Onions grown in South Texas , 17037-17042 [E7-6234]

Agencies

[Federal Register: April 6, 2007 (Volume 72, Number 66)]
[Proposed Rules]               
[Page 17037-17042]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap07-12]                         

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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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[[Page 17037]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 959

[Docket Nos. AO-322-A4; AMS-2006-0079; FV06-959-1]

 
Onions Grown in South Texas; Recommended Decision and Opportunity 
To File Written Exceptions to Proposed Amendments to Marketing 
Agreement No. 143 and Order No. 959

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This recommended decision invites written exceptions on 
proposed amendments to the marketing agreement and order (order) for 
onions grown in South Texas. Three amendments were proposed by the 
South Texas Onion Committee (committee), which is responsible for local 
administration of the order. These proposed amendments would: Add 
authority to the order to establish supplemental assessment rates on 
specified containers of onions; authorize interest and late payment 
charges on assessments not paid within a prescribed time period; and 
authorize the committee to engage in marketing promotion and paid 
advertising activities. Two additional amendments were proposed by the 
Department of Agriculture (USDA). These amendments would: Require that 
a continuance referendum be conducted every six years to determine 
grower support for the order; and, limit the number of consecutive 
terms of office a member can serve on the committee. The USDA also 
proposed to make such changes to the order as may be necessary to 
conform to any amendment that may result from the hearing.

DATES: Written exceptions must be filed by May 7, 2007.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1081-S, Washington, DC 20250-9200; 
Fax: (202) 720-9776; or via the Internet at https://www.regulations.gov. 

All comments should reference the docket number and the date and page 
number of this issue of the Federal Register. Comments will be made 
available for public inspection in the Office of the Hearing Clerk 
during regular business hours, or can be viewed at: https://www.regulations.gov
.


FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, Agricultural 
Marketing Service, USDA, 2202 Monterey Street, 102-B, Fresno, 
CA 93721; telephone: (559) 487-5110, Fax: (559) 487-5906, E-mail: 
Martin.Engeler@usda.gov; or Kathleen M. Finn, 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, E-mail: 
Kathy.Finn@usda.gov.

    Small businesses may request information on this proceeding 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, E-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding include a 
Notice of Hearing issued on May 23, 2006, and published in the May 30, 
2006, issue of the Federal Register (71 FR 30629).
    This action is governed by the provisions of sections 556 and 557 
of title 5 of the United States Code and is therefore excluded from the 
requirements of Executive Order 12866.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendment of 
Marketing Agreement 143 and Order No. 959 regulating the handling of 
onions grown in South Texas, and the opportunity to file written 
exceptions thereto. Copies of this decision can be obtained from Martin 
Engeler, whose address is listed above.
    This recommended decision is issued pursuant to the provisions of 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601 et seq.), hereinafter referred to as the ``Act,'' and the 
applicable rules of practice and procedure governing the formulation of 
marketing agreements and orders (7 CFR part 900).
    The proposed amendments are based on the record of a public hearing 
held on June 15, 2006, in Mission, Texas. Notice of this hearing was 
published in the Federal Register on May 30, 2006 (71 FR 30629). The 
notice of hearing contained proposals submitted by both the committee 
and USDA.
    Four proposed amendments to the order were initially submitted by 
the committee to USDA. These proposals were the result of deliberations 
and a recommendation by the committee at a public meeting on October 
28, 2004. The four proposed amendments were included in the notice of 
hearing. Proposal number four in the notice of hearing pertaining to 
container marking requirements was withdrawn at the hearing because the 
committee determined it was not needed and recommended it be withdrawn 
at a meeting on June 1, 2006. The committee's remaining three proposed 
amendments to the order would: (1) Provide authority to establish 
supplemental assessment rates on specified containers of onions; (2) 
authorize interest and late payment charges on assessments not paid 
within a prescribed time period; and (3) add authority for marketing 
promotion, including paid advertising.
    The USDA proposed two additional amendments that would: Require a 
continuance referendum to be conducted every six years to determine 
grower support for the order; and limit the number of consecutive years 
terms of office a member may serve on the committee. USDA also proposed 
to make such changes to the order as may be necessary, if any of the 
proposed changes are adopted, so that all of the order's provisions 
conform to the effectuated amendments.
    Four industry witnesses testified at the hearing. These witnesses 
represented onion growers and handlers in the production area, as well 
as the committee, and they all supported the committee's recommended 
changes. The witnesses expressed the need to provide the industry with 
additional tools to aid in the marketing of onions and to

[[Page 17038]]

improve the operation and administration of the order.
    Witnesses expressed their support of the committee's recommendation 
to add authority for supplemental rates of assessment for specified 
containers of onions. Additional funds generated from supplemental 
rates of assessment could be used for promotion of onions packed in 
specified containers.
    Witnesses also offered testimony in support of adding authority to 
charge interest and/or late payment charges on assessments not paid 
within a prescribed time period. This authority, if implemented, would 
provide an incentive for handlers to pay assessments in a timely manner 
and would be consistent with standard business practices.
    Witnesses addressed the need for adding authority to the order for 
marketing promotion, including paid advertising. This authority would 
enable the committee to engage in various types of promotional 
activities to assist in the marketing of its product, which could lead 
to greater market exposure and consumer demand for South Texas onions, 
thereby fostering improved grower returns.
    A USDA witness testified in support of tenure limitations as a way 
to broaden industry participation in the program. The USDA witness also 
presented testimony in support of periodic continuance referenda as a 
means of determining grower support for the order.
    At the conclusion of the hearing, the Administrative Law Judge 
stated that the final date for interested persons to file proposed 
findings and conclusions or written arguments and briefs based on the 
evidence received at the hearing would be August 15, 2006. If the 
hearing transcript was not posted on the Internet by July 15, 2006, the 
final date would be changed to 30 days after the date the hearing 
transcript was so posted. The transcript was posted prior to July 15; 
thus, the filing date remained at August 15, 2006. No briefs were 
filed.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to amend the order to add authority for supplemental 
rates of assessment for specified containers of onions;
    (2) Whether to amend the order to add authority for late payment 
and interest charges on assessments not paid within a prescribed time 
period;
    (3) Whether to amend the order to add authority for the committee 
to engage in marketing promotion, including paid advertising 
activities;
    (4) Whether to amend the order to limit the number of consecutive 
terms of office a person can serve as a member on the committee; and
    (5) Whether to amend the order to require that continuance 
referenda be held every 6 years.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Supplemental Rates of Assessment

    Section 959.42 of the order should be amended to add authority to 
establish supplemental rates of assessment on specified containers of 
onions. That section currently authorizes establishment of assessment 
rates on containers of onions, but not supplemental rates based on the 
types of containers used in packing and shipping onions. The assessment 
rate is established through informal rulemaking after recommendation of 
the committee and implementation by USDA. Once established, handlers 
are required to pay an assessment to the committee based on the 
quantity of containers they ship. If authority to establish 
supplemental rates of assessment is added to the order, any 
supplemental rate would likewise require recommendation of the 
committee and implementation by USDA through informal rulemaking.
    Witnesses testified that the South Texas onion industry is geared 
primarily towards the fresh market. The product is typically packed and 
marketed in two types of containers. The lower quality (standard) 
product is packed and sold in 50-pound sacks, while the higher quality 
(premium) product is packed and sold in more appealing 40-pound 
cartons. The premium product is a milder, sweeter onion due to its 
lower pyruvic acid content. Onions are routinely tested to measure 
their pyruvic acid level prior to packing to ensure that the onions 
packed in cartons is in fact a premium quality product. According to 
record evidence, premium carton onions are typically sold at retail 
outlets as a higher-end product at relatively higher price levels as 
compared to standard bagged onions which are customarily sold to 
foodservice outlets at relatively lower price levels.
    Witnesses testified that the industry would like to increase sales 
and build demand for its higher value, premium product by promoting it 
and differentiating it from standard product. Witnesses also testified 
that the committee would like to expand the range of promotional 
opportunities available to promote its product, and that this proposal 
goes hand in hand with the proposal to allow marketing promotion, 
including paid advertising (Material Issue Number 3). The rationale and 
anticipated benefits of advertising and promotion are discussed later 
under Material Issue Number 3.
    According to record testimony, the funding of promotional 
activities for premium onions packed in cartons should be derived by 
applying a supplemental assessment rate to such product. Witnesses 
stated that any funds raised from a supplemental assessment should be 
used for promotion of that specific product. Testimony indicated that 
the primary benefits of promoting premium quality onions would accrue 
to those growers and handlers involved in producing and selling that 
product. Therefore, it would be more equitable for those benefiting 
from these activities to provide the funding, rather than using funding 
from a general assessment on all onions packed and sold.
    A witness testified that applying a supplemental assessment rate on 
carton onions would not pose any problems from an administrative 
standpoint. All regulated South Texas onions are required to be 
inspected by the Federal-State Inspection Service prior to shipment. 
The inspection certificates provide the basis for assessment billings, 
and the certificates indicate the numbers and types of containers used. 
Committee staff utilizes this information in its assessment billings.
    Testimony was also presented which addressed concerns regarding 
potential compliance issues with a supplemental assessment rate. It was 
hypothesized that handlers could circumvent a supplemental assessment 
rate by packing in bags prior to inspection, and then re-packing the 
product in cartons after the inspection was performed. Witnesses stated 
there would be no incentive for this to occur, since the costs 
associated with re-packing would far exceed any additional supplemental 
assessment rate incurred.
    The record evidence supports adding authority to the order to 
establish supplemental rates of assessment on specified containers of 
onions. In addition, the evidence supports applying such supplemental 
assessment funds towards programs designed to promote the product upon 
which the supplemental assessments would be collected. The regulatory 
language contained in the Notice of Hearing and presented at the 
hearing did not address this specific issue. However, based on the 
testimony received at the hearing, it

[[Page 17039]]

is recommended that the proposed regulatory language be modified to 
specify that funds collected from a supplemental assessment rate be 
used for projects and activities related to the product upon which such 
assessments are collected.
    For the above reasons, it is recommended that Sec.  959.42 be 
amended accordingly as modified. There was no testimony in opposition 
to this proposal.

Material Issue Number 2--Authority for Interest and Late Payment 
Charges on Unpaid Assessments

    Section 959.42 of the order should be amended to include authority 
for the committee to charge interest and late payment fees for 
assessments not paid within a prescribed timeframe. That section of the 
order currently does not contain such authority. If such authority is 
added, informal rulemaking would be required to establish parameters 
for implementation, including applicable interest rates and late 
payment fees.
    Witnesses testified that adding such authority to the order would 
provide the committee with an additional tool to administer the 
assessment collection provisions of the order. Charging late fees and/
or interest on assessments not paid within a prescribed time frame 
would provide an incentive for handlers to pay assessments in a timely 
manner. Further testimony stated that such fees would remove any 
financial advantage for those who do not pay on time while they benefit 
from committee programs. It would help create a level playing field for 
the industry.
    Record testimony reflects that late payment and interest charges on 
unpaid financial obligations are commonplace in the business world, and 
implementation of such charges would bring the committee's financial 
operations in line with standard business practices.
    Section 959.42 should thus be amended to include authority for the 
committee, with approval of the Secretary, to implement late payment 
and interest charges on assessments not paid within a prescribed time 
period. There was no testimony in opposition to this proposal.

Material Issue Number 3--Authority for Marketing Promotion, Including 
Paid Advertising

    Section 959.48 of the order should be amended to include authority 
for marketing promotion, including paid advertising. Section 959.48 
currently authorizes only production research, marketing research, and 
development activities. Adding authority for marketing promotion and 
paid advertising to the order would expand the promotional 
opportunities available to the committee to help market South Texas 
onions.
    Witnesses testified that the intent of this proposal is to allow 
the committee to engage in paid advertising promotional activities, 
should the committee so choose.
    As previously discussed under Material Issue Number 1, the industry 
believes it would be beneficial to promote its premium onions packed in 
cartons. Witnesses testified that it is becoming increasingly difficult 
to succeed in the produce industry due to domestic and foreign 
competition. In order to remain competitive and maintain a viable onion 
industry in South Texas, witnesses indicated that advertising and 
promotion is important to promote the best quality product available.
    Industry witnesses further testified that promotion of carton 
onions at the retail level could be undertaken which would help 
differentiate the product from bagged onions, and also differentiate 
Texas onions from onions produced in other competing geographical 
areas. Promotions would be designed to influence consumer's perceptions 
and increase awareness of the product. This in turn could lead to 
repeat purchases, thus building demand for the product. Successful 
promotion could lead to increased demand which in turn could lead to 
increased price levels, and the end result would be improved returns to 
producers and handlers of South Texas onions.
    Witnesses stated that the committee currently has limited financial 
resources and would not likely engage in a significant advertising 
campaign. It is more likely to partner with retailers in purchasing 
advertising space in newspapers and/or radio and television spots. This 
type of advertising has been proven to be an effective means of selling 
commodities and presents a cost effective method of advertising with 
limited resources. However, should the committee choose to devote 
adequate funding, it could also engage in other forms of advertising. 
Witnesses testified that the committee had been precluded from 
participating in these types of activities in the past due to 
constraints in the order authority.
    Witnesses further testified that any promotional activity the 
committee engages in must be fully vetted by the committee at public 
meetings, and the committee would only engage in those activities with 
the expectation that sales would increase and returns to handlers and 
producers would improve.
    The record supports adding authority for marketing promotion, 
including paid advertising, to Sec.  959.48 of the order. There was no 
opposition testimony on this issue.

Material Issue Number 4--Term Limits

    Section 959.23, Term of office, should be revised to establish a 
limit on the number of consecutive terms a person may serve on the 
committee.
    Currently, the term of office of each member and alternate member 
of the committee is two years. There are no provisions related to term 
limits in the marketing order. Members and alternates may serve on the 
committee until their respective successors are selected and have 
qualified, pursuant to the marketing order.
    The record shows that USDA proposed tenure requirements for 
committee members is a means to increase industry participation on the 
committee, provide for more diverse membership, provide the committee 
with new perspectives and ideas, and increase the number of individuals 
in the industry with committee experience.
    Experience with other marketing order programs suggests that a 
period of six years would be appropriate. Since the current term of 
office for committee members and alternates is two years, USDA is 
proposing that no member serve more than three consecutive two-year 
terms or a total of six years. This proposal for a limitation on tenure 
would not apply to alternates. Once a member has served on the 
committee for three consecutive terms, or six years, the member would 
be required to sit out for at least one year before being eligible to 
serve as a member again. The member could serve as an alternate during 
that time. Service on the committee prior to the effective date of this 
change would not apply to a member's term limitation. Also, a person 
who has served less than six consecutive years on the committee may not 
be selected for a new term if his or her total consecutive years on the 
committee at the end of that new term would exceed six years.
    There was no opposition testimony on this issue. Therefore, it is 
recommended that the order be amended to establish term limit 
requirements for committee members.

Material Issue Number 5--Continuance Referenda

    Section 959.84, Termination, should be amended to require that 
continuance referenda be conducted every six years to ascertain 
industry support for the order.
    Currently, there is no provision in the marketing order that 
requires periodic

[[Page 17040]]

continuance referenda. The record evidence indicates that growers 
should have an opportunity to periodically vote on whether the 
marketing order should continue. Continuance referenda provide an 
industry with a means to measure grower support for the marketing order 
program. Since marketing orders are designed to benefit growers, it 
follows that they should be afforded the opportunity to express whether 
they support the programs on a periodic basis. Experience has shown 
that marketing order programs need significant industry support to 
operate effectively. Under this proposal, USDA would consider 
termination of the marketing order if continuance is not favored by at 
least two-thirds of those voting, or at least two-thirds of the volume 
represented in the referendum. This is the same criteria as that for 
issuance of an order. Experience in recent years indicates that six 
years is an appropriate period to allow growers an opportunity to vote 
for continuance of the program. Therefore, the proposal sets forth that 
a referendum would be conducted six years after the effective date of 
this amendment and every sixth year thereafter.
    The proposed regulatory text set forth in the Notice of Hearing did 
not include the above-mentioned criteria the Department would consider 
in determining if the order should be continued or terminated. To 
provide clarity, the Department recommends including such criteria in 
the proposed amended regulatory text.
    The Department believes that growers should have an opportunity to 
periodically vote on whether the marketing order should continue. There 
was no opposition testimony on this issue. Accordingly, it is 
recommended that the order be amended to require a continuance 
referendum every six years, and that such amendment include criteria 
the Department would consider in determining if the order should be 
continued or terminated.
    USDA also proposed to make such changes as may be necessary to the 
order to conform to any amendment that may result from the hearing. No 
necessary conforming changes have been identified at this time.

Small Business Considerations

    Pursuant to the 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, 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 so that small businesses will not be 
unduly or disproportionately burdened. Small agricultural growers have 
been defined by the Small Business Administration (SBA) (13 CFR 
121.201) as those having annual receipts of less than $750,000. Small 
agricultural service firms are defined as those with annual receipts of 
less than $6,500,000.
    There are approximately 114 growers of onions in the production 
area and approximately 38 handlers subject to regulation under the 
order. For the 2005-06 marketing year, the industry's 38 handlers 
shipped onions produced on 17,694 acres with the average and median 
volume handled being 182,148 and 174,437 fifty-pound equivalents, 
respectively. In terms of production value, total revenues for the 38 
handlers were estimated to be $44.2 million, with average and median 
revenues being $1.16 million and $1.12 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 38 handlers regulated by the order would be 
considered small entities if only their onion revenues are considered. 
However, revenues from other productive enterprises would likely push a 
number of these handlers above the $6,500,000 annual receipt threshold. 
Likewise, all of the 114 producers may be classified as small entities 
based on the SBA definition if only their revenue from onions is 
considered.
    The committee is comprised of 10 growers and 7 handlers, 
representing both large and small entities. Committee meetings are open 
to the public. All members are able to participate in committee 
deliberations and each has an equal vote in committee decisions. When 
the committee met on October 28, 2004, and recommended the proposed 
amendments, all views expressed by the members and others in attendance 
were considered.
    In addition, the hearing to receive evidence on the proposed 
changes was open to the public and all interested parties were invited 
and encouraged to participate and provide their views.
    The proposed amendments are intended to provide the committee and 
industry with additional tools to aid in the marketing of South Texas 
onions, and to improve the operation and administration of the order. 
Record evidence indicates that the proposed changes are intended to 
benefit all onion producers and handlers under the order, regardless of 
size. Witnesses testified that the impact of any of the proposals, if 
implemented, would be proportionate to individual grower's and 
handler's size, and that both small and large entities would benefit.
    The record shows that the proposal to include authority for 
supplemental rates of assessments on specified containers would not 
have a differential impact on small versus large growers and handlers. 
Any increased assessment costs would be based on the type and volume of 
containers shipped rather than the size of a grower or handler's 
operation. Any supplemental assessment rate would thus be applied 
proportionately to handlers.
    Onions that are packed and sold in cartons receive a higher return 
than onions packed and sold in bags or sacks. There is no known 
relationship between small versus large growers and handlers and the 
types of containers in which they pack their product. If onions packed 
in the higher value cartons were assessed at a higher rate, the 
assessment burden on the industry would be more proportionate to the 
revenues generated by the sales of product in the different types of 
containers.
    In absolute dollar terms, a handler packing and selling only carton 
onions would pay more in assessments than a handler packing and selling 
a comparable volume of bagged onions. However, witnesses testified that 
additional funds generated from the supplemental assessment rate on 
specified containers would be used to promote sales of the product 
packed and sold in those containers. Therefore, the benefits of 
promotion would more directly benefit those paying the supplemental 
assessment. As discussed later in this document, the benefits of such 
promotions would be expected to outweigh the additional costs. 
Assessment revenues generated from supplemental assessment rates on 
specified containers would not be used to subsidize the lower 
assessment revenues generated from sales of the lower value product, 
thereby ensuring equitability between handlers.
    The proposed amendment to authorize the committee to charge 
interest and/or late payment fees on

[[Page 17041]]

assessments not paid within a prescribed time period would not have a 
differential impact on small and large entities. According to record 
testimony, late fees and interest changes, if implemented, would be 
based on handlers' timeliness of payments, regardless of size. A 
hearing witness familiar with the assessment collection operations 
under the order stated that there is no relationship between a 
handler's performance with regard to timely assessment payment and the 
size of the handler's business operation. Any increased costs would be 
borne only by those handlers that fail to pay their assessments in a 
timely manner. These potential costs would offset any potential 
advantage handlers could gain by not paying their assessments when due 
and would thus promote equity for all handlers. It would provide an 
incentive to pay on time. This proposed amendment is strictly a 
performance-based measure and would thus be applied based on handlers' 
performance with respect to their payment of assessments.
    Adding authority for paid advertising to the order would not 
disproportionately impact small business if such authority is 
implemented. Paid advertising activities would provide another tool the 
committee could use to promote its product. Paid advertising activities 
would be funded from handler assessments, which, as previously 
mentioned, are proportional to the volume of product shipped and thus 
proportional to the handler's relative size. Likewise, funding of the 
activities would be proportional.
    Promotional activities authorized under the order are generic in 
nature. Generic advertising and promotion attempts to influence 
consumer's preferences and perceptions about a product, and if 
successful, ultimately expands the demand for the product. Because 
generic promotion promotes a product category, it benefits all entities 
in the category, especially growers and handlers. As witnesses 
testified, specific benefits of promotion and advertising programs are 
difficult to quantify, and are especially difficult to estimate prior 
to engaging in the activities. However, if more product is ultimately 
sold, both large and small growers and handlers benefit.
    The proposed amendment to limit the number of consecutive terms of 
office that committee members may serve would increase industry 
participation on the committee by allowing more persons the opportunity 
to serve as members of the committee. It would also provide for more 
diverse membership, provide the committee with new perspectives and 
ideas, and increase the number of individuals in the industry with 
committee experience. There would be no additional cost as a result of 
this amendment.
    The proposal to require continuance referenda on a periodic basis 
to ascertain grower support for the order would allow growers to vote 
on whether to continue the operation of the program. This provides a 
means for those whom the order was intended to benefit with an 
opportunity to express their views regarding continuation of the 
marketing order. USDA would conduct the referenda, and thus USDA would 
bear the majority of any associated costs.
    Interested persons were invited to present evidence at the hearing 
on the probable regulatory and informational impacts of the proposed 
amendments to the order on small entities. The record evidence is that 
while some minimal costs may occur, those costs would be outweighed by 
the benefits expected to accrue to the South Texas onion industry. In 
addition, any additional costs would be proportional to a handler's 
size and would not unduly or disproportionately impact small entities.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule. The amendments are 
designed to improve the administration and operation of the order and 
to provide additional tools to assist in the marketing of South Texas 
onions.
    Committee meetings regarding these proposals as well as the hearing 
date and location were widely publicized throughout the Texas onion 
industry. All interested persons were invited to attend the meetings 
and the hearing and participate in deliberations on all issues. All 
Committee meetings and the hearing were public forums and all entities, 
both large and small, were provided the opportunity to express views on 
these issues. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
these proposed changes have already been widely publicized and the 
committee and industry would like to avail themselves of the 
opportunity to implement the changes as soon as possible. All written 
exceptions timely received will be considered and a grower referendum 
will be conducted before these proposals are implemented.

Paperwork Reduction Act

    Current information collection requirements for part 959 are 
approved by the Office of Management and Budget (OMB) under OMB number 
0581-0178, Vegetable and Specialty Crops. No changes in those 
requirements as a result of this proceeding are anticipated. Should any 
changes become necessary, they would be submitted to OMB for approval.
    As with other similar marketing order programs, reports and forms 
are periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.

Civil Justice Reform

    The amendments to Marketing Order 959 proposed herein have been 
reviewed under Executive Order 12988, Civil Justice Reform. They are 
not intended to have retroactive effect. If adopted, the proposed 
amendments would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
proposal.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file 
with the Department 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 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 the 
Department's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and order; and all said 
previous findings and determinations are hereby ratified and affirmed, 
except insofar as such findings and determinations may be in conflict 
with the findings and determinations set forth herein.
    (1) The marketing agreement and order, as amended, and as hereby

[[Page 17042]]

proposed to be further amended, and all of the terms and conditions 
thereof, would tend to effectuate the declared policy of the Act;
    (2) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulate the handling of onions grown 
in the production area (designated counties in South Texas) in the same 
manner as, and are applicable only to, persons in the respective 
classes of commercial and industrial activity specified in the 
marketing agreement and order upon which a hearing has been held;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, are limited in their application to the 
smallest regional production area which is practicable, consistent with 
carrying out the declared policy of the Act, and the issuance of 
several orders applicable to subdivisions of the production area would 
not effectively carry out the declared policy of the Act;
    (4) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, prescribe, insofar as practicable, such 
different terms applicable to different parts of the production area as 
are necessary to give due recognition to the differences in the 
production and marketing of onions grown in the production area; and
    (5) All handling of onions grown in the production area as defined 
in the marketing agreement and order, is in the current of interstate 
or foreign commerce or directly burdens, obstructs, or affects such 
commerce.

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 959.23 paragraph (a) is revised to read as follows:


Sec.  959.23  Term of office.

    (a) The term of office of committee members and their respective 
alternates shall be for two years and shall begin as of August 1 and 
end as of July 31. The terms shall be so determined that about one-half 
of the total committee membership shall terminate each year. Committee 
members shall not serve more than three consecutive terms. Members who 
have served for three consecutive terms may not serve as members for at 
least one year before becoming eligible to serve again. A person who 
has served less than six consecutive years on the committee may not be 
nominated to a new two-year term if his or her total consecutive years 
on the committee at the end of that new term would exceed six years. 
This limitation on the number of consecutive terms and years does not 
apply to service on the committee prior to the enactment of this 
provision and does not apply to alternates.
* * * * *
    3. Revise paragraph (b) of Sec.  959.42 to read as follows:


Sec.  959.42  Assessments.

* * * * *
    (b) Based upon the recommendation of the committee or other 
available data, the Secretary shall fix a base rate of assessment that 
handlers shall pay on all onions handled during each fiscal period. 
Upon recommendation of the committee, the Secretary may also fix 
supplemental rates on specified containers, including premium 
containers, identified by the committee and used in the production 
area: Provided, That any such supplemental assessment funds shall be 
used, to the extent practicable, for projects and activities related to 
the product upon which such assessments are collected.
* * * * *
    4. Add a new paragraph (e) to Sec.  959.42 to read as follows:


Sec.  959.42  Assessments.

* * * * *
    (e) If a handler does not pay assessments within the time 
prescribed by the committee, the assessment may be increased by a late 
payment charge and/or an interest rate charge at amounts prescribed by 
the committee with approval of the Secretary.
    5. Revise Sec.  959.48 to read as follows:


Sec.  959.48  Research and development.

    The committee, with approval of the Secretary, may establish or 
provide for the establishment of production research, marketing 
research, development projects, and marketing promotion, including paid 
advertising, designed to assist, improve, or promote the marketing, 
distribution, consumption, or efficient production of onions. The 
expenses of such projects shall be paid from funds collected pursuant 
to Sec.  959.42.
    6. In Sec.  959.84, redesignate paragraph (d) as paragraph (e) and 
add a new paragraph (d) to read as follows:


Sec.  959.84  Termination.

* * * * *
    (d) The Secretary shall conduct a referendum within six years after 
the effective date of this paragraph and every sixth year thereafter to 
ascertain whether continuance is favored by producers. The Secretary 
would consider termination of this part if less than two-thirds of the 
growers voting in the referendum and growers of less than two-thirds of 
the volume of onions represented in the referendum favor continuance.
* * * * *

    Dated: March 29, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E7-6234 Filed 4-5-07; 8:45 am]

BILLING CODE 3410-02-P