[Federal Register Volume 62, Number 82 (Tuesday, April 29, 1997)]
[Proposed Rules]
[Pages 23185-23188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11164]


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 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. 62, No. 82 / Tuesday, April 29, 1997 / 
Proposed Rules  

[[Page 23185]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 911 and 944

[Docket No. FV97-911-1PR]


Limes Grown in Florida and Imported Limes; Change in Regulatory 
Period and Minimum Size Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on proposed changes to the 
regulatory period and the minimum size requirements 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). This rule would revoke the 
suspension and maintain continuous, year round, implementation of 
regulations. This proposed rule would also increase the minimum size 
requirement from 1\7/8\ to 2 inches in diameter for the month of June. 
This would result in the 2 inch minimum being required from January 1 
through June 30 of each year. This rule would maintain and improve 
quality standards ensuring continued customer satisfaction with fresh 
limes. The changes in import requirements are necessary under section 
8e of the Agricultural Marketing Agreement Act of 1937.

DATES: Comments must be received by May 29, 1997.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, 
P.O. Box 96456, Washington, DC 20090-6456, Fax: (202) 720-5698. All 
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: 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 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 2525-S, 
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-
5698.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Agreement No. 126 and Marketing Order No. 911 (7 CFR part 911), both as 
amended, regulating the handling of limes, 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.''
    This proposed 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 proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This proposal 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.
    This proposal would make two changes to the regulations currently 
prescribed under the lime marketing order and the lime import 
regulations. The first change would revoke the temporary suspension of 
regulations scheduled for June 1, 1997, through December 31, 1997. This 
proposal would keep the regulations in effect throughout all of 1997 
and thereafter. The second change would increase the minimum size from 
1\7/8\ inches to 2 inches for the month of June. This change would 
extend the current regulations requiring a minimum diameter of 2 inches 
from January 1 through May 31 to January 1 through June 30.
    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. Currently, the requirements specified under 
Sections 911.311, 911.329 and 911.344 are temporarily suspended from 
June 1, 1997, through December 31, 1997.
    This rule would revoke the scheduled suspension of regulations from 
June 1, 1997, through December 31, 1997. The committee met on February 
5, 1997, and, on a unanimous vote, recommended terminating the 
scheduled suspension.
    The suspension of regulations was first published, as a proposed 
rule, in the May 8, 1996, Federal Register (60

[[Page 23186]]

FR 20754). A notice, published in the June 26, 1996, Federal Register 
(61 FR 33047), extended the comment period of the proposed rule. The 
final rule was published in the August 21, 1996, Federal Register (61 
FR 43141).
    In its deliberations, the committee noted that this issue has been 
argued and debated by the committee since its original proposal. Even 
then, the committee was divided, passing the measure on a split vote of 
six in favor and four opposed, January 10, 1996. Comments from growers 
and grower/handlers concerning the changes in the proposed rule 
expressed concern that the loss of regulation and the associated 
quality standards would result in poor quality limes on the market and 
consumer dissatisfaction.
    The committee, upon further discussion, shared these concerns. In 
fact, the committee revisited the issue on April 17, 1996. After 
deliberations on the possibilities of what could occur without 
regulations, the committee recommended, on a vote of seven in support, 
none against and one abstention, that the original proposal be modified 
from a permanent change to a one year experiment. This action was taken 
to provide the committee with an opportunity to study the effects the 
suspension of the handling regulations would have on the industry and 
market versus the cost savings derived from it.
    The change was originally to have begun on June 1, 1996. However, 
an extended comment period, and the requested modifications to the 
proposal itself, resulted in the start date being delayed to June 1, 
1997. This one year delay in implementation has allowed the committee 
time to reevaluate the need to suspend regulations.
    The proposed rule was issued in response to changes in the market, 
rising costs of production and the cost of replanting in the aftermath 
of Hurricane Andrew. The committee commented that when the change was 
originally recommended on January 10, 1996, the industry's position and 
future prospects appeared quite different from today. At that time, 
many of the lime trees were less than 3 years old and too young to bear 
fruit. These lime trees had been replanted after Hurricane Andrew. 
Money was being expended on replanting and no revenue was coming in 
from these young non-bearing trees. Further, last year citrus leaf 
minor was a new threat to the lime trees and at that time predictions 
called for expensive control methods that may or may not have worked. 
Throughout the industry, the concern to save money was great, and the 
suspension of regulations was thought to be a money saving avenue. By 
reducing the regulatory period and its associated costs, the committee 
hoped to provide a decrease in industry expenses. The committee hoped 
the reduced costs of no regulations, no inspection fees and reduced 
committee expenses, resulting from fewer meetings and less compliance 
monitoring, would benefit the industry and foster growth.
    The industry's present situation is much improved over what it was 
when the changes to the regulation were proposed and made final. The 
young lime trees are now 3 and 4 years old and bearing fruit, resulting 
in a larger crop and more revenue. Citrus leaf minor is far less a 
threat than originally presumed, due, in part, to native insect 
predation against it. This has resulted in less funds being required to 
combat this pest.
    Also, the lime committee has operated off reserves this current 
season with a zero assessment, and it has budgeted to work off reserves 
with a zero assessment for the next season. This will result in 
industry savings of approximately $75,000 each season. The committee 
believes that all of these factors have eliminated the critical need 
for the further cost savings which prompted the original request for 
the change.
    Reviewing the past year, committee members stated that fresh limes 
sold were generally plentiful and of good quality. However, they also 
noted that even with quality regulations in effect, some poor quality 
limes do reach the retail market. The committee is now concerned that 
removing quality regulations, even for an experimental period, may 
result in even larger quantities of poor quality fruit reaching the 
retail market, resulting in consumer dissatisfaction and product 
substitution. Committee members commented that past experience has 
indicated the difficulty of enticing customers to return to a product 
once substitution has taken place.
    Committee members maintain that although some poor quality limes 
still appear on the market, the regulations have done much to reduce 
the number and help provide uniform quality. This, in turn, has ensured 
customer satisfaction with fresh limes which is a primary concern to 
the industry. Thus, the committee believes the benefits of the quality 
regulations outweigh the now diminished need to take action that would 
result in cost savings.
    This proposed rule would also change the minimum size regulations 
established under the order. This proposal would increase the minimum 
size diameter from 1\7/8\ inches to 2 inches for the month of June. 
This change would extend the current regulations requiring a minimum 
diameter of 2 inches to January 1 through June 30, with 1\7/8\ inches 
the standard for the remainder of the year. This change was recommended 
by the committee, on a unanimous vote, at its February 5, 1997, 
meeting.
    Section 911.344 of the regulations specifies that limes contain not 
less than 42 percent juice by volume. This section was amended by a 
final rule published on December 4, 1996, and effective on January 3, 
1997, (61 FR 64255). That rule was intended to increase the minimum 
size requirement for limes grown in Florida from 1\7/8\ inches to 2 
inches in diameter during the period January 1 through May 31. The 
December 4, 1996, rule when read with the May 8, 1996, proposed 
suspension would result in a minimum size diameter of 2 inches for the 
months of January through May. During that time prices are high and 
quality lower, resulting in an incentive to pack lower quality fruit. 
From January 1, 1996, through May 31, 1996, Florida shipped 50,365 
bushels of limes, approximately 14 percent of the total, 362,289 
bushels, shipped in 1996. Florida shipped 55,136 bushels of limes in 
June 1996, approximately 14 percent of the total, 387,833 bushels, 
shipped thus far in the 1996-97 season which ends in March.
    Limes that are 2 inches or larger in diameter have a higher juice 
content than smaller limes. The larger limes have a greater chance of 
meeting the 42 percent juice content requirement. Increasing the 
minimum size to 2 inches in diameter would result in more fresh limes 
meeting the 42 percent juice content requirement. The larger size 
should also reduce the number of limes failing inspection for low juice 
content. This would help lower handling costs by reducing the expense 
of repacking and regrading fruit that fails inspection.
    During committee deliberations, members commented that the current 
2 inch minimum diameter rule has been well received by their customers. 
Committee members expressed that the 2 inch requirement ends too early 
in the season. The committee agreed that the problem with limes with 
low juice content extends into June and July. Committee members were 
concerned that customers would switch to a substitute product in place 
of fresh limes after being disappointed with the lack of juice.
    The committee discussed increasing the minimum size requirements 
for both June and July. The committee members noted that weather 
conditions in South Florida are in transition during the month of July, 
changing from relatively

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dry, to increasing rains and tropical storms as the month progresses. 
The increasing rains allow the smaller limes to contain more juice. 
Unfortunately, the same rains cause larger limes to begin having 
problems, such as stylar-end break down and yellowing. Also, limes left 
on the tree to gain size can be lost during topical storms. Although 
some retail samples in July had low juice content in the smaller limes, 
committee members reasoned that the transitory weather conditions of 
July and its corresponding problems support maintaining the current 
minimum of 1\7/8\ for July. Therefore, the committee is recommending 
that the 2 inch minimum diameter extension end June 30 with 1\7/8\ inch 
minimum diameter the standard for the rest of the season.
    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 would change the regulatory period and the minimum size 
requirements under the domestic handling regulations, a corresponding 
change to the import regulations must also be considered.
    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 proposed rule would revoke the temporary suspension 
period scheduled for June 1, 1997, through December 31, 1997. This rule 
would leave the lime import regulations in effect throughout 1997 and 
thereafter. This proposal would also increase the minimum size 
requirement for imported limes during the month of June. Under this 
rule, the minimum size requirement for June would increase from the 
current 1\7/8\ inches to 2 inches. This reflects the same changes that 
would be made under the order for Florida limes. The minimum size and 
grade requirements for Florida limes are specified in section 911.344 
under marketing order 911. The minimum diameter size requirement is not 
specifically stated in the lime import regulation. Therefore, no change 
is needed in the text of Section 944.209.
    Mexico is the largest exporter of limes to the United States. 
During the 1995-96 season, Mexico exported 5,591,451 bushels to the 
United States, while all other import sources shipped a combined total 
of 167,832 bushels during the same time period. From June 1, 1996, 
through December 31, 1996, Mexico exported 4,151,867 bushels of limes 
to the United States, approximately 71 percent of the total, 5,819,410 
bushels, shipped thus far in the 1996-97 season ending in March. Mexico 
exported 559,525 bushels of limes to the United States for the month of 
June 1996, approximately 10 percent of the total, 5,819,410 bushels, 
shipped thus far in the 1996-97 season.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities. 
Accordingly, AMS has prepared this 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. 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 50 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.
    Based on the Florida Agricultural Statistic Service and committee 
data for the 1995-96 season, the average annual f.o.b. price for fresh 
Florida limes during the 1995-96 season was $16.50 per 55 pound bushel 
box equivalent for all domestic shipments, and the total shipments for 
the 1995-96 season were 371,413. Approximately 20 percent of all 
handlers handled 86 percent of Florida lime shipments. In addition, 
many of these handlers ship other tropical fruit and vegetable products 
which are not included in committee data but would contribute further 
to handler receipts.
    Section 911.48 of the lime marketing order provides authority to 
issue regulations establishing specific grade and size requirements, 
and section 8e of the Act requires that when such regulations are in 
effect for limes, the same or comparable requirements be applied to 
imports.
    This proposal would change the regulatory period and the minimum 
size requirements currently prescribed under the lime marketing order 
and the lime import regulations. This rule would revise both the 
domestic and import regulations by removing a scheduled, June 1, 1997, 
through December 31, 1997, suspension of regulations and maintaining 
continuous, year round, handling regulations. The regulations are 
specified in sections 911.311, 911.329 and 911.344 and establish pack, 
container, grade and size requirements. This proposed rule would also 
increase the minimum size requirement from 1\7/8\ inches to 2 inches in 
diameter for the month of June. The committee recommended these changes 
to maintain and improve the quality of limes in the marketplace.
    This proposal is expected to have a positive impact on growers, 
handlers and importers, as fruit and vegetable prices are quite 
responsive to quality differentials. This action is intended to 
maintain and improve quality. At the meeting, the committee discussed 
the impact of this change on handlers and producers in terms of cost. 
Any costs to handlers and importers caused by this proposal would be 
the loss of projected savings from the suspension. The majority of 
possible cost savings would have resulted from eliminating inspection 
fees during the suspension.
    The scheduled suspension period would have only been effective for 
one year, resulting in limited cost savings. The industry is already 
used to budgeting for inspection and associated regulation costs. The 
Federal/State Inspection Service assesses fees to provide their 
service. The cost for inspection is equitable. Small and large handlers 
are charged the same base rate, with the overall cost determined by a 
handler's volume.
    During this season, and the season prior, the committee voted to 
operate on reserves rather than assessing the industry. This will 
result in an industry cost savings of approximately $75,000, the 
approximate cost of operating the committee for a year, during each of 
these two years. This will do much to offset any costs that result from 
the revocation of the suspension period. Assessments, when they are 
applied, are based on the amount of fruit handled, therefore, the costs 
are borne proportionally by small and large operations. Consequently, 
the benefits of no assessments are received equally. Importers do not 
have to pay assessments to maintain the marketing order.
    Since the recommendation to establish the suspension period was

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made, industry needs for cost savings have diminished. The focus has 
shifted to the need for stable markets and returns. Customers are 
willing to pay for quality, and complementary studies show that 
customers return purchase rate declines considerably if they are 
disappointed by the quality of the original purchase. The current cost 
of inspection is $.14 per 55 pound equivalent. However, a drop in 
quality could result in a price reduction measured in dollars rather 
than cents on the same equivalent. Thus, the benefits of a quality 
standard outweigh the minimal cost savings that may have resulted from 
the suspension.
    The increase in the minimum size for June would also provide a cost 
benefit. With an increase in the minimum size, limes are more likely to 
meet the 42 percent minimum juice content requirement. This is expected 
to reduce the incidence of repacking, resulting in lower costs to 
handlers and importers. Maintaining and increasing quality to the 
consumer would result in a strong and stable market, benefiting 
growers, handlers and importers.
    Shipments of Florida limes for the 1994-95 season were 289,213 
bushels, for the 1995-96 season they were 371,413 bushels, and for the 
current 1996-97 season, though not complete, shipments through February 
18, 1997, with 41 days remaining in the season, stand at 382,991 
bushels. A steady increase in production is indicated. Mexican exports 
have also increased from 2,626,707 bushels in the 1990-91 season to 
5,591,451 bushels in the 1995-96 season.
    Committee members have considered alternatives to rescinding the 
suspension period. The committee considered a continuous period of no 
regulations for the months of June through December. They reconsidered 
the merits of such an action, determining that removing regulations to 
save money may have costs, such as lost market share, which would 
overshadow any potential savings. The committee determined that in the 
time that had passed since the original consideration of a suspension 
period, the need for cost savings measures had passed, and that the 
benefits of the quality standards outweighed the cost savings that may 
have been realized. The committee was unanimous in its belief that the 
need for the suspension has passed.
    Under the change in minimum size, the committee considered the 
alternative of also changing the minimum size for July. While the 
committee agreed that there are limes with low juice in July, there 
were problems with increasing the minimum size requirement for that 
month. During July, the weather begins to shift to more tropical 
conditions. Rainfall increases, which adds juice to the limes, but it 
also causes problems with the larger sized fruit. Because of these 
problems, this alternative was rejected. Accordingly, the committee 
unanimously recommended the changes as outlined.
    This action would not impose any additional reporting or 
recordkeeping requirements on either small or large lime 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 proposed rule. However, limes 
must meet the requirements as specified in the U.S. Standards for 
Grades of Persian Limes (7 CFR 51.1000 through 51.1016) issued under 
the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 through 1627).
    The committee's meeting was widely publicized throughout the lime 
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 5, 1997, meeting was a public meeting 
and all entities, both large and small, were able to express views on 
these issues. The committee itself is composed of ten members, of which 
four are handlers, five are producers and one is a public member. The 
majority of committee members represent small entities. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this proposed rule, 
as it pertains to limes imported into the United States.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

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 proposed to be 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  [Amended]

    2. Scheduled suspension of Secs. 911.311 and 911.329 effective June 
1, 1997, through December 31, 1997, is terminated.


Sec. 911.344  [Amended]

    3. Scheduled suspension of Sec. 911.344, effective June 1, 1997, 
through December 31, 1997, is terminated, and paragraph (a)(3) is 
amended by removing the words ``at least 2 inches diameter'' and 
adding, in their place, the words ``at least 2 inches in diameter from 
January 1 through June 30, and at least 1\7/8\ inches in diameter from 
July 1 through December 31''.

PART 944--FRUITS, IMPORT REGULATIONS


Sec. 944.209  [Amended]

    4. Scheduled suspension of Sec. 944.209 effective June 1, 1997, 
through December 31, 1997, is revoked.

    Dated: April 25, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-11164 Filed 4-25-97; 1:54 pm]
BILLING CODE 3410-02-P