[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]
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Proposed Rules
Federal Register
________________________________________________________________________
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