Vidalia Onions Grown in Georgia; Change in Late Payment and Interest Requirements on Past Due Assessments, 37618-37620 [2011-16139]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 76, Number 124 (Tuesday, June 28, 2011)]
[Rules and Regulations]
[Pages 37618-37620]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16139]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 955

[Doc. No. AMS-FV-11-0016; FV11-955-1 FR]


Vidalia Onions Grown in Georgia; Change in Late Payment and 
Interest Requirements on Past Due Assessments

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule changes the delinquent assessment requirements in 
effect under the marketing order for Vidalia onions grown in Georgia 
(order). The order regulates the handling of Vidalia onions grown in 
Georgia and is administered locally by the Vidalia Onion Committee 
(Committee). This rule establishes a late payment charge of 10 percent 
on unpaid assessments that are 10 days past due and increases the 
interest rate applied to delinquent assessments from 1 percent to 1.5 
percent per month. This action should improve handler compliance with 
the assessment and reporting provisions of the order and help reduce 
the Committee's collection expenditures.

DATES: Effective Date: June 29, 2011.

FOR FURTHER INFORMATION CONTACT: Jennie M. Varela, Marketing 
Specialist, or Christian D. Nissen, Regional Manager, Southeast 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 325-8793, or E-mail: Jennie.Varela@ams.usda.gov or 
Christian.Nissen@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Laurel May, 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, or E-mail: Laurel.May@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and 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.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect.
    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. A 
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 final rule changes the delinquent assessment requirements in 
effect under the order. This rule establishes a late payment charge of 
10 percent on unpaid assessments that are 10 days past due and 
increases the interest rate applied to delinquent assessments from 1 
percent to 1.5 percent per month. The change was recommended 
unanimously by the Committee at a meeting on February 17, 2011.
    Section 955.42 of the order provides authority for imposition of a 
late charge or interest rate or both on delinquent assessments. Section 
955.142 of the order's rules and regulations prescribes the 
requirements for delinquent assessments. Prior to this action, Sec.  
955.142 specified that each handler pay an interest charge of 1 percent 
per month on any unpaid assessments and accrued unpaid interest 
beginning the day after the assessments are due. This rule modifies 
Sec.  955.142 to include a 10 percent late charge on delinquent 
assessments that are 10 days past due and increases the interest rate 
on delinquent assessments to 1.5 percent per month.
    The order requires handlers to pay to the Committee a pro rata 
assessment on the volume of onions handled. The volume of onions 
handled is based on

[[Page 37619]]

a monthly shipping report handlers are required to submit to the 
Committee. The monthly shipping report and its associated assessments 
are due in the Committee office by the fifth day of the month following 
the month in which the shipments were made, unless the fifth day falls 
on a weekend or holiday, and then the due date is the first prior 
business day.
    At the Committee's January 20, 2011, meeting, Committee staff 
indicated that some handlers have been late in reporting shipments and 
paying the associated assessments, and that this has been an ongoing 
problem for the last few seasons. The handlers eventually comply with 
the order requirements, but late payments deprive the Committee of 
expected operating income and increase Committee costs.
    Vidalia onions are typically shipped from late April through August 
of each year. This creates a compressed window in which the Committee 
collects the funds it uses throughout the year for its operating 
expenses. In addition, the Committee spends the majority of funds 
allocated to promotion during the shipping season. With promotional 
expenses accounting for more than 50 percent of the Committee's total 
budget, timely payment of assessments is necessary for the Committee to 
have funds available to cover expenditures. When several handlers are 
late in paying assessments, the Committee can lack the operating funds 
required. If sufficient operating funds are not available, the 
Committee has to borrow money, increasing operating costs.
    Further, there are costs associated with trying to collect the 
delinquent assessments. Some handlers require numerous contacts from 
Committee staff by mail and telephone, with others requiring on-site 
visits from the Committee's compliance officer. Throughout a season, 
these collection activities expend time and resources.
    In addition to the costs associated with unpaid assessments, the 
failure of handlers to report on time is also a problem for the 
Committee. The monthly shipping report serves several functions, 
including providing volume information on which handler assessments are 
based. Without complete shipping information, the Committee is unable 
to provide timely and accurate market information to the industry. 
Also, monthly reports play an important role in terms of order 
compliance.
    In an effort to address this problem, the Committee staff has 
provided additional information to handlers on when reports and 
assessments are due and on the importance of timely submission. They 
have also increased the number of reminder calls made to handlers when 
submissions are late, and visits have been made to delinquent handler 
facilities to collect late reports and payments. However, these efforts 
have not been successful in resolving this concern.
    In its discussion of this issue, the Committee agreed the current 
interest rate applied to unpaid assessments does not provide sufficient 
incentive for handlers to turn in monthly reports and their associated 
assessments on time. As it stands, the rate is low enough that some 
handlers view the interest rate as a cost of doing business, and only 
submit reports and assessments after numerous contacts from the 
Committee staff.
    Committee members wanted to find a solution that encourages 
handlers to submit their reports and payments as required. Initially, 
at its January meeting, the Committee favored changing the way the 
interest rate was compounded and calculated as a way to address the 
problem. However, it was determined that such a change could exceed 
what USDA considered reasonable and customary under marketing order 
programs. At its meeting in February, the Committee reviewed different 
scenarios imposed by other marketing orders to address this issue. 
Several other marketing orders utilize late payment charges to 
encourage compliance, and that authority is available under the order 
for Vidalia onions. As such, the Committee decided to impose a late 
payment charge, as well as increase the monthly interest rate.
    Committee members agreed that establishing a 10 percent late charge 
on late assessments helps provide some additional incentive for 
handlers to submit their reports and assessments on time. The Committee 
also discussed an appropriate grace period to set before the late 
penalty was applied. Recognizing the importance of the timely receipt 
of reports and payments, the Committee did not want to set an overly 
long grace period. The Committee agreed that 10 days provides a 
sufficient buffer for those who may mistakenly miss a due date, while 
still supporting timely reports and payments.
    As an added incentive to report and pay on time, the Committee also 
believes the monthly interest charge on delinquent assessments should 
also be increased. Consequently, the Committee unanimously recommended 
imposing a late payment charge of 10 percent on any assessments paid 10 
days after the date the shipping report and assessments are due and 
increasing the interest rate applied to unpaid assessments by .5 
percent to 1.5 percent per month.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action 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 rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 50 handlers of Vidalia onions subject to 
regulation under the order and around 80 producers in the designated 
production area. Small agricultural service firms are defined by the 
Small Business Administration (SBA) as those whose annual receipts are 
less than $7,000,000, and small agricultural producers are defined as 
those whose annual receipts are less than $750,000 (13 CFR 121.201).
    Based on National Agricultural Statistical Service and Committee 
data, the average annual grower price for fresh Vidalia onions during 
the 2010 season was around $20 per 40-pound container, and total 
Vidalia onion shipments were around 4,503,000 40-pound containers. 
Using available data, more than 90 percent of Vidalia onion handlers 
have annual receipts less than $7,000,000. However, the average 
receipts for Vidalia producers were around $1,118,970 in 2010, which is 
higher than the SBA threshold for small producers. Assuming a normal 
distribution, the majority of handlers of Vidalia onions may be 
classified as small entities, while the majority of producers may be 
classified as large entities, according to the SBA definition.
    This action establishes a late payment charge of 10 percent on 
unpaid assessments that are 10 days past due and increases the interest 
rate applied to delinquent assessments from 1 percent to 1.5 percent 
per month. This change is expected to motivate handlers to submit 
shipping reports and assessments on time. This change also helps lower 
or offset the Committee's compliance expenditures associated with 
delinquent reports and

[[Page 37620]]

assessments. The authority for this action is provided in Sec.  955.42 
of the order. This change amends Sec.  955.142. The Committee 
unanimously recommended this action at its February 17, 2011, meeting.
    This rule does not impose any additional costs on handlers that are 
complying with the requirements under the order. This action only 
represents additional costs for handlers who are delinquent in 
submitting their reports and assessments. A 10 day grace period is also 
provided before the late penalty is applied, giving delinquent handlers 
additional time to avoid the costs associated with the late payment 
charge. In addition, the late charge and interest rate were considered 
reasonable by industry members who participated in the discussion of 
this issue. Since the late payment charge and interest rate are 
percentages of amounts due, the costs, when applicable, are 
proportionate and will not place an extra burden on small entities as 
compared to large entities. In addition, the industry overall benefits 
if handler reports and assessments are collected on time and the 
Committee's compliance costs are reduced, regardless of entity size.
    The Committee discussed alternatives to this change, including not 
making a change to the delinquent assessment requirements. However, a 
number of members commented that if some handlers are not paying on 
time, a change was necessary. The Committee also considered increasing 
the interest rate accrual to daily rather than monthly, but this option 
could result in an interest charge that was disproportionately large 
and considered to be beyond the scope of what is reasonable and 
customary under marketing order programs. Thus, these alternatives were 
rejected.
    This action will not impose any 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. As noted in the 
Initial Regulatory Flexibility analysis, USDA has not identified any 
relevant Federal rules that duplicate, overlap or conflict with this 
final rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    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 February 
17, 2011, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue.
    A proposed rule concerning this action was published in the Federal 
Register on May 13, 2011 (76 FR 27919). Copies of the rule were mailed 
or sent via facsimile to all Committee members and Vidalia onion 
handlers. Finally, the rule was made available through the Internet by 
USDA and the Office of the Federal Register. A 15-day comment period 
ending May 31, 2011, was provided to allow 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: https://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Laurel May at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matter 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are already shipping 
Vidalia onions from the 2011 crop and the Committee wants to implement 
these changes as soon as possible. Further, handlers are aware of this 
rule, which was recommended at a public meeting. Also, a 15-day comment 
period was provided for in the proposed rule.

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

0
1. The authority citation for 7 CFR part 955 continues to read as 
follows:

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


0
2. Section 955.142 is amended by designating the first paragraph as 
paragraph (a) and the second paragraph as paragraph (b), and revising 
newly designated paragraph (b) to read as follows:


Sec.  955.142  Delinquent assessments.

* * * * *
    (b) Each handler shall pay interest of 1.5 percent per month on any 
assessments levied pursuant to Sec.  955.42 and on any accrued unpaid 
interest beginning the day immediately after the date the monthly 
assessments were due, until the delinquent handler's assessments, plus 
applicable interest, have been paid in full. In addition to the 
interest charge, the Committee shall impose a late payment charge on 
any handler whose assessment payment has not been received within 10 
days of the due date. The late payment charge shall be 10 percent of 
the late assessments.

    Dated: June 22, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2011-16139 Filed 6-27-11; 8:45 am]
BILLING CODE 3410-02-P