[Federal Register Volume 76, Number 93 (Friday, May 13, 2011)]
[Proposed Rules]
[Pages 27919-27921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11711]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 76, No. 93 / Friday, May 13, 2011 / Proposed 
Rules  

[[Page 27919]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 955

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on changes to 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 would establish a 
late payment charge of 10 percent on unpaid assessments that are 10 
days past due and would increase the interest rate applied to 
delinquent assessments from 1 percent to 1.5 percent per month. This 
action would improve handler compliance with the assessment and 
reporting provisions of the order and would help reduce the Committee's 
collection expenditures.

DATES: Comments must be received by May 31, 2011.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number 
and the date and page number of this issue of the Federal Register and 
will be made available for public inspection in the Office of the 
Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

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: [email protected] or 
[email protected].
    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: [email protected].

SUPPLEMENTARY INFORMATION: This proposal 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 proposal 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 proposal invites comments on changes to the delinquent 
assessment requirements in effect under the order. This rule would 
establish a late payment charge of 10 percent on unpaid assessments 
that are 10 days past due and would increase 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. Section 955.142 currently 
specifies 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 would modify Sec.  
955.142 to include a 10 percent late charge on delinquent assessments 
that are 10 days past due and increase 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 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.

[[Page 27920]]

    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 would encourage 
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 would consider 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 while that authority is available under the 
order for Vidalia onions, it had never been utilized. As such, the 
Committee decided to impose a late payment charge, as well as 
increasing the monthly interest rate.
    Committee members agreed that establishing a 10 percent late charge 
on late assessments would help provide some additional incentive for 
handlers to submit their reports and assessments on time. The Committee 
also discussed what would be 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 would 
provide 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 
believed 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.

Initial 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 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 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 would establish a late payment charge of 10 percent on 
unpaid assessments that are 10 days past due and would increase 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 would also 
help lower or offset the Committee's compliance expenditures associated 
with delinquent reports and assessments. The authority for this action 
is provided in Sec.  955.42 of the order. This change would amend Sec.  
955.142. The Committee unanimously recommended this action at its 
February 17, 2011, meeting.
    The proposed rule would not impose any additional costs on handlers 
that are complying with the requirements under the order. This action 
would only represent additional costs for handlers who are delinquent 
in submitting their reports and assessments. A 10 day grace period 
would also be provided before the late penalty would be applied, giving 
delinquent handlers additional time to avoid the costs associated with 
the late payment charge.

[[Page 27921]]

    In addition, the recommended late charge and interest rate were 
considered reasonable by industry members who participated in the 
discussion of this issue. Since the proposed late payment charge and 
interest rate are percentages of amounts due, the costs, when 
applicable, are proportionate and would not place an extra burden on 
small entities as compared to large entities. In addition, the industry 
overall would benefit if handler reports and assessments were collected 
on time and the Committee's compliance costs were 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 were 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 was considered to be beyond the scope of what is reasonable and 
customary under marketing order programs. Thus, these alternatives were 
rejected.
    The proposed action would 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.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule.
    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. Finally, interested 
persons are invited to submit comments on this proposed rule, including 
the regulatory and informational impacts of this action on small 
businesses.
    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/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.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen days is deemed appropriate because 
this rule would need to be in place as soon as possible as the 
Committee's fiscal period began in January 2011 and handlers began 
shipping onions in April. Further, handlers are aware of the action, 
which was unanimously recommended by the Committee at a public meeting 
on February 17, 2011. All written comments timely received will be 
considered before a final determination is made on this matter.

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 part 955 continues to read as 
follows:

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

    2. Section 955.142 is amended by designating the first paragraph as 
(a) and the second, (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: May 9, 2011.
Ellen King,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2011-11711 Filed 5-12-11; 8:45 am]
BILLING CODE 3410-02-P