[Federal Register Volume 62, Number 165 (Tuesday, August 26, 1997)]
[Rules and Regulations]
[Pages 45142-45146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22580]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 911 and 944

[Docket No. FV97-911-1A FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, an interim final rule which changed 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). This rule revokes 
the temporary suspension of grade and size requirements and maintains 
continuous, year round, implementation of regulations. This rule will 
maintain quality standards ensuring continued customer satisfaction 
with fresh limes. The change in import requirements is necessary under 
section 8e of the Agricultural Marketing Agreement Act of 1937.

DATES: Effective September 25, 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 Anne Dec, Marketing Order Administration Branch, 
F&V,

[[Page 45143]]

AMS, USDA, room 2522-S, P.O. Box 96456, Washington, DC 20090-6456; 
telephone: (202) 720-2491, 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 rule is issued under Marketing 
Agreement No. 126 and Marketing Order No. 911 (7 CFR part 911), both as 
amended, regulating the handling of limes grown in Florida, 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 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 is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This 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.
    This rule revokes the temporary suspension of regulations currently 
prescribed under the lime marketing order and the lime import 
regulations. The temporary suspension was published in the Federal 
Register on August 21, 1996 (61 FR 43141) and suspended both the 
domestic and import regulations for the period June 1, 1997, through 
December 31, 1997. The interim final rule published in the Federal 
Register on June 4, 1997 (62 FR 30429) revised both the domestic and 
import regulations by removing a temporary suspension of regulations 
and thereby maintaining handling regulations for the remainder of 1997, 
and thereafter. This rule adopts as a final rule, without change, the 
provisions of the interim final rule and keeps the regulations in 
effect.
    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. Prior to this rule, the requirements specified 
under Sections 911.311, 911.329, and 911.344 were temporarily suspended 
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 FR 20754). A notice, 
published in the June 26, 1996, Federal Register (61 FR 33047), 
extended the comment period of the proposed rule from June 7, 1996, to 
July 8, 1996. 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 to 
suspend regulations. 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 original rule suspending regulations 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.

[[Page 45144]]

    Also, the lime committee operated off reserves last season with a 
zero assessment, and it has budgeted to work off reserves with a zero 
assessment for the current 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.
    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 made.
    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 revokes the temporary suspension period for both 
the domestic and import regulations. This rule leaves the lime 
regulations in effect throughout the remainder of 1997. This reflects 
the same changes being 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 size and grade 
requirements are 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 67 percent of the total, 6,190,321 
bushels, shipped during the 1996-97 season that ended in March. Mexico 
exported 559,525 bushels of limes to the United States for the month of 
June 1996, approximately 9 percent of the total, 6,190,321 bushels, 
shipped in the 1996-97 season.
    Pursuant to 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 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. 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.
    Based on the Florida Agricultural Statistics 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. Using the average f.o.b. price, about 80 percent 
of lime handlers could be considered small businesses under SBA's 
definition and about 20 percent of the handlers could be considered 
large businesses. The majority of lime handlers, producers, and 
importers may be classified as small entities.
    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.
    The interim final rule changed the regulatory period currently 
prescribed under the lime marketing order and the lime import 
regulations. Beginning June 9, 1997, that rule revised both the 
domestic and import regulations by removing a temporary suspension of 
regulations and thereby maintaining handling regulations for the 
remainder of 1997. The regulations are specified in sections 911.311, 
911.329 and 911.344 and establish pack, container, grade and size 
requirements. The committee recommended this change to maintain the 
quality of limes in the marketplace. Additionally, the need to suspend 
regulations to reduce handling costs has diminished.
    This rule will 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 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 action will 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 its 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

[[Page 45145]]

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 
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. Maintaining quality to the consumer will 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 shipments were 398,279 bushels. A steady 
increase in production is indicated. Mexican exports have also 
increased from 2,626,707 bushels in the 1990-91 season to 6,190,321 
bushels in the 1996-97 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. Accordingly, the committee 
unanimously recommended this change as outlined.
    This action will 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.
    A proposed rule concerning this action was issued by the Department 
on April 25, 1997, and published in the Federal Register on Tuesday, 
April 29, 1997 (62 FR 23185). That rule also proposed an increase in 
the minimum size for the month of June. Copies of the rule were mailed 
or sent via facsimile to all Committee members and lime handlers and 
producers. The rule was also made available through the Internet by the 
Office of the Federal Register.
    A 30-day comment period, ending May 29, 1997, was provided to allow 
interested persons to respond to the proposal. Two comments were 
received. The commenters, one representing a Mexican exporter and the 
other a Mexican exporters' and packers' union, requested that the 
comment period for the rule be extended to allow for additional time, 
30 days and 90 days, respectively, to analyze the proposal. One 
commenter concluded the proposal would have a negative affect on its 
business and the other noted that the proposal would have a direct 
effect on its business.
    The Department reviewed the requests, and determined that an 
extended period with no minimum quality or size standards in place 
would be detrimental to the industry. As previously discussed, the 
suspension was originally recommended at a time when cost savings were 
of utmost concern to the Florida lime industry. Now, however, the 
benefits of maintaining quality and ensuring customer satisfaction and 
repeat purchases outweigh the diminished need to take action that would 
result in cost savings.
    Therefore, the Department instituted the revocation of the 
suspension through the interim final rule which allowed 30 additional 
days to comment.
    However, with regard to increasing the minimum size requirement, 
the Department issued in a separate Federal Register publication an 
extension of the proposed comment period concerning implementing the 
increase in minimum size from 1\7/8\ to 2 inches in diameter for the 
month of June.
    This rule also modifies language in the regulations to return the 
minimum size requirement of 1\7/8\ inches from June 1 through December 
31. The 1\7/8\ inch minimum size requirement was inadvertently removed 
when the temporary suspension was issued on August 14, 1996 (61 FR 
43141).
    An interim final rule concerning this action was issued by the 
Department on May 30, 1997, and published in the Federal Register on 
June 4, 1997 (62 FR 30429). Copies of the rule were mailed or sent via 
facsimile to all committee members and lime handlers and producers. 
Finally, the rule was made available through the Internet by the Office 
of the Federal Register. The rule provided for a 30-day comment period 
which ended July 7, 1997. No comments were received.
    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.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this rule, as it 
pertains to limes imported into the United States.

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.

[[Page 45146]]

PART 911--LIMES GROWN IN FLORIDA

PART 944--FRUITS, IMPORT REGULATIONS

    Accordingly, the interim final rule amending 7 CFR parts 911 and 
944 which was published at 62 FR 30429 on June 4, 1997, is adopted as a 
final rule without change.

    Dated: August 18, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-22580 Filed 8-25-97; 8:45 am]
BILLING CODE 3410-02-P