05-14261. Vidalia Onions Grown in Georgia; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim final rule which increased the assessment rate and changed the assessable unit established for the Vidalia Onion Committee (Committee) for the 2005 and subsequent fiscal periods from $0.12 per 50-pound bag or equivalent to $0.10 per 40-pound carton of Vidalia onions. The assessment rate of $0.10 per 40-pound carton is $0.0001 per pound more than the assessment rate previously in effect. 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 began January 1 and ends December 31. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE:

August 19, 2005.

FOR FURTHER INFORMATION CONTACT:

Doris Jamieson, Southeast Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 799 Overlook Drive, Suite A, Winter Haven, Florida 33884-1671; Telephone: [phone], Fax: [phone]; 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: [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, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: [phone], Fax: [phone], or E-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

This rule is issued under Marketing Agreement and Marketing Order No. 955, both as amended (7 CFR part 955), regulating the handling of Vidalia onions grown in Georgia, 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.”

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, 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, 2005, 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 continues in effect the action that increased the assessment rate and changed the assessable unit established for the Vidalia Onion Committee (Committee) for the 2005 and subsequent fiscal periods from $0.12 per 50-pound bag or equivalent to $0.10 per 40-pound carton of Vidalia onions. The assessment rate of $0.10 per 40-pound carton is $0.0001 per pound more than the assessment rate previously in effect.

The Vidalia onion 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 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 2001-02 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate of $0.12 per 50-pound bag or equivalent that would continue in effect from 2001 and subsequent fiscal periods unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met December 15, 2004, and unanimously recommended 2005 expenditures of $450,300 and an assessment rate of $0.10 per 40-pound carton of Vidalia onions. In comparison, last year's budgeted expenditures were $312,215. The assessment rate of $0.10 per 40-pound carton is $0.0001 per pound more than the rate currently in effect. The increase in the assessment rate is based on the reduction in size of the assessable unit from 50-pounds to 40-pounds. Although the reduction in size of the assessable unit increases the number of assessable cartons, it only slightly increases the actual assessment per pound of Vidalia onions handled from $0.0024 per pound to $0.0025 per pound.

The major expenditures recommended by the Committee for the 2005 year include $92,500 for salaries and benefits, $59,800 for administrative expenses, $290,000 for marketing expenses, $5,000 for research expenses, and $3,000 for compliance. Budgeted expenses for these items in 2004 were $66,280, $237,435, $7,500, $1000, and $0, respectively.

The assessment rate recommended by the Committee was derived by multiplying the assessment rate by the number of 40-pound cartons of Vidalia onions the industry is expected to ship for the 2005 fiscal period, and took into consideration the availability of matching funds for research and promotion from the State of Georgia. Vidalia onion shipments for the 2005 fiscal period are estimated at 3,350,000 40-pound cartons which should provide $335,000 in assessment income. Income derived from handler assessments, interest income ($3,000), contributions from the Georgia Department of Agriculture ($150,000), and income from the sale of Point-of-Sale advertisement material ($6,000) will be adequate to cover budgeted expenses. Funds in the reserve (currently $67,331) will be kept within the maximum permitted by the order, which is three fiscal periods' budgeted expenses (§ 955.44).

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 is effective 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 2005 budget and 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 145 producers of Vidalia onions in the production area and approximately 110 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 of less than $750,000, and small agricultural service firms, which include handlers, are defined as those whose annual receipts are less than $6,000,000.

Based on information from the Georgia Agricultural Statistical Service and Committee data, around 90 percent of Vidalia onion handlers ship under $5,000,000 worth of onions on an annual basis. In addition, based on acreage, production, grower prices reported by the National Agricultural Statistics Service, and the total number of Vidalia onion growers, the average annual grower revenue is approximately $489,000. Thus, the majority of handlers and producers of Vidalia onions may be classified as small entities.

This rule continues in effect the action that increased the assessment rate and changed the assessable unit from $0.12 per 50-pound bag or equivalent to $0.10 per 40-pound carton of Vidalia onions for the 2005 and subsequent fiscal periods. The Committee unanimously recommended 2005 expenditures of $450,300 and an assessment rate of $0.10 per 40-pound carton of Vidalia onions. The assessment rate of $0.10 per 40-pound carton is $0.0001 per pound higher than the $0.12 per 50-pound bag or equivalent assessment rate in effect during 2004. The quantity of assessable Vidalia onions for the 2005 season is estimated at 3,350,000 40-pound cartons. Thus, the $0.10 per 40-pound carton rate should provide $335,000 in assessment income. Income derived from handler assessments, interest income ($3,000), contributions from the Georgia Department of Agriculture ($150,000), and income from the sale of Point-of-Sale advertisement material ($6,000) will be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2005 year include $92,500 for salaries, $59,800 for administrative expenses, $290,000 for marketing expenses, $5,000 for research expenses, and $3,000 for compliance. Budgeted expenses for these items in 2004 were $66,280, $237,435, $7,500, $1,000, and $0, respectively.

The Committee at its December 15, 2004, meeting unanimously recommended reducing the assessable carton size from a 50-pound bag or equivalent to the current industry standard 40-pound carton size. The reduction in the assessable unit size increases the number of assessable units. The assessable unit size reduction also causes a slight increase in the actual per pound rate of assessment from $0.0024 to $0.0025, or an increase of $0.0001 per pound.

The Committee reviewed and unanimously recommended 2005 expenditures of $450,300 which included increases in marketing, compliance, administrative expenses, and research programs. Prior to arriving at this budget, the Committee considered information from various sources. Alternative expenditure levels were discussed by the Committee based upon the relative value of various research and promotion projects to the Vidalia onion industry. The Committee also discussed keeping the current $0.12 per 50-pound bag or equivalent assessment rate. The Committee believes, however, that using the current industry standard unit of 40-pounds will increase efficiency by saving handlers the considerable time and expense previously spent in converting 40-pound units to the 50-pound assessment rate unit. The Committee also felt that the slight increase of $0.0001 per pound in assessments is insignificant when considering the benefits of using the industry standard unit. Thus, the assessment rate of $0.10 per 40-pound carton of assessable Vidalia onions was approved unanimously. The expected income was derived by multiplying the assessment rate by the estimated number of 40-pound cartons the industry expects to ship for the 2005 season. Also available for expenditure are interest income and matching funds from the State of Georgia (for expenditures pursuant to § 955.50; production research, marketing research development, and marketing promotion, including paid advertising).

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2005 season could range between $13.75 and $17.15 per 40-pound carton of Vidalia onions. Therefore, the estimated assessment revenue for the 2005 fiscal period as a percentage of total grower revenue could range between 0.58 and 0.73 percent.

This action continues in effect the action that increased 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. As noted earlier, the savings in time and expense previously spent on converting the industry standard 40-pound carton to the 50-pound unit used by the Committee more than offsets the negligible assessment increase of $0.0001 per pound of onions handled. In addition, the Committee's meeting was widely publicized throughout the Vidalia onion industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the December 15, 2004, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This action 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.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

An interim final rule concerning this action was published in the Federal Register on March 8, 2005 (70 FR 11114). Copies of that rule were also mailed or sent via facsimile to all Vidalia onion handlers. Finally, the interim final rule was made available through the Internet by USDA and the Office of the Federal Register. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on May 9, 2005. One comment was received.

The commenter stated that agricultural industry participants do not need government financial support to compete. However, the purpose of this action is to establish the assessment collection rate imposed on handlers, which enables the Committee to incur expenses to administer the program. Therefore, no changes will be made as a result of the comment.

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.

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.

List of Subjects in 7 CFR Part 955

• Onions
• Marketing agreements
• Reporting and recordkeeping requirements

PART 955—VIDALIA ONIONS GROWN IN GEORGIA

Accordingly, the interim final rule amending 7 CFR part 955 which was published at 70 FR 11114 on March 8, 2005, is adopted as a final rule without change.

Dated: July 14, 2005.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing Service.