commercial grade shall have the

grade marked permanently and conspicuously on the container. Preventing

market confusion is important to the industry in maintaining orderly

marketing, and maximizing industry shipments.

The committee reports that this distinction is of little value for

bulk shipments of onions, which normally are used for peeling,

chopping, slicing, or repacking, and that these requirements have

placed an undue regulatory burden on handlers and unnecessarily

increased packing costs for such shipments. The committee reports that

requiring the grade marking on bulk containers of U.S. Commercial grade

onions is not necessary because the chance of market confusion between

handlers and buyers of bulk containers is small.

The current requirement which prohibits the bulk shipment of a lot

of onions that grades U.S. No. 2 or U.S. Commercial because it is

comprised of more than 30 percent U.S. No. 1 quality grade sometimes

forces handlers to resort such onions, or blend them with poorer

quality onions to bring the lots into conformance with the 30 percent

tolerance. Rather than incur these additional costs, handlers sometimes

send such onions to lower value, secondary outlets, such as processing;

e.g., canning, freezing, dehydration, or similar outlets. Removing the

30 percent commingling requirement for bulk onion shipments is expected

to provide handlers with greater marketing flexibility, reduce packing

costs, and increase returns to growers. Removing the U.S. Commercial

grade marking requirement for bulk containers is expected to reduce

handler packing costs and remove an unnecessary regulatory burden on

handlers of such containers.

The 30 percent commingling and marking requirements for containers

with less than 60 pounds of onions will continue in effect to maintain

the distinction between the various grades shipped into non-bulk

markets. As mentioned earlier, this is necessary to prevent market

confusion and to maintain orderly marketing conditions.

After consideration of all relevant material presented, including

the committee's recommendation, and other available information, it is

found that this interim final rule, as hereinafter set forth, will tend

to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon

good cause that it is impracticable, unnecessary, and contrary to the

public interest to give preliminary notice prior to putting this rule

into effect and that good cause exists for not postponing the effective

date of this rule until 30 days after publication in the Federal

Register because: (1) This rule relaxes the current pack and container

marking requirements for bulk shipments of Idaho-Eastern Oregon onions;

(2) this rule was unanimously recommended at a public meeting and all

interested persons had an opportunity to express their views and

provide input; (3) Idaho-Eastern Oregon onion handlers are aware of

this rule and need no additional time to comply with the relaxed

requirements; (4) Idaho-Eastern Oregon onions are shipped throughout

the year, and this rule should be in effect by August 15, the date 1996

crop shipments are expected to begin; and (5) this rule provides a 30-

day comment period and any comments received will be considered prior

to finalization of this rule.

[[Page 39841]]

List of Subjects in 7 CFR Part 958

Marketing agreements, Onions, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 958 is

amended as follows:

PART 958--ONIONS GROWN IN CERTAIN DESIGNATED COUNTIES IN IDAHO, AND

MALHEUR COUNTY, OREGON

1. The authority citation for 7 CFR part 958 continues to read as

follows:

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

2. Section 958.328 is amended by revising paragraphs

(a)(1)(ii),(a)(3)(i), and (b) to read as follows:

Sec. 958.328 Handling regulation.

* * * * *

(a) * * *

(1) * * *

(ii) U.S. No. 2 or U.S. Commercial grade, at least 1\1/2\ inches

minimum diameter but not more than 30 percent of the lot shall be

comprised of onions of U.S. No. 1 quality when packed in containers

weighing less than 60 pounds; or

* * * * *

(3) * * *

(i) U.S. No. 2 or U.S. Commercial grade, at least 3 inches minimum

diameter, but not more than 30 percent of the lot shall be comprised of

onions of U.S. No. 1 quality when packed in containers weighing less

than 60 pounds; or

* * * * *

(b) Pack. Onions packed as U.S. Commercial grade in containers

weighing less than 60 pounds shall have the grade marked permanently

and conspicuously on the container.

* * * * *

Dated: July 25, 1996.

Sharon Bomer Lauritsen,

Acting Director, Fruit and Vegetable Division.

[FR Doc. 96-19375 Filed 7-30-96; 8:45 am]

BILLING CODE 3410-02-P