Sweet Onions Grown in the Walla Walla Valley of Southeast Washington and Northeast Oregon; Establishment of Container Marking Requirements and Special Purpose Shipment Exemptions

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 956

[FV96-956-3 FR]

Sweet Onions Grown in the Walla Walla Valley of Southeast

Washington and Northeast Oregon; Establishment of Container Marking

Requirements and Special Purpose Shipment Exemptions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule (1) establishes container marking requirements

for all shipments of Walla Walla Sweet Onions, and (2) establishes

exemptions from assessment and container marking requirements for

certain special purpose shipments of Walla Walla Sweet Onions. This

rule will contribute to the efficient marketing of Walla Walla Sweet

Onions and assist in program compliance. This rule was recommended by

the Walla Walla Sweet Onion Committee (Committee), the agency

responsible for the local administration of the marketing order for

sweet onions grown in the Walla Walla Valley.

EFFECTIVE DATE: This final rule becomes effective April 15, 1997.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, 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) 326-2043; or George J.

Kelhart, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room

[[Page 18024]]

2525-S, Washington, DC 20090-6456; telephone: (202) 690-3919. Small

businesses may request information on compliance with this regulation

by contacting: Jay Guerber, Marketing Order Administration Branch,

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

Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 720-

5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement and Order No. 956 (7 CFR Part 956), regulating the handling

of sweet onions grown in the Walla Walla Valley of southeast Washington

and northeast Oregon, hereinafter referred to as the ``order.'' This

order is authorized by 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 final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. It 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 the 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.

The Committee meets regularly throughout each season to consider

recommendations for implementation, modification, suspension, or

termination of the regulatory requirements for Walla Walla Sweet

Onions. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department

reviews Committee recommendations in conjunction with information

submitted by the Committee and from other industry and government

sources.

This final rule (1) establishes container marking requirements for

all shipments of Walla Walla Sweet Onions, and (2) establishes

exemptions from assessment and container marking requirements for

certain special purpose shipments of Walla Walla Sweet Onions. This

rule will contribute to the efficient marketing of Walla Walla Sweet

Onions and assist in program compliance, and was recommended by the

Committee.

The Committee met twice to recommend adding container marking

requirements and exemption for special purpose shipments to the

marketing order's Subpart--Rules and Regulations provisions which are

authorized in the order. Section 956.62 provides authority for the

Committee, with the approval of the Secretary, to establish a method

for fixing the markings of containers used in the packaging or handling

of Walla Walla Sweet Onions. Further, based upon recommendations

submitted by the Committee, Sec. 956.63 provides authority for the

Secretary to issue regulations in regard to assessment and container

marking requirements to facilitate the handling of Walla Walla Sweet

Onions for specified purposes.

The Committee met October 8, 1996, and recommended that all Walla

Walla Sweet Onions produced in the production area and shipped to the

fresh market be packed in containers marked with the ``Genuine Walla

Walla Sweet Onion'' logo. The Committee also recommended exemption from

assessments for sweet onions shipped to outlets specified in

Sec. 956.163.

At its next regularly scheduled meeting on November 12, 1996, the

Committee reconfirmed the recommendations to establish container

marking requirements and exempt specified shipments from assessments.

At that meeting, the Committee also recommended exempting shipments

specified in Sec. 956.163 from container marking requirements. This

rule combines the recommendations from the two Committee meetings into

one rulemaking action.

The first action establishes container marking requirements in

Sec. 956.162. When the Walla Walla Sweet Onion industry began the

process of formulating the order, a primary objective was to help

promote product identity at wholesale, retail, and consumer levels,

while at the same time deterring the marketing of non-sweet onions, or

onions grown outside the production area, as Walla Walla Sweet Onions.

The Committee is authorized to use a trademarked logo developed by the

Walla Walla Sweet Onion Commission and the Walla Walla Area Chamber of

Commerce. The logo was developed and patented by the Walla Walla Sweet

Onion Commission in December 1991, and currently is widely recognized

by the onion industry.

The logo has been used by the Committee on promotional material and

correspondence since the Committee obtained the license to use it on

April 19, 1996. During both the subcommittee and the regular Committee

meetings held to develop the recommendation for the regulation

specified in Sec. 956.162, all participants agreed that containers of

Walla Walla Sweet Onions should be marked with the Committee's

registered logo. Discussion during the meetings indicated that product

identity, just as it was during the formulation of the order, continues

to be a primary concern for both promotional and compliance purposes,

and that effort should be made to add specific container marking

regulations.

Committee members and other industry members agree that the use of

the widely recognized logo will have a positive effect on the economic

returns for the entire industry. One of the major problems for this

industry has been the marketing of non-Walla Walla Sweet Onions, grown

either in the traditional production area or outside of it, as Walla

Walla Sweet Onions. It is the Committee's belief that, buyers, having

purchased onions represented to them as being Walla Walla Sweet Onions,

will rarely return to purchase more due to the lack of confidence such

a sale fostered. This had, and still has, the effect of curtailing

demand and reducing returns to producers.

Some of the handler members on the Committee recommended that this

regulation allow handlers a period of time to utilize current packaging

inventory before being required to use containers marked with the

Committee's logo. These individuals expressed concern that some

handlers may have significant container inventory with pre-printed

graphics and other markings. Comments by handlers at the meeting

indicated that the expense and burden of disposing of their container

inventory, or, alternatively, adding decals, stickers, or stamps to the

existing containers would be significant. The Committee agrees that,

although handlers should make every effort to begin using the logo on

containers as soon as possible, a grace period of two crop years allows

adequate time for handlers to exhaust current container inventories.

Section 956.162(b) provides such a grace period, subject to

[[Page 18025]]

Committee verification of handler container inventories.

The Committee recommended that the logo be clearly displayed as

either a decal or an imprint on all containers, and that there should

be no specific requirements for the size and color of the markings. As

it is a common industry practice to ship onions in field pack bulk bins

containing more than 500 pounds net weight from the field to road-side

stands and farmers' markets where they are bagged for resale, the

Committee recommended that the container marking requirements should

not apply to shipments to these two small outlets. This exemption is

specified in Sec. 956.162(b). The proposed rule on this action

incorrectly stated that this exemption was specified in Sec. 956.163.

The container marking requirements will contribute to the efficient

marketing of Walla Walla Sweet Onions by ensuring better product

identification, building buyer confidence, increasing returns to the

industry, and enhancing Committee compliance efforts. During the

shipping season, the Committee manager frequently visits handling

operations to ensure that these operations are complying with marketing

order requirements. Requiring that the registered logo be displayed on

the container will decrease the amount of time the manager spends

tracing and tracking these onions to ensure that they are not non-sweet

onions, or onions from outside the production area, being sold as Walla

Walla Sweet Onions.

When considering Sec. 956.163, which provides exemptions for

shipments made to certain non-fresh use outlets, Committee members

stated that most Walla Walla Sweet Onions are shipped into the fresh

market. However, a small percentage of the onions are utilized for

other purposes, including relief and charitable organizations,

livestock feed, planting and plants, salad onions, processing, disposal

of culls, and seed. For the exemption to apply to shipments made to

relief or charitable organizations, the Committee included a provision

in its recommendation that such shipments must be donated and not sold.

Section 956.163 clearly indicates which shipments are exempted from

assessments and container marking requirements. This is intended to

lessen the chance of confusion on the part of the regulated industry

and alleviate potential administrative and compliance problems for the

Committee, thereby facilitating the marketing of Walla Walla Sweet

Onions.

Notice of this action was published in the Federal Register (62 FR

5933) on February 10, 1977. Interested persons were invited to submit

written comments. The deadline for such comments ended March 12, 1997.

No comments were received.

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, the 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 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 35 handlers of Walla Walla Sweet Onions

subject to regulation under the order and approximately 60 producers in

the regulated production area. Small agricultural service firms 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 region in which Walla Walla Sweet Onions are produced is a

relatively small production area, encompassing only a portion of

Oregon's Umatilla County and Washington's Walla Walla County. Produced

on an estimated 850 acres, the industry's total 1996 Walla Walla Sweet

Onion pack-out approximated 20,106,200 pounds. Based on assessments

collected on 50-pound cartons or sacks, Committee records for the 1996

season show that 18 handlers shipped 500 or fewer units, eight handlers

shipped between 500 and 5,000 units, four handlers shipped between

5,000 and 50,000 units, and five handlers shipped between 50,000 and

100,000 units.

Information provided by the Department's Fresh Fruit and Vegetable

Market News officials in Yakima, Washington, indicates that 1996 F.O.B.

prices on jumbo Walla Walla Sweet Onions, packed in 50-pound cartons,

ranged from a high of $16.00 early in the season to a low at the end of

the season of $10.00. On the other end of the scale, medium Walla Walla

Sweet Onions, packed in 50-pound mesh sacks, ranged from early season,

high returns of $14.00 per sack down to a low at the season's

conclusion of $6.00 per sack. Handlers have stated that packing costs

average between $4.00 and $5.00 per 50-pound carton, and around $3.00

per 50-pound sack. Committee records indicate that individual farms

currently have acreage dedicated to the production of Walla Walla Sweet

Onions in the range from 1 to 160 acres.

About 25 of the 35 regulated handlers of Walla Walla Sweet Onions

are also producers and generally pack their own onions in the field

while harvesting them. These onions are usually marketed direct to

consumers through road-side stands and farmers' markets or through mail

order sales. Only about 10 of these handlers own and operate

commercially sized packing facilities and market the majority of their

onions through large wholesale and retail outlets. Based on current

information, the majority of Walla Walla Sweet Onion handlers and

producers may be classified as small entities.

The only alternative to the proposal discussed at the meetings was

to not recommend the rulemaking action at all. The Committee determined

that such an alternative would not be acceptable to the industry

because of the significant benefits expected as a result of these

regulations. Without container marking requirements, the Committee

believes that the current marketing and compliance problems, basic

reasons behind the promulgation of the marketing order, will not be

alleviated. As for the foregoing special purpose shipment exemptions,

the Committee concluded that the absence of a list of shipments exempt

from assessments and container marking requirements would perpetuate

confusion and compliance problems, as well as increase the economic,

reporting and recordkeeping burden on handlers.

This final rule provides that containers of Walla Walla Sweet

Onions for shipment to fresh markets be marked with the Committee's

registered logo, and that specified shipments of Walla Walla Sweet

Onions be exempt from such container marking requirements and from

assessments. This action will not impose any additional reporting or

recordkeeping requirements on either small or large handlers of Walla

Walla Sweet Onions. Additionally, the benefits of this rule are not

expected to be disproportionately greater or less for small handlers or

producers than for larger entities.

As with all Federal marketing order programs, reports and forms are

periodically reviewed to reduce information requirements and

duplication by industry and public

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sector agencies. The Department has not identified any relevant Federal

rules that duplicate, overlap, or conflict with this rule.

The Committee's meetings were widely publicized throughout the

production area. All interested persons were invited to attend the

meetings. The Committee actively seeks participation in its

deliberations at all of its meetings. Both the October 8 and November

12, 1996, meetings were open to the public and representatives of both

large and small entities expressed their views on these and related

issues. The majority of the Committee, composed of six producers and

three handlers, as well as a public member and respective alternates

for each position, represent small entities. Additionally, in the

proposed rule published in the Federal Register (62 FR 5933) on

February 10, 1997, interested persons were invited to submit

information on the regulatory and informational impacts of this action

on small businesses. A copy of the proposal was also made available on

the Internet by the U. S. Government Printing Office. The comment

period ended March 12, 1997, and no comments were received concerning

the impacts of this action on small businesses.

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 that good

cause exists for not postponing the effective date of this rule until

30 days after publication in the Federal Register because: (1) The 1997

shipping season begins in June; (2) handlers are well aware of this

action which was discussed at two open public meetings which were

widely publicized in the production area; and (3) a proposed rule was

published on this action and provided for a 30-day comment period. No

comments were received.

List of Subjects in 7 CFR Part 956

Marketing agreements, Onions, Reporting and record keeping

requirements.

For the reasons set forth in the preamble, 7 CFR Part 956 is

amended as follows:

PART 956--SWEET ONIONS GROWN IN THE WALLA WALLA VALLEY OF SOUTHEAST

WASHINGTON AND NORTHEAST OREGON

1. The authority citation for 7 CFR Part 956 continues to read as

follows:

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

2. New sections 956.162 and 956.163 are added to Subpart--Rules and

Regulations to read as follows:

Sec. 956.162 Container markings.

Effective April 15, 1997, no handler shall ship any container of

Walla Walla Sweet Onions except in accordance with the following terms

and provisions:

(a) Each container of Walla Walla Sweet Onions shall be

conspicuously marked with the ``Genuine Walla Walla Sweet Onion'' logo.

The marking may be in the form of a decal or a stamped imprint of any

color and size: Provided, That the decal or stamped imprint must be

placed in plain sight and easy to read.

(b) Walla Walla Sweet Onions may be handled not subject to the

marking requirements of this section when handlers ship such onions

pursuant to Sec. 956.163, or ship such onions in field packed bulk bins

containing more than 500 pounds net weight for sale to roadside stands

and farmers' market operators for repacking and direct consumer sale:

Provided, That subject to Committee verification of handler container

inventories, handlers may use their existing inventories of unmarked

containers until April 15, 1999.

Sec. 956.163 Handling for specified purposes.

(a) Assessment and container marking requirements specified in this

part shall not be applicable to shipments of onions for any of the

following purposes:

(1) Shipments of Walla Walla Sweet Onions for relief or to

charitable institutions: Provided, That such shipments must be donated

and not sold in order for this exemption to apply;

(2) Shipments of Walla Walla Sweet Onions for livestock feed;

(3) Shipments of Walla Walla Sweet Onions for planting and for

plants;

(4) Shipments of Walla Walla Sweet Onions as salad onions;

(5) Shipments of Walla Walla Sweet Onions for all processing uses

including, pickling, peeling, dehydration, juicing, or other

processing;

(6) Shipments of Walla Walla Sweet Onions for disposal;

(7) Shipments of Walla Walla Sweet Onions for seed.

(b) [Reserved]

Dated: April 7, 1997.

Sharon Bomer Lauritsen,

Acting Director, Fruit and Vegetable Division.

[FR Doc. 97-9479 Filed 4-11-97; 8:45 am]

BILLING CODE 3410-02-P