Vidalia Onions Grown in Georgia; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 955

[Docket No. FV00-955-1 PR]

Vidalia Onions Grown in Georgia; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposal would increase the assessment rate established

for the Vidalia Onion 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 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 January 12, 2000.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. 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.

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 compliance with this regulation

by contacting Jay Guerber, 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) 720-

5698, or E-mail: Jay.G[email protected].

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 proposed herein would be applicable to all assessable Vidalia onions

beginning on 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 would increase 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. In

comparison, 1998-99 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). 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

[[Page 69420]]

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 3\1/2\ 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 (currently projected to be $83,000 on December 31, 1999),

would be kept within the maximum permitted by the order (about three

fiscal period's budgeted expenses; Sec. 955.44).

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

fiscal period 2000 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 91 handlers subject to regulation

under the marketing order. Small agricultural producers have been

defined by the Small Business Administration (13 CFR 121.601) 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 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 would increase 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 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 proposed assessment rate of

$0.10 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, would be a

dequate 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 3\1/2\ 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

[[Page 69421]]

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.

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 September

30, 1999, 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 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.

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 2000 fiscal period begins 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

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 unanimously recommended by the

Committee at a public meeting 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 911--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:

Sec. 911.209 Assessment rate.

On and after January 1, 2000, an assessment rate of $0.10 per 50-

pound bag or equivalent is established for Vidalia onions.

Dated: December 7, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-32233 Filed 12-10-99; 8:45 am]

BILLING CODE 3410-02-P