Onions Grown in Certain Designated Counties in Idaho, and Malheur County, Oregon, and Imported Onions; Possible Increase in Grade Requirements for White Onions

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 958 and 980

[Docket No. FV97-958-2AN]

Onions Grown in Certain Designated Counties in Idaho, and Malheur

County, Oregon, and Imported Onions; Possible Increase in Grade

Requirements for White Onions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Advance notice of proposed rulemaking; request for public

comments.

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SUMMARY: The Agricultural Marketing Service (AMS) invites comments from

producers, handlers, importers, commercial users, and other interested

persons on a possible increase in the minimum grade requirements for

white onions handled under the Idaho-Eastern Oregon onion marketing

order, and for imported white onions. A recommendation to increase the

minimum grade for white onions from U.S. No. 2 to U.S. No. 1 is under

consideration. Comments pertaining to the volume and grade of imported

white onions, as well as to other aspects of the potential grade

increase, including its probable regulatory and economic impact on

small business entities are sought.

DATES: Comments received by April 6, 1998, will be considered prior to

issuance of a proposed rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning the issues contained in this notice. Comments must be sent

in triplicate to the Docket Clerk, Fruit and Vegetable Programs, AMS,

USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax:

(202) 205-6632. All comments should reference the docket number and the

date and page number of this issue of the Federal Register and will be

made available for public inspection in the Office of the Docket Clerk

during regular business hours.

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 J. 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.

SUPPLEMENTARY INFORMATION: This advance notice of proposed rulemaking

invites comments on a possible increase in the minimum grade

requirements for Idaho-Eastern Oregon and imported white onions. AMS is

seeking information pertaining to the volume and grade of imported

white onions, and on the regulatory and economic impact such rulemaking

might have on handlers, producers, importers, and other interested

parties, including small businesses. All other views, suggestions or

comments relative to the proposal in general also are sought. The

regulation being considered for amendment governs the handling of

onions grown in certain designated counties in Idaho, and Malheur

County, Oregon, and is authorized under Marketing Agreement No. 130 and

Marketing Order No. 958, both as amended (7 CFR part 958). Any action

to amend the domestic onion handling regulation also would affect the

Onion Import Regulation (7 CFR 980.117). The marketing agreement,

marketing order, and import regulation 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 onion import regulation requires imported onions to meet the

same or comparable grade, size, quality, and maturity standards as are

in effect for domestic onions under a Federal marketing order. The Act

further provides that when two or more marketing orders regulating the

same commodity are concurrently in effect, imports will be subject to

the requirements established for the commodity grown in the area with

which the imported commodity is in most direct competition. Onion

import requirements are based on regulations established under the

Idaho-Eastern Oregon (7 CFR part 958) and South Texas (7 CFR part 959)

onion marketing orders. The action under consideration is a change to

the grade requirements for imported white onions during the period the

Idaho-Eastern Oregon requirements apply (June 5-March 9).

Pursuant to the requirements set forth in the Regulatory

Flexibility Act, the AMS will consider the economic impact any such

action would have on small entities and prepare regulatory flexibility

analyses for inclusion in any subsequent rulemaking actions. Any

actions undertaken as a result of this advance notice or also reviewed

by the AMS under Executive Order 12866 and 12988.

This advance notice is based on a unanimous recommendation of the

Idaho-Eastern Oregon Onion Committee (Committee). The Committee

recommendation would increase the minimum grade requirements for white

onion varieties grown in the Idaho-Eastern Oregon onion production area

and handled subject to marketing order requirements. Pursuant to

section 8e of the Act and the onion import regulation, this action

would also affect imported white onions.

The recommended change would increase the minimum grade from U.S.

No. 2 to U.S. No. 1, thereby eliminating from the fresh market all U.S.

Commercial and U.S. No. 2 white onions produced in the regulated

production area and those imported into the U.S. during the period from

June 5 through March 9. Information, suggestions, and comments

pertaining to the proposal are sought. Anyone having specific

information relative to the affect the recommendation to eliminate the

importation of U.S. Commercial and U.S. No. 2 white onions would have

on the volume of imported white onions is encouraged to comment.

Producers, handlers, importers, and other small businesses, both large

and small, potentially impacted by the possible grade change also are

encouraged to provide comments relative to any probable regulatory and

economic impacts.

Section 958.328(a)(1) establishes the grade requirements for white

onions handled subject to the Idaho-Eastern onion marketing order. Such

grade requirements are based on the U.S. Standards for Grades of Onions

(Other

[[Page 5473]]

than Bermuda-Granex-Grano and Creole Types)(7 CFR part 51.2830 et

seq.), or the U.S. Standards for Grades of Bermuda-Grano-Granex Type

Onions (7 CFR part 51.3195 et seq.). Currently, these handling

regulations require that white onion varieties shall be (1) U.S. No. 2

or U.S. Commercial, 1 inch minimum to 2 inches maximum diameter; or (2)

U.S. No. 2 or U.S. Commercial, if not more than 30 percent of the lot

is comprised of onions of U.S. No. 1 quality, and at least 1\1/2\

inches minimum diameter; or (3) U.S. No. 1, at least 1\1/2\ inches

minimum diameter. The regulations further specify that none of these

three categories may be commingled in the same bag or other container.

The change under consideration would require all bags or other

containers of white onion varieties shipped subject to marketing order

requirements to be either: (1) U.S. No. 1, 1 inch minimum to 2 inches

maximum diameter; or (2) U.S. No. 1, at least 1\1/2\ inches minimum

diameter. Commingling of these two categories would not be allowed.

Current exemptions under the order for special purpose shipments in

section 958.328(e), and shipments qualifying for a minimum quantity

exemption in section 958.328(g), would continue to apply when

applicable.

The Committee justified its recommendation stating that the

shipment of U.S. No. 2 and U.S. Commercial grade white onions have had

a negative impact on producer returns and have been a factor in

decreasing this industry's share of the fresh domestic white onion

market. In addition, the Committee stated that consumers of white

onions traditionally demand a quality product and that U.S. No. 2 and

U.S. Commercial grade white onions have poor consumer acceptance.

The Committee stated that producers seldom profit from U.S. No. 2

or U.S. Commercial grade white onion sales, and as a consequence,

common business practice for many is to discard such onions as culls

following harvest. Furthermore, the Committee indicated that shipments

of low quality U.S. No. 2 or U.S. Commercial grade white onions have a

depressing influence on the price of the higher quality U.S. No. 1

grade white onions.

An annual average of 336,000 hundredweight of white onions,

representing 3.9 percent of the total of all onion varieties, have been

shipped from the Idaho-Eastern Oregon production area since the 1986/87

marketing season. The annual average of all Idaho-Eastern Oregon onion

shipments for this period, including white, yellow, and red onion

varieties, is 9,517,500 hundredweight. During the same period of time,

shipments of Idaho-Eastern Oregon U.S. No. 2 white onions averaged

3,807 hundredweight per year, or approximately an annual average of 1.2

percent of white Idaho-Eastern Oregon onion shipments and an annual

average of .04 percent of all Idaho-Eastern Oregon onion shipments.

Onions from the Idaho-Eastern Oregon production area are shipped

throughout the year. The majority of Idaho-Eastern Oregon white onions

are marketed during the months of September, October and November, with

significant additional volume through February.

As mentioned earlier, section 8e of the Act requires that when

certain domestically produced commodities, including onions, are

regulated under a Federal marketing order, imports of that commodity

must meet the same or comparable grade, size, quality, or maturity

requirements. Section 8e also provides that whenever two or more

marketing orders regulating the same commodity produced in different

areas of the U.S. are concurrently in effect, a determination must be

made as to which of the areas produces the commodity in more direct

competition with the imported commodity. Imports must then meet the

requirements established for the particular area.

Grade, size, quality, and maturity regulations have been issued

regularly under both Marketing Order No. 958 and Marketing Order No.

959, which regulates the handling of onions grown in South Texas, since

the marketing orders were established. The current import regulation

specifies that import requirements for onions are to be based on the

seasonal categories of onions grown in both marketing order areas. The

import regulation specifies that imported onions must meet the

requirements of the Idaho-Eastern Oregon onion marketing order during

the period June 5 through March 9 and the South Texas onion marketing

order during the period March 10 through June 4 each season. The

Committee's recommendation, if adopted, would change the import

requirements for the period June 5 through March 9 of each marketing

year to provide that all imported white onion varieties must be U.S.

No. 1 grade. While no changes are required in the language of section

980.117, all white onion varieties imported during this period would be

required to meet the modified grade requirement should the recommended

grade increase eventually be implemented.

During the period June 5 through March 9, the current import

regulation requires that all imported onions, except braided red

varieties, must be at least U.S. No. 2 grade. During the period March

10 through June 4 the current onion import regulation requires that all

imported onions must be U.S. No. 1 grade with an allowable tolerance of

up to 20 percent for defects, 10 percent for serious damage, and 2

percent for decay.

White onions are imported into the U.S. throughout the year from a

number of different countries. By far the largest source of all

imported onions is Mexico. Mexican white onions enter the U.S. from

November through July, with the heaviest volumes moving during the

months of December through April. The annual average volume of all

Mexican onions imported into the U.S. between 1986 and 1996 was

3,333,150 hundredweight, while the annual average volume for all

imported onions from all sources during the same period was 4,040,004

hundredweight. Other major sources of imported onions are Canada,

Chile, Australia, and New Zealand with small quantities coming from

Belgium, France, Guatemala, Israel, Morocco, the Netherlands, and

Taiwan. Compiled statistics specific to the volume and grade of

imported white onions are not available at this time.

There are approximately 35 handlers of Idaho-Eastern Oregon onions

who are subject to regulation under the marketing order and

approximately 260 producers, including approximately 80 producers of

white onions, in the regulated area. In addition, approximately 150

importers of onions are subject to import regulations and would be

affected by the possible grade change discussed in this document. 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

having annual receipts of less than $500,000. Although it is unknown

how many importers of white onions may be classified as small entities,

approximately 9 percent of the handlers and 7 percent of the producers

of Idaho-Eastern Oregon white onions may be classified as small

entities.

In conclusion, the AMS is soliciting the views of producers,

handlers, importers, commercial users, consumers, and other interested

persons on possible grade requirement changes for Idaho-Eastern Oregon

and imported onions described in this document. Specifically, the AMS

is interested in statistical information, suggestions, and comments

pertaining to the volume and grade of imported white onions and to the

probable regulatory and economic

[[Page 5474]]

impact of the proposal on small businesses. All views are solicited,

however, so that every aspect of this potential revision may be studied

prior to formulating a proposed rule, if such is deemed warranted by

the Agency.

This request for public comments does not constitute notification

that the recommendation to change the regulations described in this

document is or will be proposed or adopted.

A 60-day comment period is provided to allow interested persons the

opportunity to respond to this request for information and comments.

All written comments timely received will be considered before any

subsequent rulemaking action is undertaken.

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

Dated: January 28, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-2551 Filed 2-2-98; 8:45 am]

BILLING CODE 3410-02-P