[Federal Register Volume 61, Number 163 (Wednesday, August 21, 1996)]
[Rules and Regulations]
[Pages 43141-43144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21210]


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DEPARTMENT OF AGRICULTURE
7 CFR Parts 911 and 944

[Docket No. FV96-911-2FR]


Limes Grown in Florida and Imported Limes; Change in Regulatory 
Period

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule; suspension.

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SUMMARY: This rule suspends the regulatory period currently prescribed 
under the lime marketing order and the lime import regulations. The 
marketing order regulates the handling of limes grown in Florida and is 
administered locally by the Florida Lime Administrative Committee 
(committee). By temporarily reducing the regulatory period and its 
associated costs, this rule should decrease industry expenses and allow 
the committee to evaluate its impact. The changes in import 
requirements are necessary under section 8e of the Agricultural 
Marketing Agreement Act of 1937.

EFFECTIVE DATES: June 1, 1997, through December 31, 1997.

FOR FURTHER INFORMATION CONTACT: Aleck Jonas, Southeast Marketing Field 
Office, Marketing Order Administration Branch, F&V, AMS, USDA, P.O. Box 
2276, Winter Haven, Florida 33883; telephone: (941) 299-4770, Fax: 
(941) 299-5169; or Caroline Thorpe, Marketing Order Administration 
Branch, F&V, AMS, USDA, room 

[[Page 43142]]

2522-S, P.O. Box 96456, Washington, DC 20090-6456: telephone: (202) 
720-8139, Fax: (202) 720-5698. Small businesses may request information 
on compliance with this regulation by contacting: Jay Guerber, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-6456; 
telephone (202) 720-2491; Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and Marketing Order No. 911 (7 CFR Part 911), as amended, 
regulating the handling of limes, hereinafter referred to as the 
``order.'' This 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.''
    This final rule is also issued under section 8e of the Act, which 
provides that whenever certain specified commodities, including limes, 
are regulated under a Federal marketing order, imports of these 
commodities into the United States are prohibited unless they meet the 
same or comparable grade, size, quality, or maturity requirements as 
those in effect for the domestically produced commodities.
    The Department of Agriculture (Department) 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. This final 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. A 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 date of the entry of the ruling.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this final rule on small entities.
    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. Thus, both statutes have small 
entity orientation and compatibility. Import regulations issued under 
the Act are based on those established under Federal marketing orders.
    There are approximately 10 handlers subject to regulation under the 
order and about 115 producers of Florida limes. There are approximately 
35 importers of limes. Small agricultural service firms, which include 
lime handlers and importers, have been defined by the Small Business 
Administration (13 CFR 121.601) as those whose annual receipts are less 
than $5,000,000, and small agricultural producers are defined as those 
whose annual receipts are less than $500,000. A majority of these 
handlers, producers, and importers may be classified as small entities.
    This rule changes the regulatory period by suspending both the 
domestic and import regulations from June 1, 1997 through December 31, 
1997. By temporarily reducing the regulatory period and its associated 
costs, this rule should provide a decrease in industry expenses. Both 
large and small growers, handlers and importers should benefit from the 
reduced costs of no regulations, such as no inspection fees during the 
deregulated period.
    In addition, small handlers usually use block inspection. Under 
block inspection, the fruit is packed and palletized, and then 
inspection is requested. The handler must wait for an available 
Federal-State inspector to inspect and certify the limes prior to 
shipment. Larger facilities use continuous inspection because their 
volume of fruit justifies the constant presence of an inspector. By 
relaxing regulations for this seven month period, small handlers will 
benefit by being able to ship fruit without the delay of waiting for an 
inspector. Small and large handlers should both benefit from the 
reduction in inspection costs and committee expenses from fewer 
meetings and less compliance monitoring. Therefore, the AMS has 
determined that this action will not have a significant economic impact 
on a substantial number of small entities.
    Section 911.48 of the lime marketing order provides authority to 
issue regulations establishing specific pack, container, grade and size 
requirements. These requirements are specified under Sections 911.311, 
911.329 and 911.344. Section 911.51 requires inspection and 
certification that these requirements are met. Currently, there is no 
regulatory period stated in the order, and these regulations are 
applied on a continuous year-round basis.
    This rule changes the regulatory period by suspending both the 
domestic and import regulations from June 1, 1997 through December 31, 
1997. The committee met on December 13, 1995, and in a vote of six in 
favor and four opposed, recommended a change in the regulatory period.
    There is general agreement in the industry for the need to reduce 
costs and increase grower returns under current market conditions. The 
committee made this recommendation to decrease industry expenses by 
reducing the regulatory period and its associated costs. Prior to 
Hurricane Andrew, there were approximately 6,500 producing acres of 
limes in the production area. Currently, there are approximately 1,500 
acres of producing lime trees in the production area. Growers are 
expending approximately $2,500 per acre to plant new groves and replant 
lost ones. They are also spending approximately $1,500 per acre per 
year to maintaining new groves of young trees which will not produce 
fruit in commercially significant volumes for several years, thus, 
giving no return for their investments.
    During the 1991-1992 season, prior to Hurricane Andrew, assessments 
were collected on 1,682,677 bushels. In the 1993-1994 and the 1994-1995 
seasons, after the storm, assessments were collected on 228,455 bushels 
and 283,977 bushels respectively. Lost income from reduced volume and 
the costs of replanting and maintaining groves, with no immediate 
monetary return, has caused the industry to seek cost saving measures.
    Historically, the June 1 through December 31 period is a time when 
fruit is plentiful, prices are low, and the overall quality of the crop 
is good for both domestic and imported supplies. The committee 
maintains that under these abundant and good quality fruit

[[Page 43143]]

conditions, competition and market demand will keep quality standards 
high.
    Conversely, during the time period January 1 through May 31, past 
seasons have shown that for both domestic and imported fruit, skins are 
thicker, the juice content is lower and supplies of fruit are limited. 
Because the temptation to ship poor quality is greater under these high 
demand and low supply conditions, the committee believes regulations 
are necessary to prevent poor quality fruit from entering and damaging 
the lime market. Therefore, the committee believes that for the period 
June 1, 1997 through December 31, 1997, pack, container, grade and size 
regulations can be suspended. Competition under good quality and high 
supply conditions should protect the consumer from poor quality fruit 
entering market during the deregulated period. The application of 
regulations from January 1 through May 31 will insure uniform quality 
throughout the year. The committee will evaluate the impact of this 
action on the market at the end of the suspension.
    Growers, handlers and importers should benefit from the reduced 
costs of no regulations, such as no inspection fees during the 
deregulated period. Committee expenses should also be reduced by 
requiring fewer meetings and less compliance monitoring. Reporting 
requirements are not affected by this change, and handler reports will 
continue to be collected during the period of suspension.
    Several alternatives to this action were discussed by the 
committee. One alternative was to leave the regulations in place year-
round. This alternative was rejected by the committee because the need 
to take some action was considered necessary under current market 
conditions. It was argued that when these regulations were put in 
place, the quality of both the domestic and imported lime supply varied 
greatly. Over the years, improved agricultural practices have produced 
a more consistent, high quality lime supply. This is particularly true 
during the June through December time period.
    Another alternative raised was to terminate the marketing order. 
Although seriously considered, committee members rejected the idea 
under arguments that during the January through May time period when 
supplies are reduced and juice content of all limes is lower, poor 
quality fruit could enter the market. Consumer dissatisfaction with 
poor quality limes could lead to product rejection and substitution 
with lemons, causing lost market share.
    This rule represents a compromise of the alternatives considered. 
The committee believes that this change will provide the consumer with 
quality fruit throughout the year, while reducing industry costs.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including limes, are regulated under a Federal 
marketing order, imports of that commodity must meet the same or 
comparable grade, size, quality, and maturity requirements. Since this 
rule changes the regulatory period under the domestic handling 
regulations, a corresponding change to the import regulations must also 
be implemented.
    Minimum grade and size requirements for limes imported into the 
United States are currently in effect under Section 944.209 [7 CFR 
944.209]. This rule will result in relaxed import requirements because 
the lime import regulations will not be in effect during the period 
June 1, 1997, through December 31, 1997. This should reduce costs to 
importers.
    Mexico is the largest exporter of limes to the United States. 
During the 1994-95 season, Mexico exported 6,075,685 bushels to the 
United States, while all other sources shipped a combined total of 
201,053 bushels during the same time period. The majority of Mexican 
imports enter the United States between June 1 and December 31, the 
deregulated period covered in this rule.
    A proposed rule concerning this action was published in the May 8, 
1996, Federal Register (61 FR 20754), with a 30-day comment period 
ending June 7, 1996. The comment period was extended to July 8, 1996, 
through a notice published in the June 26, 1996, Federal Register (61 
FR 33047). Eight comments were received. Three comments recommended 
modifications to the proposed rule, and five comments opposed the 
proposed rule.
    The three comments requesting modification to the proposed rule 
were submitted by the committee administrator, Gail Knodel, on behalf 
of the committee. The first comment requested that the proposed rule be 
modified from a permanent change to a one year trial basis. On April 
17, 1996, this recommendation was passed by the committee on a majority 
vote of seven in support, none against and one abstention. The 
committee modified its original position because it believes that it is 
important that this change be thoroughly evaluated before making the 
suspension on a permanent basis. At the end of the trial year, the 
committee will evaluate the impact of this action on the industry and 
determine if continuation is justified.
    The second committee comment requested an extension of the comment 
period. This request was made due to the complexity of the proposed 
rule and the potential impact of the proposed changes to the industry. 
A reopening of the comment period was granted by the Department and 
published in the June 26, 1996, Federal Register (61 FR 33047).
    The third committee comment was a request to make the effective 
date of the rule June 1, 1997. Because the extension of the comment 
period would delay the effective date of a final rule, making it 
impossible to begin the period of deregulation effective June 1, 1996, 
the committee voted to postpone the effective date to allow for a 
continuous period of deregulation from June 1 to December 31. The 
committee believes that this will be beneficial for handlers. The 
committee also believes that this will allow for a more accurate 
analysis of the impact of the suspension. The recommendation to change 
the effective date to June 1, 1997, was made by unanimous vote of the 
committee. This rule has been modified to reflect the committee's 
recommendations.
    The five opposing comments were submitted by Steve Biondo, grower; 
Gregory P. Nelson, president of Bernard Egan & Company, grower/
importer; Barney W. Rutzke, president of Barney W. Rutzke, Inc., 
grower/handler; Tina Marie Rutzke, operations manager of Florida Brands 
Inc., grower/handler; and the fifth was jointly submitted by Herbert 
Yamamura, president of LIMECO, Inc., grower/handler; Joe Guggino, 
registered agent for Primo Groves, Inc., grower; Richard Takeshita, 
grower; Edna Batho, grower; Elizabeth Harrill, grower; Robert Yamamura, 
grower; Donald Strock, grower; and April Yamamura, grower.
    All of the opposing comments expressed concerns that loss of 
regulation and the associated quality standards will result in poor 
quality limes on the market and consumer dissatisfaction. Ms. Rutzke 
states that the loss of regulations will lead to consumer rejection of 
limes and the substitution of lemons, causing a loss of overall market 
share. Both the comment of Mr. Rutzke and the jointly signed comment 
expressed concerns that low quality imported limes will be dumped on 
the domestic market.
    The committee, upon further discussion, shared these concerns, and 
therefore recommended that the proposed rule be modified from a 
permanent change to a one year trial basis. The committee believes that 
there

[[Page 43144]]

is an adequate supply of high quality limes to meet consumer demands 
during the requested deregulation period. However, the committee also 
believes that a test of the deregulation period will determine if 
consumer demand will keep quality high or result in substitution of 
lemons and loss of market share.
    Four of the opposing comments allege that the proposed rule was 
passed by a committee with unqualified members seated, and therefore 
the proposal should not have been acted on by the Department. 
Commenters claim that, when the original recommendation was made on 
December 13, 1995, some members were serving in positions that they 
were not qualified to hold. However, since that time, a new committee 
has been seated. At its organizational meeting on April 17, 1996, the 
newly elected members of the committee took up the discussion of the 
suspension. The new committee voted to recommend that the proposed rule 
be modified from a permanent change to a one year trial basis. 
Consequently, the changes provided for in this rule were affirmed by 
the current committee with a majority vote of seven in support, none 
opposed, and one abstention.
    The jointly signed comment disagreed with the proposed rule's 
contention that, historically, the June 1 through December 31 period is 
a time when fruit prices are low, and the overall quality of the crop 
is good. They argued that prices in June, September, October, November 
and December often have differed from year to year, between low to 
moderately high, and that lime prices in 1993 and 1994 remained 
moderate during the months of July and August.
    In terms of quality, they state that during the June through 
December time period, quality is not considered high quality. For 
example, they state there is a relatively large amount of stylar-end 
breakdown, which is a weakening of the rind at the fruit's blossom end 
which deteriorates over time. In its deliberations of this rule, the 
committee considered the availability of quality fruit during the 
proposed period of suspension. The proposed rule noted that 
historically prices are low, and the overall quality of the crop is 
good, indicating a trend and general view of the time period. This does 
not mean to imply that fluctuations do not occur during various months 
within the period or from year to year. However, during the period from 
June to December, juice content improves, fruit matures, and the 
overall quality of limes is better. The committee plans to review the 
effects of the suspension on the market, and base further action on its 
analysis.
    After thoroughly analyzing the comments received and other 
available information, the Department has concluded that this final 
rule is appropriate.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this final rule.
    After consideration of all relevant matter presented, including the 
information and recommendations submitted by the committee and other 
available information, it is hereby found that the provisions of the 
regulations to be suspended, as hereinafter set forth, no longer tend 
to effectuate the declared policy of the Act.

List of Subjects

7 CFR Part 911

    Limes, Marketing agreements, Reporting and recordkeeping 
requirements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges.

    For the reasons set forth in the preamble, 7 CFR parts 911 and 944 
are amended as follows:
    1. The authority citation for 7 CFR parts 911 and 944 continues to 
read as follows:

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

PART 911--LIMES GROWN IN FLORIDA


Secs. 911.311, 911.329, 911.344  [Amended]

    2. Effective June 1, 1997, through December 31, 1997, 
Secs. 911.311, 911.329, and 911.344 are suspended.

PART 944--FRUITS; IMPORT REGULATIONS


Sec. 944.209  [Amended]

    3. Effective June 1, 1997, through December 31, 1997, Sec. 944.209 
is suspended.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-21210 Filed 8-20-96; 8:45 am]
BILLING CODE 3410-02-P