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 IFR]

Onions Grown in South Texas; Removal of Sunday Packing and

Loading Prohibitions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule changes the handling regulation 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 will 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.

DATES: Effective February 25, 1998; comments received by April 27,

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. 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: 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, 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. 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 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. 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 date of the entry of the ruling.

This rule changes the handling regulation under the South Texas

onion marketing order by removing the

[[Page 9129]]

Sunday packaging and loading prohibitions. It also modifies

Sec. 959.322(f)(5) by removing all references to the Sunday packaging

and loading prohibitions. This rule will provide handlers with greater

flexibility and additional time to prepare onions for market.

Section 959.322 of the order currently prohibits the packaging or

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

each season. This prohibition has 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 has

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 action

will 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 prevent the South Texas onion industry from marketing more

of their onions. Producers object to the Sunday restriction because if

the shed is full of onions they are prevented from sending more onions

to the sheds. By removing the Sunday restriction, handlers could

continue 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 the restrictive Sunday holiday has 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

wants the same opportunity. Continuing to prohibit the packing and

loading of onions on Sunday would present an unreasonable and

unnecessary hardship on handlers in the production area. If the

prohibitions continue, the Committee believes that Texas markets will

be taken by competing areas, and that the Texas onion industry will not

be able to meet their buyers' needs.

The Committee's recommendation is expected to improve producers'

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

Sunday if their operations were curtailed for some reason earlier

during the week. There have been times when handlers have been packing

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

packing had not been completed. This restriction is unacceptable to the

South Texas onion industry. The producers and handlers need the

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

their competition.

This action will allow handlers to package and load onions on

Sunday and permit producers to harvest and deliver their onions to

packing sheds each day of the week. This will provide 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 requires

that all references to the Sunday restrictions be removed from

Sec. 959.322(f)(5). Currently, the prohibition against packing or

loading onions on Sunday may be modified or suspended to permit the

handling of onions for export provided that such handling complies with

safeguard procedures. In addition, whenever the handler grades,

packages, and ships onions for export on any Sunday, such handler is

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) is 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 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 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 from 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.

[[Page 9130]]

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

estimates that all 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 be considered small

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

figure.

This rule would 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 is expected

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 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 benefit the industry. Removal of the

prohibitions will provide producers with an additional window of

opportunity to harvest and deliver their onions to handlers for

sorting, grading, packaging, and loading. Moreover, the continued use

of this self-imposed restriction could cause 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 will positively impact both small and large

handlers by helping them maintain markets.

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

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

operations were curtailed for some reason earlier in the week. The

ability to pack and load on Sunday will help the 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 result

in significant crop losses as occurred last season prior to the

emergency suspension of the prohibitions. 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 will give producers and handlers more time to harvest and prepare

onions for market. This increased flexibility will enable the industry

to better meet buyer needs and to 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 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 are invited to

submit information on the regulatory and informational impacts of this

action on small businesses.

After consideration of all relevant material presented, including

the information and recommendation by the Committee and other available

information, it is hereby found that this interim final rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

This rule invites comments on a change to the handling regulation

currently prescribed under the South Texas onion marketing order. Any

comments received will be considered prior to finalization of this

rule.

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 rule relaxes requirements in the handling

regulations; (2) this action must be taken promptly to be in place by

March 1, the start of the South Texas onion regulatory period; (3) the

Committee unanimously recommended these changes at a public meeting and

interested parties had an opportunity to provide input; and (4) this

rule provides a 60-day comment period and any comments received will be

considered prior to finalization of this rule.

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

1. The authority citation for 7 CFR part 959 continues to read as

follows:

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

2. In Sec. 959.322, the introductory paragraph is amended by

removing the last sentence and paragraph (f)(5) is revised to read as

follows:

[[Page 9131]]

Sec. 959.322 Handling regulation.

* * * * *

(f) * * *

(5) Export shipments. Export shipments shall be exempt from all

container requirements of this section.

* * * * *

Dated: February 17, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-4596 Filed 2-23-98; 8:45 am]

BILLING CODE 3410-02-P