Melons Grown in South Texas; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV98-979-1 FIR]

Melons Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

which decreased the assessment rate established for the South Texas

Melon Committee (Committee) under Marketing Order No. 979 for the 1997-

98 and subsequent fiscal periods. The Committee is responsible for

local administration of the marketing order which regulates the

handling of melons grown in South Texas. Authorization to assess Texas

melon handlers enables the Committee to incur expenses that are

reasonable and necessary to administer the program. The fiscal period

began on October 1 and ends September 30. The assessment rate will

remain in effect indefinitely unless modified, suspended, or

terminated.

EFFECTIVE DATE: June 8, 1998.

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 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) 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, PO Box 96456, Washington, DC 20090-

6456; telephone: (202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 156 and Order No. 979 (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 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 issued herein will be applicable to all assessable

melons beginning October 1, 1997, 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 continues to decrease the assessment rate established for

the Committee for the 1997-98 and subsequent fiscal periods from $0.07

per carton to $0.04 per carton.

The 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 producers 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 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 September 1997. The assessment rate and funding for research

projects, promotion, 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 December 16, 1997, and

unanimously recommended 1997-98 expenditures of $158,200 and an

assessment rate of $0.04 per carton of melons. In comparison, last

year's budgeted expenditures were $308,000. The assessment rate of

$0.04 is $0.03 lower than the rate previously in effect. At the former

rate of $0.07 per carton, the assessment income would have exceeded

anticipated expenses by about $112,700, and the projected reserve of

$234,269 on September 30, 1998, would have exceeded the level the

Committee believes to be adequate to administer the program. The

Committee voted to lower its assessment rate and use more of the

reserve to cover its expenses. The

[[Page 25388]]

reduced assessment rate is expected to bring assessment income closer

to the amount necessary to administer the program for the 1997-98

fiscal period.

Major expenses recommended by the Committee for the 1997-98 fiscal

year include $84,500 for personnel and administrative expenses, $40,500

for compliance, $23,200 for research projects, and $10,000 for

promotion. Budgeted expenses for these items in 1996-97 were $84,500,

$115,500, $108,000, and $0, respectively.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of South Texas

melons. Melon shipments for the year are estimated at 3,870,000

cartons, which should provide $154,800 in assessment income. Income

derived from handler assessments, along with funds from the Committee's

authorized reserve, will be adequate to cover budgeted expenses. Funds

in the reserve (currently $228,669) will be kept within the maximum

permitted by the order (approximately two fiscal periods' expenses;

Sec. 979.44).

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 remainder of

the Committee's 1997-98 budget was approved December 23, 1997, 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 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 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 33 producers of South Texas melons in the

production area and approximately 16 handlers subject to regulation

under the marketing order. Small agricultural 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 melon producers and handlers

may be classified as small entities.

This rule continues in effect the assessment rate of $0.04 per

carton established for the Committee and collected from handlers for

the 1997-98 and subsequent fiscal periods. The Committee unanimously

recommended 1997-98 expenditures of $158,200 and an assessment rate of

$0.04 per carton of melons. In comparison, last year's budgeted

expenditures were $308,000. The assessment rate of $0.04 is $0.03 less

than the rate previously in effect. At the former rate of $0.07 per

carton and an estimated 1998 melon production of 3,870,000 cartons, the

projected reserve on September 30, 1998, would have exceeded the level

the Committee believes necessary to administer the program. The

Committee decided that an assessment rate of less than $0.04 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 $84,500 for personnel and administrative expenses,

$40,500 for compliance, $23,200 for research projects, and $10,000 for

promotion. Budgeted expenses for these items in 1996-97 were $84,500,

$115,500, $108,000, and $0, respectively.

Melon shipments for the year are estimated at 3,870,000 cartons,

which should provide $154,800 in assessment income. Income derived from

handler assessments, along with funds from the Committee's authorized

reserve, will be adequate to cover budgeted expenses. Funds in the

reserve (currently $228,669) will be kept within the maximum permitted

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

Recent price information indicates that the grower price for the

1997-98 marketing season will range between $7.00 and $9.00 per carton

of cantaloupes and between $5.00 and $7.00 per carton of honeydew

melons. Therefore, the estimated assessment revenue for the 1997-98

fiscal period as a percentage of total grower revenue will range

between .006 and .004 percent for cantaloupes and between .008 and .006

percent for honeydew melons.

This rule continues to decrease the assessment obligation imposed

on handlers. While this rule imposes 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

are 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 December

16, 1997, meeting was a public meeting and all entities, both large and

small, were able to express views on this issue.

This action imposes 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.

An interim final rule concerning this action was published in the

Federal Register on January 29, 1998 (63 FR 4366). The interim final

rule was made available through the Internet by the Office of the

Federal Register. A 60-day comment period was provided for interested

persons to respond to the interim final rule. The comment period ended

on March 30, 1998, and no comments were received.

After consideration of all relevant material 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.

[[Page 25389]]

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

amended as follows:

PART 979--MELONS GROWN IN SOUTH TEXAS

Accordingly, the interim final rule amending 7 CFR part 979 which

was published at 63 FR 4366 on January 29, 1998, is adopted as a final

rule without change.

Dated: May 4, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-12291 Filed 5-7-98; 8:45 am]

BILLING CODE 3410-02-P