Melons Grown in South Texas; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 979

[Docket No. FV98-979-1 IFR]

Melons 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 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 1997-98 fiscal period began October 1 and ends September

30. The assessment rate will continue in effect indefinitely unless

modified, suspended, or terminated.

DATES: Effective January 30, 1998. Comments received by March 30, 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, PO 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 George J. Kelhart, 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. 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 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

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 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

[[Page 4367]]

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

$0.04 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 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 $112,700,

and the projected reserve of $234,269 on September 30, 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 $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 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 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 decreases the assessment rate established for the

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

fiscal periods from $0.07 to $0.04 per carton. 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 currently in effect. At the 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 exceed the

level the Committee believes to be adequate 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.

[[Page 4368]]

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 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 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. 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 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.

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 melons; (2) the 1997-98 fiscal period began on October

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

for each fiscal period apply to all assessable melons 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 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

1. The authority citation for 7 CFR part 979 continues to read as

follows:

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

Sec. 979.219 [Amended]

2. Section 979.219 is amended by removing the words ``October 1,

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

removing ``$0.07'' and adding in its place ``$0.04.''

Dated: January 23, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-2123 Filed 1-28-98; 8:45 am]

BILLING CODE 3410-02-P