Onions Grown in South Texas; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket No. FV00-959-1 PR]

Onions Grown in South Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule would decrease the assessment rate established for

the South Texas Onion Committee (Committee) for the 1999-2000 and

subsequent fiscal periods from $0.05 to $0.04 per 50-pound container or

equivalent of onions handled. The Committee is responsible for local

administration of the marketing order which regulates the handling of

onions grown in South Texas. Authorization to assess onion handlers

enables the Committee to incur expenses that are reasonable and

necessary to administer the program. The fiscal period began August 1

and ends July 31. The assessment rate would remain in effect

indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by December 27, 1999.

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, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. 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: Belinda G. Garza, Regional Manager,

McAllen Marketing Field Office, Fruit and Vegetable Programs, AMS,

USDA, 1313 E. Hackberry, McAllen, Texas 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) 720-5698. Small businesses may

request information on complying with this regulation by contacting Jay

Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Programs, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-

6456; telephone (202) 720-2491, Fax: (202)720-5698, or E-mail:

Jay.G[email protected].

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. Under the marketing order now in effect, South Texas

onion handlers are subject to assessments. Funds to administer the

order are derived from such assessments. It is intended that the

assessment rate as proposed herein would be applicable to all

assessable onions beginning on August 1, 1999, and continue 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

later than 20 days after the date of the entry of the ruling.

This rule would decrease the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal periods from $0.05 to

$0.04 per 50-pound container or equivalent of onions handled.

The South Texas onion 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 onions. They are 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 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 1997-98 and subsequent fiscal periods, the Committee

recommended, and the Department approved, an assessment rate of $0.05

per 50-pound container or equivalent 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, in a mail vote, unanimously recommended 1999-2000

expenses of $271,000 for personnel, office, compliance, promotion, and

research expenses. These expenses were approved in July 1999. The

assessment rate and specific funding for research and promotion

projects were to be recommended at a later Committee meeting.

The Committee subsequently met on September 16, 1999, and

recommended 1999-2000 expenditures of $301,000 and an assessment rate

of $0.04 per 50-pound container or equivalent of onions. In comparison,

last year's budgeted expenditures were $271,000.

[[Page 66412]]

The assessment rate of $0.04 is $0.01 lower than the rate currently in

effect. The Committee voted to lower its assessment rate because at the

current rate of assessment, income would exceed anticipated expenses by

about $74,000 and the projected reserve on July 31, 2000 ($458,720),

would exceed the level the Committee believes to be adequate to

administer the program.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $97,200 for administrative expenses, $34,800

for compliance, $36,000 for promotion, and $133,000 for research

projects. Budgeted expenses for these items in 1998-99 were $94,000,

$36,000, $33,000, and $108,000, respectively.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of South Texas

onions. Onion shipments for the year are estimated at 7.5 million 50-

pound equivalents, which should provide $300,000 in assessment income.

Income derived from handler assessments, along with interest income and

funds from the Committee's authorized reserve, would be adequate to

cover budgeted expenses. Funds in the reserve (currently $384,720)

would be kept within the maximum permitted by the order (approximately

two fiscal periods' expenses; Sec. 959.43).

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. 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. The Committee's

1999-2000 budget and those for subsequent fiscal periods would 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 rule 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 80 producers of South Texas onions in the

production area and approximately 37 handlers subject to regulation

under the marketing order. Small agricultural producers have been

defined by the Small Business Administration (SBA) (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.

Most of the handlers are vertically integrated corporations

involved in producing, shipping, and marketing onions. For the 1998-99

marketing year, onions produced on 13,782 acres were shipped by the

industry's 37 handlers with the average and median volume handled being

147,669 and 102,478 fifty-pound bag equivalents, respectively. In terms

of production value, total revenues for the 37 handlers were estimated

to be $43.7 million, with average and median revenues being $1.1

million, and $820,000, respectively.

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 all the 37 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 80 producers may be classified as

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

spring onions is considered. When revenues from all sources is

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

entities because receipts would exceed $500,000.

This rule would decrease the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal periods from $0.05 to $0.04 per 50-pound container or equivalent

of onions. The Committee recommended 1999-2000 expenditures of $301,000

and an assessment rate of $0.04 per 50-pound container or equivalent.

The proposed assessment rate of $0.04 is $0.01 lower than the 1998-99

rate. The quantity of assessable onions for the 1999-2000 fiscal period

is estimated at 7.5 million 50-pound equivalents. Income derived from

handler assessments, along with interest income and funds from the

Committee's authorized reserve, would be adequate to cover budgeted

expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $97,200 for administrative expenses, $34,800

for compliance, $36,000 for promotion, and $133,000 for research

projects. Budgeted expenses for these items in 1998-99 were $94,000,

$36,000, $33,000, and $108,000, respectively.

The Committee voted to lower its assessment rate because at the

current rate of assessment, income would exceed anticipated expenses by

about $74,000 and the projected reserve on July 31, 2000 ($458,720),

would exceed the level the Committee believes to be adequate to

administer the program.

The Committee reviewed and recommended 1999-2000 expenditures of

$301,000, which included increases in administrative and office

salaries, and research programs. Prior to arriving at this budget, the

Committee considered information from various sources, including the

Research Subcommittee and the Market Development Subcommittee.

Alternative expenditure levels were discussed by these groups, based

upon the relative value of various research projects to the onion

industry. The assessment rate of $0.04 per 50-pound equivalent of

assessable onions was then determined by dividing the total recommended

budget by the quantity of assessable onions, estimated at 7.5 million

50-pound equivalents for the 1999-2000 fiscal period. This is

approximately $1,000 below the anticipated expenses, which the

Committee determined to be acceptable. Funds from the Committee's

reserve

[[Page 66413]]

will be used to make up the expected deficit.

A review of historical information and preliminary information

pertaining to the upcoming fiscal period indicates that the grower

price for the 1999 marketing season could range between $7.00 and

$12.00 per 50-pound container or equivalent of onions. Therefore, the

estimated assessment revenue for the 1999-2000 fiscal period as a

percentage of total grower revenue could range between .571 and .333

percent.

This action would decrease the assessment obligation imposed on

handlers. Assessments are applied uniformly on all handlers, and some

of the costs may be passed on to producers. However, decreasing the

assessment rate would reduce the burden on handlers, and may reduce the

burden on producers. In addition, 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 on all issues. Like all Committee meetings, the September

16, 1999, 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 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 sector agencies.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

A small business guide on complying with fruit, vegetable, and

speciality crop marketing agreements and orders may be viewed at the

following web site: http://www.ams.usda.gov/fv/moab.html. Any questions

about the compliance guide should be sent to Jay Guerber at the

previously mentioned address in the FOR FURTHER INFORMATION CONTACT

section.

A 30-day comment period is provided to allow interested persons to

respond to this proposed rule. Thirty days is deemed appropriate

because: (1) The 1999-2000 fiscal period began on August 1, 1999, and

the marketing order requires that the rate of assessment for each

fiscal period apply to all assessable onions handled during such fiscal

period; (2) the proposed rule would decrease the assessment rate for

assessable onions beginning with the 1999-2000 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 959

Marketing agreements, Onions, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 959 is

proposed to be 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. Section 959.237 is revised to read as follows:

Sec. 959.237 Assessment rate.

On and after August 1, 1999, an assessment rate of $0.04 per 50-

pound container or equivalent is established for South Texas onions.

Dated: November 8, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-30813 Filed 11-24-99; 8:45 am]

BILLING CODE 3410-02-P