[Federal Register: March 31, 2003 (Volume 68, Number 61)]
[Rules and Regulations]
[Page 15335-15338]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr03-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 959
[Docket No. FV03-959-1 FR]
Onions Grown in South Texas; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule increases the assessment rate established for the
South Texas Onion Committee (Committee) for the 2002-03 and subsequent
fiscal periods from $0.05 to $0.085 per 50-pound equivalent of onions
handled. The Committee locally administers 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 will remain in
effect indefinitely unless modified, suspended, or terminated.
EFFECTIVE DATE: April 1, 2003.
FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, Regional Manager,
McAllen Marketing Field Office, Marketing Order Administration Branch,
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, 1400 Independence Avenue SW.,
STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, Fax:
(202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov <mailto:Jay.Guerber@usda.gov>.
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 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 (USDA) 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 issued herein will be applicable to all assessable
onions beginning on August 1, 2002, 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 USDA 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 USDA 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 USDA'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 increases the assessment rate established for the
Committee for the 2002-03 and subsequent fiscal
[[Page 15336]]
periods from $0.05 to $0.085 per 50-pound equivalent of onions.
The South Texas onion marketing order provides authority for the
Committee, with the approval of USDA, 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,
where all persons directly affected have an opportunity to participate
and provide input.
For the 2001-02 and subsequent fiscal periods, the Committee
recommended and USDA approved, an assessment rate that would continue
in effect from fiscal period to fiscal period unless modified,
suspended, or terminated by USDA upon recommendation and information
submitted by the Committee or other information available to USDA.
The Committee met on July 11, 2002, and unanimously recommended
2002-03 expenses of $127,002 for personnel, office, compliance, and
partial promotion expenses. 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 October 8, 2002, and recommended
2002-03 expenditures of $463,297 and an assessment rate of $0.085 per
50-pound equivalent of onions. Ten of the 13 Committee members present
voted in support of the $0.035 per 50-pound equivalent increase and
three voted against it. The three Committee members voting against the
recommendation were producer handlers who basically did not approve of
the research and promotion budgets. In comparison, last year's budgeted
expenditures were $449,190. The Committee recommended the increased
rate to fund a major market development program to promote the
consumption of South Texas onions. Without the increase, the
Committee's reserve fund would drop to $16,053. The Committee believes
a reserve that low would not be adequate for its operations.
The major expenditures recommended by the Committee for the 2002-03
fiscal period included $72,002 for administrative expenses, $35,000 for
compliance, $260,500 for promotion, and $95,795 for research projects.
Budgeted expenses for these items in 2001-02 were $75,190, $30,000,
$254,000, and $90,000, respectively.
The assessment rate recommended by the Committee was derived by
dividing anticipated expenses by expected shipments of South Texas
onions. At the October 2002 meeting, onion shipments for the fiscal
period were estimated at 5.5 million 50-pound equivalents, which would
have provided $467,500 in assessment income.
Since then, however, the Committee has become aware that the South
Texas onion acreage is approximately 26 percent less than last season's
16,148-planted acres. The Committee met January 6, 2003, to discuss
reports of the reduced acreage. Based on the estimated 26 percent
reduced production, shipments are estimated to be 4,070,000 fifty-pound
equivalents. The Committee recommended a 40 percent reduction to a
market development program previously funded at $225,000 and a 50
percent cut to three onion research projects. The revised $325,400
budget for 2002-03 includes reductions of $90,000 and $47,898 in
promotion and research, respectively. The Committee did not recommend a
change in the proposed assessment rate.
With shipments of 4,070,000 fifty-pound equivalents, assessment
income in 2002-03 should total $345,950. Income derived from handler
assessments should be adequate to cover budgeted expenses. Funds in the
reserve (currently $204,350) would be kept within the maximum permitted
by the order (approximately two fiscal periods' expenses, Sec.
959.43).
The assessment rate established in this rule will continue in
effect indefinitely unless modified, suspended, or terminated by USDA
upon recommendation and information submitted by the Committee or other
available information.
Although this assessment rate will be in effect 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 USDA.
Committee meetings are open to the public and interested persons may
express their views at these meetings. USDA 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 2002-03 budget has been
reviewed and approved by USDA. Those for subsequent fiscal periods will
be reviewed and, as appropriate, approved by USDA.
Final Regulatory Flexibility Analysis
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 final 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 90 producers of onions in the production
area and approximately 35 handlers subject to regulation under the
marketing order. Small agricultural producers are defined by the Small
Business Administration (SBA) (13 CFR 121.201) as those having annual
receipts less than $750,000, 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 2001-02
fiscal period, the industry's 35 handlers shipped onions produced on
16,148 acres with the average and median volume handled being 152,446
and 136,810 fifty-pound bag equivalents, respectively. In terms of
production value, total revenues for the 35 handlers were estimated to
be $39.9 million, with average and median revenues being $1.1 million
and $1.0 million, 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 of the 35 handlers regulated by the order would be
considered small entities if only their spring onion revenues are
considered. However,
[[Page 15337]]
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 90 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 are considered, a majority
of the producers would not be considered small entities because
receipts would exceed $750,000.
This rule increases the assessment rate established for the
Committee and collected from handlers for the 2002-03 and subsequent
fiscal periods from $0.05 to $0.085 per 50-pound equivalent of onions.
The Committee recommended 2002-03 expenditures of $463,297 and an
assessment rate of $0.085 per 50-pound equivalent. The assessment rate
of $0.085 is $0.035 higher than the 2001-02 rate.
In October 2002, the major expenditures recommended by the
Committee for the 2002-03 fiscal period included $72,002 for
administrative expenses, $35,000 for compliance, $260,500 for
promotion, and $95,795 for research projects. Budgeted expenses for
these items in 2001-02 were $75,190, $30,000, $254,000, and $90,000,
respectively. The Committee recommended the increased rate to fund a
major market development program to promote the consumption of South
Texas onions without having to draw a large amount from reserves.
The Committee reviewed and recommended 2002-03 expenditures of
$463,297, which included increases in research and promotion programs.
Prior to arriving at this budget, the Committee considered information
from various sources, including the Executive Committee and the
Research and Market Development Subcommittees. Numerous alternative
expenditure levels were discussed by these groups based upon the
relative value of various research and promotion projects to the onion
industry. The assessment rate of $0.085 per 50-pound equivalent of
assessable onions was then determined by dividing the total recommended
budget by the quantity of assessable onions, estimated at 5.5 million
50-pound equivalents for the 2002-03 fiscal period.
The quantity of assessable onions for the 2002-03 fiscal period was
initially estimated at 5.5 million 50-pound equivalents. Thus, the
$0.085 rate would have provided $467,500 in assessment income, and
income derived from handler assessments would have been adequate to
cover the $463,297 budget. This is approximately $4,203 above the
anticipated expenses, which the Committee determined to be acceptable.
As mentioned earlier, the Committee met again on January 6, 2003,
to discuss reports of a 26 percent onion acreage reduction, and
recommended an amended budget totaling $325,400, based on a revised
production estimate of 4,070,000 fifty-pound equivalents. The revised
budget includes reduced promotion and research expenditures of $170,500
and $47,898, respectively. The Committee did not recommend changes to
the proposed assessment rate.
With shipments of 4,070,000 fifty-pound equivalents, assessment
income in 2002-03 should total $345,950. Income derived from handler
assessments should be adequate to cover budgeted expenses. Funds in the
reserve (currently $204,350) would be kept within the maximum permitted
by the order (approximately two fiscal periods' expenses, Sec.
959.43).
A review of historical information and preliminary information
pertaining to the upcoming fiscal period indicates that the grower
price for the 2002-03 fiscal period could range between $8.60 and $9.25
per 50-pound equivalent of onions. Therefore, the estimated assessment
revenue for the 2002-03 fiscal period as a percentage of total grower
revenue could be about 1 percent.
This action increases 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
are offset by the benefits derived by the operation of the marketing
order. In addition, the Committee's meetings were widely publicized
throughout the South Texas onion industry and all interested persons
were invited to attend the meetings and participate in Committee
deliberations on all issues. Like all Committee meetings, the October
8, 2002, and January 6, 2003, meetings were public meetings and all
entities, both large and small, were able to express views on this
issue.
This rule imposes 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.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
A proposed rule concerning this action was published in the Federal
Register on December 26, 2002 (67 FR 78751). Copies of the proposal
were also mailed to all onion handlers on December 26, 2002, by the
Committee staff. Finally, the proposed rule was made available through
the Internet by the Office of the Federal Register and USDA. A 30-day
comment period ending January 27, 2003, was provided for interested
persons to respond to the proposal. Eight comments were received during
the comment period; six were in support of the assessment rate increase
as published, and two comments opposed the proposed assessment rate
increase.
One commenter in support of the increased assessment rate noted
that the Committee, recognizing tight economic conditions in recent
years, reduced the assessment rate two years ago and budgeted a deficit
by setting an artificially low assessment rate. This commenter, as well
as another commenter, believes the Committee allowed its reserves to
get too low, and both fully support the assessment rate increase. The
commenter also noted that the projected volume of onions would be low
due to decreased plantings. Both commenters state that in spite of the
Committee making further cuts in the original budget, decreased
production dictates that the assessment rate be increased.
Another comment in support of the increased assessment rate noted
that, without the increase the Committee would not be able to meet its
research and marketing program obligations the industry has always
funded. Two other favorable comments expressed the need for continuing
to promote Texas onions in order to be able to compete with other
onion-producing areas.
One comment, representing a grower and shipper in District 2
(Laredo-Winter Garden) of the South Texas onion order production area,
stated that over half of District 2's season is not covered by the
order. The commenter opposes the increased assessment rate because he
believes that the Rio Grande Valley growers and shippers gain more from
the Committee's research and marketing program activities. While it is
true that the regulatory period, which the Committee approved, ends
June 4 each year and only includes part of District 2's season,
District 2 handlers do not pay assessments during the latter part of
their onion season. District 2 growers and shippers continue to receive
the benefit of the assessment because all Texas onions grown in the
production area covered by the marketing order are promoted.
Consequently, USDA
[[Page 15338]]
disagrees with the commenter's statement that Rio Grande Valley growers
and shippers would gain more from the increased assessment than those
from the Laredo-Winter Garden area.
The second commenter opposing the increase expressed concern
regarding a possible conflict of interest with some producers and
handlers on the Committee who also produce and handle onions not
assessed under the South Texas marketing order. The commenter stated
that increasing the assessment rate should be determined by those who
are directly affected, not handlers that either attain most of their
onion business outside the jurisdiction of the order, or pass on the
assessment to growers under the jurisdiction of the order. The
commenter was concerned that such Committee members could unduly shape
the decision-making of the Committee, that their decisions could be
biased against their South Texas competitors, and that being on the
Committee could enable them to raise the production costs (i.e.
assessments) of their South Texas competition.
The Committee, which is composed of six producer and four handler
members from District 1 (Coastal Bend--Lower Valley) and four producer
and three handler members from District 2, is representative of the
entire production area. The Committee is established and selected in
accordance with the provisions of the order. The producer and handler
members and alternates on the Committee are nominated by their peers
and are eligible to serve based on their qualifications. The fact that
some of the Committee members also grow and handle onions outside the
South Texas onion production area does not disqualify them from serving
on the Committee. Further, only South Texas onions grown in the 35-
county production area may be assessed for marketing order purposes.
Based on the foregoing, no changes are being made to the rule as it
was proposed.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html <http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=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.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee, the
comments received, 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 also found and determined that good
cause exists for not postponing the effective date of this rule until
30 days after publication in the Federal Register because the 2002-03
fiscal period began August 1, 2002, and the marketing order requires
that the rate of assessment for each fiscal period apply to all
assessable onions handled during such fiscal period. In addition, the
Committee needs to have sufficient funds to pay its expenses, which are
incurred on a continuous basis. Further, handlers are aware of this
action which was recommended by the Committee at a public meeting.
Also, a 30-day comment period was provided for in the proposed rule and
all of the comments received have been considered.
List of Subjects in 7 CFR Part 959
Marketing agreements, Onions, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, 7 CFR part 959 is amended as
follows:
PART 959--ONIONS GROWN IN SOUTH TEXAS
0
1. The authority citation for 7 CFR part 959 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 959.237 is revised to read as follows:
Sec. 959.237 Assessment rate.
On and after August 1, 2002, an assessment rate of $0.085 per 50-
pound equivalent is established for South Texas onions.
Dated: March 24, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-7633 Filed 3-26-03; 1:47 pm]
BILLING CODE 3410-02-P
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