Onions Grown in South Texas; Removal of Sunday Packing and Loading Prohibitions

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV98-959-2 FIR]

Onions Grown in South Texas; Removal of Sunday Packing and

Loading Prohibitions

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 changed the handling regulation prescribed under the South Texas

onion marketing order by removing the Sunday packing and loading

prohibitions. The marketing order regulates the handling of onions

grown in South Texas and is administered locally by the South Texas

Onion Committee (Committee). This rule allows the South Texas onion

industry to compete more effectively with other growing areas, better

meet buyer needs, and increase supplies of South Texas onions in the

marketplace.

EFFECTIVE DATE: July 6, 1998.

FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, McAllen Marketing

Field Office, Marketing Order Administration Branch, F&V, AMS, USDA,

1313 E. Hackberry, McAllen, TX 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, 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 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 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 the date of the entry of the ruling.

This rule continues in effect modifications to language in the

order's handling regulation to remove the Sunday packaging and loading

prohibitions. It also continues in effect modifications to

Sec. 959.322(f)(5) to remove all references to the Sunday packaging and

loading prohibitions. This rule will continue to provide handlers with

greater flexibility and additional time to prepare onions for market.

Section 959.322 of the order formerly prohibited the packaging or

loading of onions on Sunday during the period March 1 through May 20 of

each season. This prohibition had been in place for 35 years to foster

orderly marketing conditions. Handlers were permitted to move onions

that were already inspected and billed, but were not prevented from

harvesting onions or taking them to the packing shed for storage or to

the dryers. The onions, however, could not be packaged or loaded on

Sunday during that time period.

At a Committee meeting on November 6, 1997, producers and handlers

expressed the view that the Sunday holiday had outlived its usefulness.

In recent seasons, the Sunday packaging and loading prohibition had

hindered the movement of South Texas onions by not allowing producers

and handlers to harvest and pack each day of the week. Last year, the

South Texas area received record amounts of rainfall and producers had

difficulty harvesting their onions. The packaging and loading

restriction prevented handlers from packaging or loading onions, even

when it was dry by Sunday. These heavy periods of rain disrupted the

normal pattern of harvesting, packing, and loading.

Due to these severe conditions last season, the Committee

unanimously recommended relief from the Sunday packing and loading

restriction in April through May 20 of the onion season. The

restriction was removed and handlers had the flexibility to package and

load onions on Sunday, which helped them to salvage some of their crop.

According to the Committee's pre-season estimate, five million fifty-

pound bags were expected to be harvested last season. However, due to

the inclement weather, only 2.78 million fifty-pound bags were shipped.

At its November 6, 1997, meeting, the Committee unanimously

recommended revising the current handling regulation to remove the

restriction on packaging and loading onions on Sundays. This

recommendation was intended to allow the South Texas onion industry to

compete more effectively with other growing areas, better meet buyer

needs, and increase supplies of South Texas onions in the marketplace.

Continuing to prohibit the packaging and loading of onions on

Sunday could

[[Page 30578]]

have prevented the South Texas onion industry from marketing more of

their onions. Producers objected to the Sunday restriction because if

the shed was full of onions, they were prevented from sending more

onions to the sheds. Removing the Sunday restriction allowed handlers

to package and load onions on Sunday and salvage the producers' crops

if there were a threat of adverse weather conditions.

The Committee noted that competing areas pack and load on Sundays,

and that the restrictive Sunday holiday had prevented the South Texas

onion industry from competing effectively with other areas that do not

restrict packing or loading on Sundays. The South Texas onion industry

wanted the same opportunity. Continuing to prohibit the packing and

loading of onions on Sunday would have presented an unreasonable and

unnecessary hardship on handlers in the production area. If the

prohibitions had continued, the Committee believed that Texas markets

would have been taken by competing areas, and that the Texas onion

industry would not have been able to meet their buyers' needs.

The Committee's recommendation was intended to improve producers'

and handlers' returns by allowing them to package and load onions on

Sunday when their operations were curtailed for some reason during the

previous week. There had been times when handlers had been packing

onions on Saturday night, and had to stop at 12:01 a.m. even though the

packing had not been completed. This restriction was unacceptable to

the South Texas onion industry. The producers and handlers needed the

flexibility to pack and ship each day of the week to effectively meet

their competition.

This action continues to allow handlers to package and load onions

on Sunday, and permits producers to harvest and deliver their onions to

packing sheds each day of the week. This provides producers and

handlers more flexibility in meeting buyer needs and additional time

for preparing onions for market.

Removing the Sunday packing and loading prohibitions also required

that all references to the Sunday restrictions be removed from

Sec. 959.322(f)(5). Prior to the issuance of the interim final rule,

the prohibition against packing or loading onions on Sunday could have

been modified or suspended to permit the handling of onions for export

provided that such handling complied with safeguard procedures. In

addition, whenever the handler graded, packaged, and shipped onions for

export on any Sunday, such handler was required to cease all grading,

packaging, and shipping on the first weekday following shipment for the

same length of time as the handler operated on Sunday. The Committee

recommended the removal of such references. Thus, Sec. 959.322(f)(5)

was revised to remove all references to the Sunday prohibition.

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 38 handlers of South Texas onions who are

subject to regulation under the order and approximately 70 onion

producers in the regulated area. Small agricultural service firms have

been defined by the Small Business Administration (SBA) (13 CFR

121.601) as those having annual receipts of less than $5,000,000, and

small agricultural producers are defined as those having annual

receipts of less than $500,000.

Most of the handlers are vertically integrated corporations

involved in producing, shipping, and marketing onions. For the 1996-97

marketing year, onions produced on 12,175 acres were shipped by the

industry's 38 handlers; with the average acreage and median acreage

handled being 310 acres and 177 acres, respectively. In terms of

production value, total revenues for the 38 handlers were estimated to

be $23.6 million; with average and median revenue being $620,000 and

$146,000, respectively. The industry is highly concentrated as the

largest 8 handlers (largest 25 percent) controlled 62 percent of the

acreage and 77 percent of onion production.

The South Texas onion industry is characterized by producers and

handlers whose farming operations generally involve more than one

commodity, and whose income from farming operations is not exclusively

dependent on the production of onions. Alternative crops provide an

opportunity to utilize many of the same facilities and equipment not in

use when the onion production season is complete. For this reason,

typical onion producers and handlers either produce multiple crops or

alternate crops within a single year.

Based on the SBA's definition of small entities, the Committee

estimates that the 38 handlers regulated by the order would be

considered small entities if only their spring onion revenues are

considered. However, revenues from other productive enterprises would

likely push a large number of these handlers above the $5,000,000

annual receipt threshold. All of the 70 producers may be classified as

small entities based on the SBA definition if only their revenue from

spring onions is considered. When revenue from all sources is

considered, a majority of the producers would not be considered small

entities because many of the producers would exceed the $500,000

figure.

This rule continues to relieve the Sunday ban on packing and

loading onions from South Texas allowing individual firms the

flexibility to modify operations to effectively compete with production

areas not bound by such restrictions, to fill customer orders, and to

take advantage of available transportation.

The Committee recommended this rule change for the purpose of

ensuring a timely flow of available supplies, and thus help to maintain

stability in the onion market. Being reasonably assured of a stable

price and market provides South Texas onion producers and handlers with

added flexibility to maintain proper cash flow and to meet annual

expenses. The market and price stability provided by the order

potentially benefits the smaller handlers more than such provisions

benefit large handlers. Smaller producers and handlers are more

dependent upon stable prices. Larger handlers are more diversified and

not as dependent upon price stability. Therefore, the relief of packing

and loading restrictions on Sundays has small entity orientation.

While the level of benefits of removing the Sunday packing and

loading prohibitions are difficult to quantify, this action continues

to allow the South Texas onion industry to compete more effectively

with other growing areas, better meet buyer needs, and increase

supplies of South Texas onions in the marketplace. Last season, the

South Texas onion industry expected to ship 5 million 50-pound bags of

onions with a production value of $45.6 million. However, inclement

weather during a substantial part of the shipping season limited

shipments. Late in the season, the packing and loading restrictions

were removed to help producers and handlers salvage their

[[Page 30579]]

crops. Industry shipments totaled 2.8 million bags with a production

value of $25.4 million. The suspension for last season provided

producers and handlers more flexibility in meeting the needs of their

buyers.

The Committee believes that providing handlers the ability to pack

and load on Sundays will continue to benefit the industry. Removal of

the prohibitions provided producers with an additional window of

opportunity to harvest and deliver their onions to handlers for

sorting, grading, packaging, and loading. The continued use of this

self-imposed restriction could have caused the South Texas area to lose

its markets to other competing areas, because these areas can package

and load onions on Sunday. Removing the Sunday packaging and loading

prohibitions positively impacted both small and large handlers by

helping them maintain markets.

This action is intended to improve producers' and handlers' returns

by allowing them to package and load onions on Sunday if their

operations were curtailed for some reason during the previous week. The

ability to pack and load on Sunday has helped handlers fill unexpected

rush orders made at the end of the normal packing week. There have been

times when handlers were packing onions on Saturday night, and at 12:01

a.m. had to stop even though the packing had not yet been completed.

This hindered handler operations and unduly delayed the packing and

shipping of onions to meet buyer needs.

The Committee considered not removing the Sunday packing and

loading prohibitions. However, not relaxing the regulation could have

resulted in significant crop losses, as occurred last season, prior to

the emergency suspension of the prohibition. Also, the cessation in

harvesting activity last season resulted in increased unemployment

among onion field workers and employees at handlers' facilities. In

addition, reduced supplies could result in consumers paying higher

prices for onions. The opportunity to pack and load onions seven days a

week gives producers and handlers more time to harvest and prepare

onions for market. This increased flexibility enables the industry to

better meet buyer needs and compete more effectively with its

competition.

This rule 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 collection requirements and

duplication by industry and public sectors. In addition, the Department

has not identified any relevant Federal rules that duplicate, overlap,

or conflict with this rule.

Further, 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. Like

all Committee meetings, the November 6, 1997, meeting was a public

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

their views on this issue. Finally, interested persons were invited to

submit information on the regulatory and informational impacts of this

action on small businesses.

An interim final rule concerning this action was published in the

Federal Register on February 24, 1998 (63 FR 9128). 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 April 27, 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 finalizing the interim

final rule, without change, as published in the Federal Register (63 FR

9128, February 24, 1998), will tend to effectuate the declared policy

of the Act.

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

Accordingly, the interim final rule amending 7 CFR part 959 which

was published at 63 FR 9128 on February 24, 1998, is adopted as a final

rule without change.

Dated: June 1, 1998.

Sharon Bomer Lauritsen,

Acting Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-15016 Filed 6-4-98; 8:45 am]

BILLING CODE 3410-02-P