Onions Grown in South Texas; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV98-959-1 IFR]

Onions Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule decreases 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 1997-98 fiscal period began August 1 and ends July 31. The

assessment rate will continue in effect indefinitely unless modified,

suspended, or terminated.

DATES: Effective December 31, 1997. Comments received by March 2, 1998,

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

96456, Washington, DC 20090-6456; Fax: (202) 205-6632. 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 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 Anne M. Dec, 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

[[Page 67695]]

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 continuing 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 decreases the assessment rate established for the

Committee for the 1997-98 and subsequent fiscal periods from $0.07 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 currently in effect. The Committee

voted to lower its assessment rate and use more of the reserve to cover

its expenses. The assessment rate decrease is necessary to bring

expected assessment income closer to the amount necessary to administer

the program for the 1997-98 fiscal period. At the current rate,

assessment income would exceed anticipated expenses by about $35,000,

and the projected reserve of $220,000 on July 31, 1998, would exceed

the level the Committee believes to be adequate to administer the

program.

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.

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 Committee's

1997-98 budget 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 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 68 producers of South Texas onions in the

production area and approximately 35 handlers subject to regulation

under the marketing order. Small agricultural

[[Page 67696]]

producers have been defined by the Small Business Administration (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. The majority of South Texas onion

producers and handlers may be classified as small entities.

This rule decreases the assessment rate established for the

Committee and collected from handlers for the 1997-98 and subsequent

fiscal periods from $0.07 to $0.05 per 50-pound container or

equivalent. 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

currently in effect. At the 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 exceed the

level the Committee believes to be adequate 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 action reduces 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 will 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 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. Finally, interested

persons are invited to submit information on the regulatory and

informational impacts of this action on small businesses.

This action will not impose any 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. 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.

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 action reduces the current assessment rate

for South Texas onions; (2) the 1997-98 fiscal period began on August

1, 1997, and the marketing order requires that the rate of assessment

for each fiscal period apply to all assessable onions handled during

such fiscal period; (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; and (4)

this interim final rule provides a 60-day comment period, and all

comments timely received will be considered prior to finalization of

this rule.

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

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

follows:

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

Sec. 959.237 [Amended]

2. Section 959.237 is amended by removing the words ``August 1,

1996,'' and adding in their place the words ``August 1, 1997,'' and by

removing ``$0.07'' and adding in its place ``$0.05.''

Dated: December 22, 1997.

Sharon Bomer Lauritsen,

Acting Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 97-33907 Filed 12-29-97; 8:45 am]

BILLING CODE 3410-02-P