Sweet Onions Grown in the Walla Walla Valley of Southeast Washington and Northeast Oregon; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 956

[Docket No. FV98-956-2 FR]

Sweet Onions Grown in the Walla Walla Valley of Southeast

Washington and Northeast Oregon; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the assessment rate established for the

Walla Walla Sweet Onion Committee (Committee) under Marketing Order No.

956 for the 1998-99 and subsequent fiscal periods from $0.19 to $0.21

per 50-pound bag or equivalent of onions handled. The Committee is

responsible for local administration of the marketing order which

regulates the handling of sweet onions grown in portions of Walla Walla

County, Washington, and Umatilla County, Oregon. Authorization to

assess Walla Walla sweet onion handlers enables the Committee to incur

expenses that are reasonable and necessary to administer the program.

The fiscal period begins June 1 and ends May 31. The assessment rate

will remain in effect indefinitely unless modified, suspended, or

terminated.

EFFECTIVE DATE: May 29, 1998.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing

Field Office, Marketing Order Administration Branch, Fruit and

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

Portland, Oregon 97204-2807; telephone: (503) 326-2724, Fax: (503) 326-

7440; or George Kelhart, 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

96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202)

205-6632.

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.'' 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. Under the order now in effect, Walla Walla sweet 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 would be applicable to all assessable sweet onions

beginning on June 1, 1998, 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 increases the assessment rate established for the

Committee for the 1998-99 and subsequent fiscal periods from $0.19 to

$0.21 per 50-pound bag or equivalent of Walla Walla sweet onions

handled.

The 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

Committee consists of six producer members, three handler members and

one public member, each of whom is familiar with the Committee's needs

and with the costs for goods and services in their local area and are

thus in a position to formulate an appropriate budget and assessment

rate. The budget and assessment rate were discussed at a public meeting

and all directly affected persons had 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 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 met on February 17, 1998, and unanimously recommended

1998-99 expenditures of $97,272. In a vote with six favoring, three

opposing, and one abstaining, the Committee recommended an assessment

rate of $0.21 per 50-pound bag or equivalent of Walla Walla sweet

onions handled during the 1998-99 and subsequent fiscal periods. The

members opposed believed that the assessment rate should be increased

more than $0.02 per 50-pound bag or equivalent, so more funds could be

earmarked for promotion and paid advertising. The public member

abstained because of his desire to remain neutral on these issues. The

Committee estimated that the 1998 sweet onion crop will approximate

463,200 50-pound bags or equivalents of onions. In comparison, the

1997-98 fiscal period budget was established at $126,682 with an

estimated assessable sweet onion crop of 667,750 50-pound bags or

equivalents. In an effort to partially offset the loss of assessment

income due to the more conservative

[[Page 29090]]

1998 crop estimate, the Committee recommended the $0.02 increase.

In both the 1996 and 1997 seasons, the actual quantity of

assessable sweet onions produced for the fresh market was less than the

Committee had estimated for the purpose of establishing the respective

budgets. Actual assessment income earned during the 1997-98 fiscal

period was approximately $30,000 less than was estimated for the 1997-

98 budget, and for the 1996-97 fiscal period, actual assessment income

was approximately $26,000 less than was budgeted. For the 1998-99

fiscal period, the Committee made its 1998 assessable crop estimate

based on a lower average yield per acre than was used during the past

two seasons. Based on a reported 772 acres planted, the Committee is

anticipating a 1998 harvest averaging 600 50-pound bags or equivalents

per acre. Thus, the 1998-99 fiscal period budget is based on a crop

estimate of 463,200 50-pound bags or equivalents of Walla Walla sweet

onions.

After much discussion, the major expenditures recommended by the

Committee for the 1998-99 fiscal period include $43,890 for

administration, $10,000 for production research, $35,890 for market

promotion including paid advertising, and $4,500 for marketing order

compliance. Budgeted expenses for these items in the 1997-98 fiscal

period were $41,700, $15,000, $51,000, and $9,000, respectively.

The Committee based its recommended assessment rate increase on the

1998 crop estimate and its estimate of 1998-99 fiscal period

expenditures, including administrative costs and desired research and

promotion projects. The Committee also took into consideration the

impact an increase in the assessment rate would have on producers and

handlers. The increased assessment rate should provide $97,272 in

income which would be adequate to cover budgeted expenses. In the event

the 1998 assessable sweet onion crop falls short of anticipated yields,

the Committee estimates it will have approximately $25,000 in its

operating reserve at the beginning of the 1998-99 fiscal period (June

1, 1998), which should be adequate to cover any assessment shortages.

This amount is within the maximum permitted by the order of

approximately two fiscal period's budgeted expenses (Sec. 956.44).

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 will be in effect 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 and are locally published. 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.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this rule 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 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 60 producers of Walla Walla sweet onions in

the production area and approximately 35 handlers subject to regulation

under the 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 Walla Walla sweet onion producers and handlers may be

classified as small entities.

This rule increases the assessment rate established for the

Committee and collected from handlers for the 1998-99 and subsequent

fiscal periods from $0.19 to $0.21 per 50-pound bag or equivalent of

Walla Walla sweet onions handled. The Committee unanimously recommended

1998-99 expenditures of $97,272, and, with 6 members favoring, 3

members opposing and 1 member abstaining, recommended the $0.21 per 50-

pound bag or equivalent assessment rate. This assessment rate is $0.02

higher than the 1997-98 rate. The Committee recommended an increased

assessment rate to help offset the smaller projected crop of assessable

sweet onions in 1998. The anticipated crop of 463,200 50-pound bags or

equivalents is approximately 30 percent less than each of the 1996 and

1997 crops. The $0.21 rate should provide $97,272 in assessment income

and be adequate to meet 1998-99 fiscal period expenses.

The Committee discussed alternatives to this rule, including

alternative expenditure and assessment levels. The Committee discussed

various alternative expenditure levels for promotion, production

research, and marketing order compliance. Further, the Committee

discussed various levels of assessment from the 1997-98 rate of $0.19

to as much as $0.25 per 50-pound bag or equivalent of sweet onions.

Action was taken by the Committee on a motion to increase the

assessment rate by $0.01. The vote failed to carry a majority, however,

since a $0.01 increase would not have adequately funded desired

expenditures. The members opposed believed that the assessment rate

should be increased more than $0.02 per 50-pound bag or equivalent, so

more funds could be dedicated to promotion and paid advertising. The

public member abstained because of his desire to remain neutral on

these issues.

The major expenditures recommended by the Committee for the 1998-99

fiscal period include $43,000 for administration, $10,000 for

production research, $35,890 for market promotion including paid

advertising, and $4,500 for marketing order compliance. Budgeted

expenses for these items in the 1997-98 fiscal period were $41,700,

$15,000, $51,000, and $9,000, respectively.

Recent price information indicates that producer prices for all

sizes and grades of Walla Walla sweet onions for the 1998 shipping

season may range between $4.50 and $12.00 per 50-pound bag or

equivalent. Thus, the estimated assessment revenue for the 1998-99

fiscal period as a percentage of total producer revenue could range

between 0.017 and 0.046 percent.

This action increases the assessment obligation imposed on

handlers. While assessments impose 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

will be offset by the benefits derived by the operation of the order.

In addition, the Committee's meeting was widely publicized throughout

the Walla Walla sweet onion industry and all interested persons were

invited to attend the

[[Page 29091]]

meeting and participate in Committee deliberations on all issues. Like

all Committee meetings, the February 17, 1998, meeting was a public

meeting and all entities, both large and small, were able to express

views on this issue.

This rule imposes no additional reporting or recordkeeping

requirements on either small or large Walla Walla sweet 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.

A proposed rule concerning this action was published in the Federal

Register on April 8, 1998 (63 FR 17125). A copy of the proposed rule

was also sent via facsimile to the administrative office of the

Committee, which in turn notified Committee members and industry

members. The proposal was also made available through the Internet by

the Government Printing Office.

A 30-day comment period ending May 8, 1998, was provided to allow

interested persons the opportunity to respond to the request for

information and comments. No comments were received in response to the

proposal.

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.

Pursuant to 5 U.S.C. 553, it 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

Committee needs to have sufficient funds to pay its expenses which are

incurred on a continuous basis; (2) the Committee's 1998-99 fiscal

period begins June 1, 1998, and the order requires that the assessment

rate apply to all assessable sweet onions handled during that fiscal

period; (3) the 1998 sweet onion harvest is expected to begin in early

June due to unseasonably warm temperatures experienced in early Spring;

(4) handlers are aware of this action which was recommended by the

Committee at a public meeting; and (5) a 30-day comment period was

provided for in the proposed rule, and no comments were received.

List of Subjects in 7 CFR Part 956

Sweet onions, Marketing agreements, Reporting and recordkeeping

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. Section 956.202 is revised to read as follows:

Sec. 956.202 Assessment rate.

On and after June 1, 1998, an assessment rate of $0.21 per 50-pound

bag or equivalent is established for Walla Walla Sweet Onions.

Dated: May 21, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-14017 Filed 5-27-98; 8:45 am]

BILLING CODE 3410-02-P