[Federal Register Volume 63, Number 142 (Friday, July 24, 1998)]
[Rules and Regulations]
[Pages 39697-39699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19886]



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  Federal Register / Vol. 63, No. 142 / Friday, July 24, 1998 / Rules 
and Regulations  

[[Page 39697]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 906

[Docket No. FV98-906-1 IFR]


Oranges and Grapefruit Grown in the Lower Rio Grande Valley in 
Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate from $0.125 to $0.11 
per \7/10\ bushel carton established for the Texas Valley Citrus 
Committee (Committee) under Marketing Order No. 906 for the 1998-99 and 
subsequent fiscal periods. The Committee is responsible for local 
administration of the marketing order which regulates the handling of 
oranges and grapefruit grown in the Lower Rio Grande Valley in Texas. 
Authorization to assess orange and grapefruit handlers enables the 
Committee to incur expenses that are reasonable and necessary to 
administer the program. The fiscal period begins August 1 and ends July 
31. The assessment rate will remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Effective July 27, 1998. Comments received by September 22, 
1998, will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, Fruit 
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; Fax: (202) 205-6632. 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: Belinda G. Garza, McAllen Marketing 
Field Office, Fruit and Vegetable Programs, AMS, USDA, 1313 E. 
Hackberry, McAllen, TX 78501; telephone: (956) 682-2833, Fax: (956) 
682-5942; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 205-6632. Small businesses may request information 
on compliance with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: 
(202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 906 (7 CFR part 906), regulating the handling 
of oranges and grapefruit grown in the Lower Rio Grande Valley in 
Texas, 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.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, orange and 
grapefruit handlers in the Lower Rio Grande Valley in Texas are subject 
to assessments. Funds to administer the order are derived from such 
assessments. It is intended that the assessment rate as issued herein 
will be applicable to all assessable oranges and grapefruit beginning 
August 1, 1998, and continue until amended, suspended, or terminated. 
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. Such 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 the date of the entry of the ruling.
    This rule deceases the assessment rate established for the 
Committee for the 1998-99 and subsequent fiscal periods from $0.125 to 
$0.11 per \7/10\ bushel carton handled.
    The Texas orange and grapefruit marketing order provides authority 
for the Committee, with the approval of the Department, to formulate an 
annual budget of expenses and collect assessments from handlers to 
administer the program. The members of the Committee are producers and 
handlers of Texas oranges and grapefruit. They are familiar with the 
Committee's needs and with the costs for goods and services in their 
local area and are thus in a position to formulate an appropriate 
budget and assessment rate. The assessment rate is formulated and 
discussed in a public meeting. Thus, all directly affected persons have 
an opportunity to participate and provide input.
    For the 1996-97 and subsequent fiscal periods, the Committee 
recommended, and the Department approved, an assessment rate that would 
continue in effect from fiscal period to fiscal period unless modified, 
suspended, or terminated by the Secretary upon recommendation and 
information submitted by the Committee or other information available 
to the Secretary.
    The Committee met on June 10, 1998, and unanimously recommended 
1998-99 expenditures of $1,172,950 and an assessment rate of $0.11 per 
7/10 bushel carton of oranges and grapefruit handled. In comparison, 
last year's budgeted expenditures were $1,100,478. The assessment rate 
of $0.11 is $0.015 lower than the rate currently in effect. The 
Committee voted to lower its assessment rate and use more of the

[[Page 39698]]

reserve to cover its expenses. The assessment rate decrease is 
necessary to bring expected assessment income closer to the amount 
necessary to administer the program for the 1998-99 fiscal period. At 
the current rate, assessment income would exceed anticipated expenses 
by about $14,550, and the projected reserve on July 31, 1999, would 
exceed the level the Committee believes to be adequate to administer 
the program.
    The major expenditures recommended by the Committee for the 1998-99 
fiscal period include $768,700 for advertising and promotion, and 
$170,000 for the Mexican Fruit Fly support program. Budgeted expenses 
for these items in 1997-98 were $712,000 and $170,000, respectively. 
Budget increases for 1998-99 (with the 1997-98 budgeted amounts in 
parentheses) include administrative at $68,313, ($64,548), and 
compliance at $73,369, ($71,112). A new budget item for 1998-99 
includes funds totaling $14,000 for promotion program evaluation.
    The assessment rate recommended by the Committee was derived by 
dividing anticipated expenses by expected shipments of Texas oranges 
and grapefruit. Texas orange and grapefruit shipments for the year are 
estimated at 9.5 million cartons which should provide $1,045,000 in 
assessment income. Income derived from handler assessments, along with 
interest income and funds from the Committee's authorized reserve, will 
be adequate to cover budgeted expenses. Funds in the reserve (currently 
$270,000) will be kept within the maximum permitted by the order 
(approximately one fiscal periods' expenses; Sec. 906.35).
    The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by the 
Secretary upon recommendation and information submitted by the 
Committee or other available information.
    Although this assessment rate is effective for an indefinite 
period, the Committee will continue to meet prior to or during each 
fiscal period to recommend a budget of expenses and consider 
recommendations for modification of the assessment rate. The dates and 
times of Committee meetings are available from the Committee or the 
Department. Committee meetings are open to the public and interested 
persons may express their views at these meetings. The Department will 
evaluate Committee recommendations and other available information to 
determine whether modification of the assessment rate is needed. 
Further rulemaking will be undertaken as necessary. The Committee's 
1998-99 budget and those for subsequent fiscal periods will be reviewed 
and, as appropriate, approved by the Department.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule 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 the 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.
    There are approximately 2,000 producers of oranges and grapefruit 
in the production area and 17 handlers subject to regulation under the 
marketing order. Small agricultural producers have been defined by the 
Small Business Administration (SBA) (13 CFR 121.601) as those having 
annual receipts less than $500,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$5,000,000. The majority of orange and grapefruit producers and 
handlers may be classified as small entities.
    Last year, 4 of the handlers each shipped over 833,000 \7/10\ 
bushel cartons of oranges and grapefruit, which at an average free-on-
board (f.o.b.) price of $6.00, generated approximately $5 million in 
gross sales. These handlers would be considered large businesses under 
SBA's definition, and the remaining 13 handlers would be considered 
small businesses. Of the approximately 2,000 producers within the 
production area, few have sufficient acreage to generate sales in 
excess of $500,000; therefore, a majority of producers of Texas oranges 
and grapefruit may be classified as small entities.
    This rule decreases the assessment rate established for the 
Committee and collected from handlers for the 1998-99 and subsequent 
fiscal periods from $0.125 to $0.11 per \7/10\ bushel carton handled. 
The Committee unanimously recommended 1998-99 expenditures of 
$1,172,950 and an assessment rate of $0.11 per \7/10\ bushel carton. 
The assessment rate of $0.11 is $0.015 lower than the 1997-98 rate. As 
mentioned earlier, the quantity of assessable oranges and grapefruit 
for the 1998-99 season is estimated at 9.5 million cartons. Income 
derived from handler assessments, along with interest income and funds 
from the Committee's authorized reserve, will be adequate to cover 
budgeted expenses.
    The major expenditures recommended by the Committee for the 1998-99 
fiscal period include $768,700 for advertising and promotion, and 
$170,000 for the Mexican Fruit Fly support program. Budgeted expenses 
for these items in 1997-98 were $712,000 and $170,000, respectively. 
Budget increases for 1998-99 (with the 1997-98 budgeted amounts in 
parentheses) include administrative at $68,313, ($64,548), and 
compliance at $73,369, ($71,112). A new budget item for 1998-99 
includes funds totaling $14,000 for promotion program evaluation.
    Many producers are still recovering from the devastating freezes of 
1983 and 1989 that virtually destroyed the Texas citrus industry. Most 
trees in the production area were planted within the past ten years and 
have not yet reached full maturity. As a result, yields are still 
somewhat low and profit to the producers is marginal. Also, a general 
oversupply of citrus from other domestic sources and foreign countries 
is depressing prices. To allow more of the revenue from sales to be 
retained by those paying assessments, the Committee recommended that 
the 1998-99 rate of assessment be reduced to $0.11 per \7/10\ bushel 
carton. A reduction in the assessment rate will, however, cause the 
Committee to draw approximately $122,950 from reserves to meet the 
1998-99 budget. At the end of the 1998-99 fiscal period, the reserve is 
expected to be $126,428. Interest income totaling $5,000 also will be 
used to cover program expenses in 1998-99.
    The Committee reviewed and unanimously recommended 1998-99 
expenditures of $1,172,950, which included increases in administrative 
costs, compliance, the advertising and promotion program, and the 
addition of funds to cover promotion program evaluation. Budgeted 
expenses for the Mexican Fruit Fly program were left the same as last 
year. In arriving at the budget, the Committee considered information 
from various sources. A lower assessment rate was considered. The 
Committee, however, concluded that establishing a lower rate would 
require it to use to much of its reserve. Based on its estimate of 
anticipated 1998-99 shipments, the Committee concluded that an 
assessment rate of $0.11 per \7/10\ bushel carton of oranges and 
grapefruit would generate the income necessary to administer the 
program with an appropriate reserve level.

[[Page 39699]]

    A review of historical information and preliminary information 
pertaining to the upcoming fiscal period indicates that the f.o.b. 
price for the 1998-99 season could range between $4.50 and $9.00 per 
\7/10\ bushel carton of oranges and grapefruit, depending upon the 
fruit variety, size, and quality. Therefore, the estimated assessment 
revenue for the 1998-99 fiscal period as a percentage of the total 
pack-out revenue could range between 2.4 and 1.2 percent.
    This action decreases the assessment obligation imposed on 
handlers. Assessments are applied uniformly on all handlers, and some 
of the costs may be passed on to producers. However, decreasing the 
assessment rate reduces the burden on handlers and may reduce the 
burden on producers. In addition, the Committee's meeting was widely 
publicized throughout the Texas orange and grapefruit industry and all 
interested persons were invited to attend the meeting and participate 
in Committee deliberations on all issues. Like all Committee meetings, 
the June 10, 1998, 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 information on the regulatory 
and informational impacts of this action on small businesses.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large Texas orange and grapefruit 
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 rule.
    After consideration of all relevant material 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.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register because: (1) The Committee needs to have sufficient funds to 
pay its expenses which are incurred on a continuous basis; (2) the 
1998-99 fiscal period begins on August 1, 1998, and the marketing order 
requires that the rate of assessment for each fiscal period apply to 
all assessable oranges and grapefruit handled during such fiscal 
period; (3) handlers are aware of this action which was unanimously 
recommended by the Committee at a public meeting and is similar to 
other assessment rate actions issued in past years; and (4) this 
interim final rule provides a 60-day comment period, and all comments 
timely received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 906

    Marketing agreements, Grapefruit, Oranges, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 906 is 
amended as follows:

PART 906--ORANGES AND GRAPEFRUIT GROWN IN LOWER RIO GRANDE VALLEY 
IN TEXAS

    1. The authority citation for 7 CFR part 906 continues to read as 
follows:

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

    2. Section 906.235 is revised to read as follows:


Sec. 906.235  Assessment rate.

    On and after August 1, 1998, an assessment rate of $0.11 per \7/10\ 
bushel carton is established for oranges and grapefruit grown in the 
Lower Rio Grande Valley in Texas.

    Dated: July 21, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-19886 Filed 7-23-98; 8:45 am]
BILLING CODE 3410-02-P