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 PR]

Sweet Onions Grown in the Walla Walla Valley of Southeast

Washington and Northeast Oregon; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase 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

would remain in effect indefinitely unless modified, suspended, or

terminated.

DATES: Comments must be received by May 8, 1998.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent 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: 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, 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 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

proposed herein would be applicable to all assessable sweet onions

beginning on June 1, 1998, and continue until amended, suspended, or

terminated. This rule would 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 would increase the assessment rate established for the

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

50-pound bag or equivalent 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 handled during the 1998-99

and subsequent fiscal periods. 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

[[Page 17126]]

poundage of 667,750 50-pound bags or equivalents of sweet onions. In an

effort to partially offset the loss of assessment income due to the

more conservative 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 formulated based on

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

Sweet Onions. If the assessment rate is not increased from the 1997-98

fiscal period rate of $0.19, funds would fall approximately $9,264

short of 1998-99 fiscal period budgeted expenses, and this is not

acceptable to a majority of the Committee. 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.

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 proposed assessment rate would 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 would be in effect for an indefinite

period, the Committee would 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 would evaluate Committee recommendations and

other available information to determine whether modification of the

assessment rate is needed. Further rulemaking would 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 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 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 would increase the assessment rate established for the

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

fiscal periods from $0.19 per 50-pound bag or equivalent 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.

The proposed assessment rate is $0.02 higher than the rate currently in

effect. 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 proposed 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 current $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.

After much discussion, 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 will range between $4.50 and $12.00 per 50-pound bag or

equivalent. Thus, the estimated

[[Page 17127]]

assessment revenue for the 1998-99 fiscal period as a percentage of

total producer revenue would range between 0.017 and 0.046 percent.

This action would increase 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

would 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 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. Finally, interested

persons are invited to submit information on the regulatory and

informational impacts of this action on small businesses.

This proposed rule would impose 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 30-day comment period is provided to allow interested persons the

opportunity to respond to this request for information and comments.

Thirty days is deemed appropriate because: (1) The Committee needs to

have sufficient funds to pay its expenses which are incurred on a

continuous basis; (2) the 1998-99 fiscal period begins on June 1, 1998,

and the order requires that the rate of assessment for each fiscal

period apply to all assessable sweet onions handled during such fiscal

period; and (3) handlers are aware of this action which was recommended

by the Committee at a public meeting and is similar to other assessment

rate actions issued in past years.

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

proposed to be 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 proposed to be 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: April 2, 1998.

Robert C. Keeny,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-9200 Filed 4-7-98; 8:45 am]

BILLING CODE 3410-02-P