Vidalia Onions Grown in Georgia; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule increases the assessment rate established for the Vidalia Onion Administrative Committee (Committee) for fiscal period 2000 and subsequent fiscal periods from $0.07 to $0.10 per 50-pound bag of Vidalia onions handled. The Committee is responsible for local administration of the marketing order which regulates the handling of Vidalia onions grown in Georgia. Authorization to assess Vidalia onion handlers enables the Committee to incur expenses that are reasonable and necessary to administer the program. The fiscal period began on January 1 and ends on December 31. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE:

February 8, 2000.

FOR FURTHER INFORMATION CONTACT:

William Pimental, Marketing Specialist, Southeast Marketing Field Office, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 2276, Winter Haven, FL 33883-2276; telephone: (863) 299-4770, Fax: (863) 299-5169; 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) 205-6632.

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.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION:

This rule is issued under Marketing Agreement and Order No. 955 (7 CFR part 955), regulating the handling of Vidalia Onions grown in Georgia area, 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, Vidalia 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 Vidalia onions beginning January 1, 2000, 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 increases the assessment rate established for the Committee for the fiscal period 2000 and subsequent fiscal periods from $0.07 to $0.10 per 50-pound bag of Vidalia onions handled.

The Vidalia 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 Vidalia 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 1998-99 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 September 30, 1999, and unanimously recommended fiscal period 2000 expenditures of $421,600 and an assessment rate of $0.10 per 50-pound bag of Vidalia onions handled. In comparison, 1998-1999 budgeted expenditures were $373,577. However, during the 1998-99 fiscal period the Committee recommended and the Department approved a change in the fiscal period under the order to January 1-December 31 from September 16-September 15 to make the fiscal period consistent with the Vidalia onion marketing season (64 FR 48243, September 3, 1999; 64 FR 72265, December 27, 1999). To provide for continuous operation of the order, the 1998-99 fiscal period was extended by 3 and 1/2 months (from September 16 to December 31, 1999). As a result, actual expenditures for 1998-99 are expected to total about $475,577. In addition, the quantity of assessable onions for 1998-99 and assessment income is much less than expected. The Committee projected the quantity of assessable onions for 1998-99 at 4,842,857 50-pound bags and assessment revenue at $339,000. The actual quantity of assessable onions is expected to be 3,617,017 50-pound bags, and assessment revenue is expected to total $253,191. Because of this shortfall, the Committee will have to use more of its operating reserve to cover approved expenses than it expected.

The assessment rate of $0.10 is $0.03 higher than the rate currently in effect. The increase is needed so the Committee can maintain its operating reserve at an acceptable level, and to cover increases in the Committee's promotion expenses for fiscal period 2000.

The major expenditures recommended by the Committee for fiscal period 2000 include $135,127 for administrative costs, $31,800 for compliance activities, $175,000 for promotional activities, and $47,000 for research projects. Budgeted expenses for these items in 1998-99 (including the 31/2 month extension) are $151,127 for administrative costs, $37,850 for compliance activities, $161,600 for promotional activities, and $125,000 for research projects.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses by expected shipments of Vidalia onions. Onion shipments for fiscal period 2000 are estimated at 4,200,000 50-pound bags or equivalent which should provide $420,000 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 for fiscal period 2000. Funds in the reserve (totaling $110,000 on December 31, 1999), would be kept within the maximum permitted by the order (about three fiscal period's budgeted expenses; § 955.44).

The assessment rate established in this rule will 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 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 the Department. Committee meetings are open to the public and interested persons may express their views at these meetings. The Department 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 fiscal period 2000 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by the Department.

This action also changes the 7 CFR Part number and title from “Part 911—Vidalia Onions Grown in Georgia” to “Part 955—Vidalia Onions Grown in Georgia”, and the section heading number from “§ 911.209 Assessment rate.” to “955.209 Assessment rate.” that appeared at the end of the proposed rule to correctly state the title and section heading number.

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 133 producers of Vidalia onions in the production area and approximately 91 handlers subject to regulation under the marketing order. Small agricultural producers have been defined by the Small Business Administration (13 CFR 121.201) 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 Vidalia onion producers and handlers may be classified as small entities.

Based on the Georgia Agricultural Statistical Service and committee data, the average price for fresh Vidalia onions during the 1998-99 season was $15.45 per 50-pound bag or equivalent and total shipments were 3,617,017 bags. Approximately 28 percent of all handlers handled 83 percent of Vidalia onion shipments. Many Vidalia onion handlers ship other vegetable products which are not included in the committee data but would contribute further to handler receipts.

Using the average price, about 97.4 percent of the Vidalia onion handlers could be considered small businesses under the SBA definition. The majority of Vidalia onion producers and handlers may be classified as small entities.

This rule increases the assessment rate established for the Committee and collected from handlers for fiscal period 2000 and subsequent fiscal periods from $0.07 to $0.10 per 50-pound bag or equivalent of assessable Vidalia onions. The Committee unanimously recommended fiscal period 2000 expenditures of $421,600 and an assessment rate of $0.10 per 50-pound bag or equivalent. The assessment rate of $0.10 per 50-pound bag is $0.03 higher than the 1998-99 rate. The quantity of assessable Vidalia onions for fiscal period 2000 is estimated at 4,200,000 50-pound bags. Thus, the $0.10 rate should provide $420,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for fiscal period 2000 include $135,127 for administrative costs, $31,800 for compliance activities, $175,000 for promotional activities, and $47,000 for research projects. Budgeted expenses for these items in 1998-99 (including the 31/2 month extension) were $151,127 for administrative costs, $37,850 for compliance activities, $161,600 for promotional activities, and $125,000 for research projects.

As mentioned earlier, in an effort to recover from its assessment income shortfall in 1998-99, maintain its operating reserve at an acceptable level, and expand its promotion activities, the Committee voted unanimously to increase its assessment rate to cover operating expenses during fiscal period 2000. The Committee believes that increased promotion activities are needed to help the Vidalia onion industry remain competitive in the marketplace.

The Committee reviewed and unanimously recommended fiscal period 2000 expenditures of $421,600. Prior to arriving at this budget, the Committee considered information from various sources, such as the Budget Subcommittee, the Research Subcommittee, and the Advertising and Promotion Subcommittee. Alternative expenditure levels were discussed by these groups, based upon the relative value of various promotion and research projects to the Vidalia onion industry. The assessment rate of $0.10 per 50-pound bag or equivalent of assessable Vidalia onions was then determined by dividing the total recommended budget by the quantity of assessable onions, estimated at 4,200,000 50-pound bags for fiscal period 2000. This rate will generate $420,000, which is $1,600 below the anticipated expenses. The Committee found this acceptable because interest income and reserve funds are available to make up the deficit.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for fiscal period 2000 could range between $10.00 and $15.00 per 50-pound bag of Vidalia onions. Therefore, the estimated assessment revenue for fiscal period 2000 as a percentage of total grower revenue could range between 0.7 and 1.0 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 meeting was widely publicized throughout the Vidalia onion production area and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the September 30, 1999, meeting was a public meeting 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 Vidalia 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 proposed rule concerning this action was published in the Federal Register on December 13, 1999 (64 FR 69419). Copies of the proposed rule were also mailed or sent via facsimile to all Vidalia onion handlers. Finally, the proposal was made available through the Internet by the Office of the Federal Register. A 30-day comment period ending January 12, 2000, was provided for interested persons to respond to the proposal. No comments were received.

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

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee 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: (1) The 2000 fiscal period began on January 1, 2000, and the marketing order requires that the rate of assessment for each fiscal period apply to all assessable Vidalia onions handled during such period; (2) the Committee needs to have sufficient funds to pay its expenses which are incurred on a continuous basis; and (3) handlers are aware of this action which was unanimously recommended by the Committee at a public meeting. Also, a 30-day comment period was provided for in the proposed rule, and no comments were received.

List of Subjects in 7 CFR Part 955

• Marketing agreements
• Onions
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, 7 CFR part 955 is amended as follows:

PART 955—VIDALIA ONIONS GROWN IN GEORGIA

1. The authority citation for 7 CFR parts 955 continues to read as follows:

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

2. Section 955.209 is revised to read as follows: