01-717. Vidalia Onions Grown in Georgia; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This rule would increase the assessment rate established for the Vidalia Onion Committee (Committee) for the 2001 and subsequent fiscal periods from $0.10 to $0.12 per 50-pound bag of Vidalia onions handled. The Committee locally administers 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 begins on January 1 and ends December 31. The assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Comments must be received by February 9, 2001.

ADDRESSES:

Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: [phone]; or E-mail: [e-mail]. 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, or can be viewed at: http://www.ams.usda.gov/​fv/​moab.html.

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: [phone], Fax: [phone]; 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: [phone], Fax: [phone].

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: [phone], Fax: [phone], or E-mail: [e-mail].

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, 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 proposed herein would be applicable to all assessable Vidalia onions beginning on January 1, 2001, 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 increase the assessment rate established for the Committee for the 2001 and subsequent fiscal periods from $0.10 to $0.12 per 50-pound bag or equivalent of Vidalia onions.

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 producer/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 1999-2000 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 November 16, 2000, and discussed 2001 expenditures of $411,102 and an increased assessment rate of $0.12 per 50-pound bag or equivalent of onions. The Committee held a telephone meeting on November 27, 2000, and recommended this budget and assessment rate change in a vote of 5 in favor and 3 opposed. The three members opposed objected to increasing the assessment rate following a season with reduced returns.

The recommended assessment rate of $0.12 is $0.02 higher than the rate currently in effect. Last year, budgeted expenditures were $421,600 and the assessment rate was $0.10. The Committee projected 4.2 million assessable 50-pound bags of Vidalia onions for the 2000 fiscal period. The actual quantity of assessable onions was closer to 3,908,000 50-pound bags. Because of this shortfall, the Committee had to use its authorized reserve funds to cover approved expenses. The Committee believes that fewer acres of Vidalia onions will be planted in 2001 because of lower grower returns and high yield losses last season. The quantity of assessable Vidalia Onions for the 2001 fiscal period is projected to be less than in previous seasons. Therefore, the increase in the assessment rate is needed to cover expenses and to replenish the reserve fund.

The major expenditures recommended by the Committee for the 2001 fiscal period include $135,227 for administrative costs, $37,850 for compliance activities, $188,025 for promotional activities, and $50,000 for research projects. Budgeted expenses for these items in 1999-2000 were $135,127, $31,800, $175,000, and $47,000 respectively.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses by expected shipments of Vidalia onions. Vidalia onion shipments for the year are estimated at 3.6 million 50-pound bags and should provide $432,000 in assessment income at the proposed rate. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, would be adequate to cover budgeted expenses. Income in excess of expenses would be added to the Committee's reserve fund. Funds in the reserve (currently around $77,000) would be kept within the maximum permitted by the order (about three fiscal period's expenses; § 955.44).

The Committee vote was 5 votes in support of the increase and 3 votes opposed. Those casting negative votes stated they were opposed because of the relatively poor grower returns received in fiscal year 2000 and the need for fiscal conservatism. The majority of the Committee members pointed out the need for funds to cover the estimated expenses for 2001, to build up its operating reserve, and to pay any loans that might be needed to cover expenses until assessment monies are received in the spring of 2001. Also, the positive voters pointed out that without the increase, there would be limited funds for promotion and research which was the reason for instituting the marketing order in the first place. Therefore, the Committee recommended the increase in the assessment rate.

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 2001 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 133 producers of Vidalia onions in the production area and approximately 102 handlers subject to regulation under the marketing order. Small agricultural producers are 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.

Based on the Georgia Agricultural Statistical Service and Committee data, the average annual f.o.b. price for fresh Vidalia onions during the 2000 season was $13.00 per 50-pound bag for all shipments, and total shipments for the 2000 season were around 3.9 million bags of Vidalia onions. 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 available data, about 97 percent of 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 would increase the assessment rate established for the Committee and collected from handlers for the 2001 and subsequent fiscal periods from $0.10 to $0.12 per 50-pound bag of Vidalia onions. The Committee recommended 2001 expenditures of $411,102 and an assessment rate of $0.12 per 50-pound bag or equivalent. The proposed assessment rate of $0.12 is $0.02 higher than the 2000 rate. The quantity of assessable Vidalia onions for the 2001 fiscal period is estimated at 3.6 million 50-pound bags. Thus, the $0.12 rate should provide $432,000 in assessment income. Income derived from handler assessments, along with interest income would be adequate to cover budgeted expenses and any excess funds would be placed in the reserve fund.

The major expenditures recommended by the Committee for 2001 fiscal period include $135,227 for administrative costs, $37,850 for compliance activities, $188,025 for promotional activities, and $50,000 for research projects. Budgeted expenses for these items in 1999-2000 were $135,127, $31,800, $175,000, and $47,000 respectively.

The Committee projected 4.2 million assessable 50-pound bags of Vidalia onions for the 2000 fiscal period. The actual quantity of assessable Vidalia onions was closer to 3.9 million 50-pound bags. Because of this shortfall, the Committee had to use about $20,000 from its authorized reserve fund to cover approved expenses. The quantity of assessable Vidalia onions for the 2001 fiscal period is projected to be 3.6 million 50-pound bags, which is less than in previous seasons. To cover necessary expenses and to bring the reserve fund back to an acceptable level (about $50,000), the Committee voted to recommend an increase in its assessment rate.

The Committee reviewed and recommended 2001 expenditures of $411,102, which included increases in expenditures for compliance, promotion, and research. 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 and assessment rates were discussed by these groups and the full Committee, based upon the relative value of various promotion and research projects to the Vidalia onion industry. With assessable onions in 2001 estimated to total 3.6 million 50-pound bags, the present assessment rate of $0.10 was too low to cover estimated expenses and would leave no funds to replenish the reserve fund. The Committee then considered a $0.15 cent assessment rate, but it was not supported. While the majority of the Committee believed that many growers would support a $0.02 increase in assessments, they did not, however, believe a $0.05 increase in assessments would be supported by a majority of the industry at this time. Therefore, this alternative was rejected.

The assessment rate of $0.12 per 50-pound bag of assessable Vidalia onions was then determined by dividing the total recommended budget by the quantity of assessable Vidalia onions, estimated at 3.6 million 50-pound bags for the 2001 fiscal period. This would generate approximately $22,500 above the anticipated expenses, which the Committee determined to be acceptable.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2001 fiscal period could range between $10.00 and $15.00 per 50-pound bag of Vidalia onions. Therefore, the estimated assessment revenue for the 2001 fiscal period as a percentage of total grower revenue could range between .08 and 1.2 percent.

This action would increase the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the 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 November 16, 2000, 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 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 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. 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 2001 fiscal period begins on January 1, 2001, and the marketing order requires that the rate of assessment for each fiscal period apply to all assessable Vidalia onions handled during such fiscal 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 recommended by the Committee and is similar to other assessment rate actions issued in past years.

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 proposed to be 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:

§ 955.209

Assessment rate.

On and after January 1, 2001, an assessment rate of $0.12 per 50-pound bag or equivalent is established for Vidalia onions.

Dated: January 4, 2001.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.