[Federal Register Volume 65, Number 133 (Tuesday, July 11, 2000)]
[Proposed Rules]
[Pages 42642-42647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17424]


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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. 65, No. 133 / Tuesday, July 11, 2000 / 
Proposed Rules  

[[Page 42642]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV00-905-4 PR]


Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; 
Limiting the Volume of Small Red Seedless Grapefruit

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on limiting the volume of small red 
seedless grapefruit entering the fresh market under the marketing order 
covering oranges, grapefruit, tangerines, and tangelos grown in 
Florida. The marketing order is administered locally by the Citrus 
Administrative Committee (Committee). This rule would limit the volume 
of size 48 and size 56 red seedless grapefruit handlers could ship 
during the first 11 weeks of the 2000-2001 season beginning in 
September. This rule would establish the base percentage for these 
small sizes at 25 percent for the 11-week period. This proposal would 
supply enough small sized red seedless grapefruit to meet market 
demand, without saturating all markets with these small sizes. This 
rule would help stabilize the market and improve grower returns.

DATES: Comments must be received by August 10, 2000.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administrative Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-5698, or E-mail: [email protected]. All comments 
should reference the docket 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.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: William G. Pimental, Southeast 
Marketing Field Office, Marketing Order Administrative Branch, Fruit 
and Vegetable Programs, AMS, USDA, P.O. Box 2276, Winter Haven, Florida 
33883-2276; telephone: (863) 299-4770, Fax: (863) 299-5169; 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) 720-
5698.
    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) 
720-5698 or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Agreement No. 84 and Marketing Order No. 905, both as amended (7 CFR 
part 905), regulating the handling of oranges, grapefruit, tangerines, 
and tangelos 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.''
    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 the date of the entry of the ruling.
    The order provides for the establishment of grade and size 
requirements for Florida citrus, with the concurrence of the Secretary. 
These grade and size requirements are designed to provide fresh markets 
with citrus fruit of acceptable quality and size. This helps create 
buyer confidence and contributes to stable marketing conditions. This 
is in the interest of growers, handlers, and consumers, and is designed 
to increase returns to Florida citrus growers. The current minimum 
grade standard for red seedless grapefruit is U.S. No. 1, and the 
minimum size requirement is size 56 (at least 3\5/16\ inches in 
diameter).
    This rule invites comments on limiting the volume of small red 
seedless grapefruit entering the fresh market. This rule would limit 
the volume of size 48 and size 56 red seedless grapefruit handlers 
could ship during the first 11 weeks of the 2000-2001 season beginning 
in September. This rule would establish the base percentage for these 
small sizes at 25 percent for each week of the 11-week period. This 
proposal would supply enough small sized red seedless grapefruit to 
meet market demand, without saturating all markets with these small 
sizes. This rule would help stabilize the market and improve grower 
returns.
    Section 905.52 of the order provides authority to limit shipments 
of any grade or size, or both, of any variety of Florida citrus. Such 
limitations may restrict the shipment of a portion of a specified grade 
or size of a variety. Under such a limitation, the quantity of such 
grade or size that may be shipped by a handler during a particular week 
would be established as a percentage of the total shipments of such 
variety by such handler in a prior period, established by the Committee 
and

[[Page 42643]]

approved by the Secretary, in which the handler shipped such variety.
    Section 905.153 of the regulations provides procedures for limiting 
the volume of small red seedless grapefruit entering the fresh market. 
The procedures specify that the Committee may recommend that only a 
certain percentage of sizes 48 and 56 red seedless grapefruit be made 
available for shipment into fresh market channels for any week or weeks 
during the regulatory period. The regulation period is 11 weeks long 
and begins the third Monday in September. Under such a limitation, the 
quantity of sizes 48 and 56 red seedless grapefruit that may be shipped 
by a handler during a regulated week is calculated using the 
recommended percentage. By taking the recommended weekly percentage 
times the average weekly volume of red grapefruit handled by such 
handler in the previous five seasons, handlers can calculate the total 
volume of sizes 48 and 56 they may ship in a regulated week.
    This proposed rule would limit the volume of small red seedless 
grapefruit entering the fresh market for each week of the 11-week 
period beginning September 18. This rule would limit the volume of 
sizes 48 and 56 red seedless grapefruit entering the fresh market by 
establishing a weekly percentage of 25 percent for each of the 11 
weeks. This would allow the Committee to start the season at the most 
restrictive level allowed under Sec. 905.153, and if conditions 
warrant, to release greater quantities of sizes 48 and 56 small red 
grapefruit as more information becomes available. The Committee 
recommended this action by a unanimous vote at a meeting on May 26, 
2000. This action is similar to those taken the previous three seasons 
(1997-98, 1998-99 and 1999-2000.)
    For the seasons 1994-95, 1995-96, and 1996-97, returns for red 
seedless grapefruit had been declining, often not returning the cost of 
production. On-tree prices for red seedless grapefruit had fallen 
steadily from $9.60 per carton (\4/5\ bushel) during the 1989-90 
season, to $3.45 per carton during the 1994-95 season, to $1.41 per 
carton during the 1996-97 season.
    The Committee determined that one problem contributing to the 
market's condition was the excessive number of small-sized grapefruit 
shipped early in the marketing season. In the 1994-95, 1995-96, and 
1996-97 seasons, sizes 48 and 56 accounted for 34 percent of total 
shipments during the 11-week regulatory period, with the average weekly 
percentage exceeding 40 percent of shipments. This contrasted with 
sizes 48 and 56 representing only 26 percent of total shipments for the 
remainder of the season.
    While there is a market for early grapefruit, shipping large 
quantities of small red seedless grapefruit in a short period 
oversupplies the fresh market for these sizes and negatively impacts 
the market for all sizes. For the majority of the season, larger sizes 
return higher prices than smaller sizes. However, there is a push early 
to get fruit into the market to take advantage of high prices available 
at the beginning of the season. The early season crop tends to have a 
greater percentage of small sizes. This creates a glut of smaller, 
lower-priced fruit on the market, driving down the price for all sizes.
    At the start of the season, larger-sized fruit command a premium 
price. In some cases, the f.o.b. price is $4 to $10 more a carton than 
for the smaller sizes. In October, the f.o.b. price for a size 27 
averages around $14.00 per carton. This compares to an average f.o.b. 
price of $6.00 per carton for size 56. In the three years before the 
issuance of a percentage size regulation, by the end of the 11-week 
period covered in this rule, the f.o.b. price for large sizes dropped 
to within $1 or $2 of the f.o.b. price for small sizes.
    In the three seasons prior to 1997-98, prices of red seedless 
grapefruit fell from a weighted average f.o.b. price of $7.80 per 
carton to an average f.o.b. price of $5.50 per carton during the period 
covered by this rule. Later in the season the crop sized to naturally 
limit the amount of smaller sizes available for shipment. However, the 
price structure in the market had already been negatively affected. The 
market never recovered, and the f.o.b. price for all sizes fell to 
around $5.00 to $6.00 per carton for most of the rest of the season.
    An economic study done by the University of Florida--Institute of 
Food and Agricultural Sciences (UF-IFAS) in May 1997, found that on-
tree prices had fallen from a high near $7.00 per carton in 1991-92 to 
around $1.50 per carton for the 1996-97 season. The study projected 
that if the industry elected to make no changes, the on-tree price 
would remain around $1.50 per carton. The study also indicated that 
increasing minimum size restrictions could help raise returns.
    The Committee believes that the over shipment of smaller sized red 
seedless grapefruit early in the season contributes to poor returns for 
growers and lower on-tree values. To address this issue, the Committee 
voted to utilize the provisions of Sec. 905.153, and established a 
weekly percentage of size regulation during the first 11 weeks of the 
1997-98, 1998-99, and 1999-2000 seasons. The initial recommendation 
from the Committee was to set the weekly percentages at 25 percent for 
each of the 11 weeks. Then, as more information on the crop became 
available, and as the season progressed, the Committee met again and 
adjusted its recommendations for the weekly percentages as needed. 
Actual weekly percentages established during the 11-week period during 
the 1999-2000 season were 45 percent for the first two weeks, 40 
percent for the third week, 37 percent for the fourth through the 
seventh week, and 32 percent for the last four weeks. The Committee 
considered information from past seasons, crop estimates, fruit size, 
and other available information in making its recommendations.
    The Committee has used the percentage size regulation to the 
betterment of the industry. Prices have increased, and movement has 
been stable. In each of the three seasons following the 1996-97 season, 
the Committee has recommended utilizing the percentage size rule. 
During the 11-week period of regulation, the average price has been 
higher than for the three years prior to regulation. In late October, 
the average price for red seedless grapefruit was $9.31 for the last 
three years regulation compared to $7.22 for the same period for the 
three years prior to regulation. Prices also remained at a higher 
level, with an average price of $7.31 in mid-December during regulation 
compared to $6.02 for the three years prior to regulation. The average 
season price was also higher, with the past three seasons averaging 
$7.13 compared to $5.83 for the three prior years.
    The on-tree earnings per box have also been increasing for the past 
three years, providing better returns to growers. The on-tree price 
increased from $3.42 for 1997-98, to $5.04 for 1998-99, to an estimated 
$6.46 for the 1999-2000 season.
    Another benefit of percentage size regulation has been in 
maintaining higher prices for the larger-sized fruit. Larger fruit 
commands a premium price early in the season. The f.o.b. price for a 
larger size can be $4 to $10 more per carton than for smaller sizes. 
However, the glut of smaller, lower-priced fruit on the early market 
was driving down the prices for all sizes. In the three years prior to 
the implementation of the percentage size rule, by the end of the 11-
week period covered, the f.o.b. price for the large sizes would drop to 
within $2 of the f.o.b. price for the smaller sizes. This was not 
acceptable to the industry.

[[Page 42644]]

    During the past three years of regulation under the percentage size 
rule, the average differential between the carton price for a size 27 
and the price for a size 56 was $5.65 at the end of October and 
remained at $3.43 in mid-December. During the three years prior to 
regulation, the average differential between these two sizes was $3.47 
at the end of October, but by mid-December the price for the larger 
size had dropped to within $1.68 of the price for the smaller-size 
fruit. In fact, the average prices for each size were higher during the 
three years with regulation than for the three years prior to 
regulation. The average prices for size 27, size 32, size 36, and size 
40 during the 11-week period for the last three years were $9.07, 
$7.91, $7.16, and $6.62, respectively. This compares to the average 
prices for the same sizes during the same period for the three years 
prior to regulation of $6.48, $5.63, $5.59, and $5.34, respectively.
    The percentage size regulation has also been helpful in stabilizing 
the volume of small sizes entering the fresh market early in the 
season. During the three years prior to regulation, small sizes 
accounted for over 34 percent of the total shipments of red seedless 
grapefruit during the 11-week period covered in the rule. This compares 
to 31 percent for the same period for the last three years of 
regulation. There has also been a 43 percent reduction in the volume of 
small sizes entering the fresh market during the 11-week regulatory 
period from 1995-96 to 1999-2000.
    In making its recommendation for the upcoming season, the Committee 
reviewed its experiences from the past seasons. The Committee examined 
shipment data covering the 11-week regulatory period for the last three 
regulated seasons and the three prior seasons. The information 
contained the amounts and percentages of sizes 48 and 56 shipped during 
each week. The Committee believes establishing weekly percentages 
during the last three seasons was successful. The past regulations 
helped maintain prices at a higher level than the previous years 
without regulation, and sizes 48 and 56 by count and as a percentage of 
total shipments were reduced.
    An economic study done by Florida Citrus Mutual (Lakeland, Florida) 
in April 1998, found that the weekly percentage regulation had been 
effective. The study stated that part of the strength in early season 
pricing appeared to be due to the use of the weekly percentage rule to 
limit the volume of sizes 48 and 56. It said that prices were generally 
higher across the size spectrum with sizes 48 and 56 having the largest 
gains, and larger-sized grapefruit registering modest improvements. The 
rule shifted the size distribution toward the higher-priced, larger-
sized grapefruit, which helped raise weekly average f.o.b. prices. It 
further stated that sizes 48 and 56 grapefruit accounted for around 27 
percent of domestic shipments during the same 11 weeks during the 1996-
97 season. Comparatively, sizes 48 and 56 accounted for only 17 percent 
of domestic shipments during the same period in 1997-98, as small sizes 
were used to supply export customers with preferences for small-sized 
grapefruit.
    The Committee considered the past problems and the success of the 
percentage rule and decided to recommend using the percentage of size 
provisions for the coming season beginning in September. Members 
believe the problems associated with an uncontrolled volume of small 
sizes entering the market early in the season would recur without this 
action. The Committee recommended that the weekly percentage be set at 
25 percent for each week of the 11-week period. This is as restrictive 
as Sec. 905.153 will allow.
    The Committee believes it is best to set regulation at the most 
restrictive level, and then relax the percentages if warranted by 
conditions later in the season. The Committee intends to meet on a 
regular basis early in the season, as was done in the previous three 
seasons. In making this recommendation, the Committee considered that 
by establishing regulation at 25 percent, they could meet again in 
August and the months following and use the most current information 
available to consider adjustments in the weekly percentage rates. This 
would help the industry and the Committee make the most informed 
decisions as to whether the established percentages are appropriate. 
Any changes to the weekly percentages proposed by this rule would 
require additional rulemaking and the approval of the Secretary.
    The Committee noted that more information helpful in determining 
the appropriate weekly percentages would be available after August. At 
the time of the May meeting, grapefruit had just begun to size, giving 
little indication as to the distribution of sizes. Only the most 
preliminary of crop estimates was available, with the official estimate 
not to be issued until October. In addition, the production area is 
suffering through a period of insufficient rainfall. While the actual 
effects are not currently known, it is possible that this may affect 
the sizing of the crop as well as maturity. This could mean a larger 
volume of small-sized red seedless grapefruit, further exacerbating the 
problem with small sizes early in the season.
    The situation is also complicated by the ongoing problems affecting 
the European and Asian markets. In past seasons, these markets have 
shown a strong demand for the smaller-sized red seedless grapefruit. 
The reduction in shipments to these areas experienced during the last 
few years is expected to continue during the upcoming season. This 
reduction in demand could result in a greater amount of small sizes for 
remaining markets to absorb. These factors increase the need for 
restrictions to prevent the volume of small sizes from overwhelming all 
markets.
    During deliberations in past seasons, the Committee considered how 
shipments had affected the market. Based on available statistical 
information, the Committee members concluded that once shipments of 
sizes 48 and 56 reached levels above 250,000 cartons a week, prices 
declined on those and most other sizes of red seedless grapefruit. The 
Committee believed that if shipments of small sizes could be maintained 
at around or below 250,000 cartons a week, prices should stabilize and 
demand for larger, more profitable sizes should increase.
    Last season, the weekly shipments of sizes 48 and 56 during the 11 
weeks regulated remained close to the 250,000 carton mark. This may 
have contributed to the success of the regulation.
    In setting the weekly percentage for each week at 25 percent for 
this season, the total available allotment would be slightly less than 
the 250,000 carton level. The weekly percentage of 25 percent, when 
combined with the average weekly shipments for the total industry, 
would provide a total industry allotment of nearly 220,000 cartons of 
sizes 48 and/or 56 red seedless grapefruit per regulated week. This 
would allow total shipments of small red seedless grapefruit to 
approach the 250,000-carton mark during regulated weeks without 
exceeding it.
    Therefore, this rule would establish the weekly percentage at 25 
percent for each of the 11 weeks. The Committee plans to meet in August 
and as needed during the remainder of the 11-week period to ensure that 
the set weekly percentages are at the appropriate levels.
    Under Sec. 905.153, the quantity of sizes 48 and 56 red seedless 
grapefruit that may be shipped by a handler during a regulated week 
would be calculated using the recommended percentage of 25 percent. By 
taking the weekly percentage times the average weekly

[[Page 42645]]

volume of red grapefruit handled by such handler in the previous five 
seasons, handlers can calculate the total volume of sizes 48 and 56 
they may ship in a regulated week.
    The Committee would calculate an average week for each handler 
using the following formula. The total red seedless grapefruit 
shipments by a handler during the 33 week period beginning the third 
Monday in September and ending the first Sunday in May during the 
previous five seasons are added and divided by five to establish an 
average season. This average season is then divided by the 33 weeks to 
derive the average week. This average week would be the base for each 
handler for each of the 11 weeks of the regulatory period. The weekly 
percentage, in this case 25 percent, is multiplied by a handler's 
average week. The product is that handler's total allotment of sizes 48 
and 56 red seedless grapefruit for the given week.
    Under the proposed rule handlers could fill their allotment with 
size 56, size 48, or a combination of the two sizes such that the total 
of these shipments are within the established limits. The Committee 
staff would perform the specified calculations and provide them to each 
handler.
    The average week for handlers with less than five previous seasons 
of shipments would be calculated by averaging the total shipments for 
the seasons they did ship red seedless grapefruit during the 
immediately preceding five years and dividing that average by 33. New 
handlers with no record of shipments would have no prior period on 
which to base their average week. Therefore, a new handler could ship 
small sizes equal to 25 percent of their total volume of shipments 
during their first shipping week. Once a new handler has established 
shipments, their average week would be calculated as an average of the 
weeks they have shipped during the current season.
    The regulatory period begins the third Monday in September, 
September 18, 2000. Each regulation week would begin Monday at 12:00 
a.m. and end at 11:59 p.m. the following Sunday, since most handlers 
keep records based on Monday being the beginning of the work week.
    The rules and regulations governing percentage size regulation 
contain a variety of provisions designed to provide handlers with some 
marketing flexibility. When the Secretary establishes regulation for a 
given week, the Committee calculates the quantity of small red seedless 
grapefruit that may be handled by each handler. Section 905.153(d) 
provides allowances for overshipments, loans, and transfers of 
allotment. These tolerances should allow handlers the opportunity to 
supply their markets while limiting the impact of small sizes.
    During any week for which the Secretary has fixed the percentage of 
sizes 48 and 56 red seedless grapefruit, any handler could handle an 
amount of sizes 48 or 56 red seedless grapefruit not to exceed 110 
percent of their allotment for that week. The quantity of overshipments 
(the amount shipped in excess of a handler's weekly allotment) would be 
deducted from the handler's allotment for the following week. 
Overshipments would not be allowed during week 11 because there would 
be no allotments the following week from which to deduct the 
overshipments.
    If handlers fail to use their entire allotments in a given week, 
the amounts undershipped would not be carried forward to the following 
week. However, a handler to whom an allotment has been issued could 
lend or transfer all or part of such allotment (excluding the 
overshipment allowance) to another handler. In the event of a loan, 
each party would, prior to the completion of the loan agreement, notify 
the Committee of the proposed loan and date of repayment. If a transfer 
of allotment were desired, each party would promptly notify the 
Committee so that proper adjustments of the records could be made. In 
each case, the Committee would confirm in writing all such transactions 
prior to the following week.
    The Committee could also act on behalf of handlers wanting to 
arrange allotment loans or participate in the transfer of allotment. 
Repayment of an allotment loan would be at the discretion of the 
handler's party to the loan. The Committee would notify each handler 
prior to that particular week of the quantity of sizes 48 and 56 red 
seedless grapefruit such handler could handle during a particular week, 
making the necessary adjustments for overshipments and loan repayments.
    This rule does not affect the provision that handlers may ship up 
to 15 standard packed cartons (12 bushels) of fruit per day exempt from 
regulatory requirements. Fruit shipped in gift packages that are 
individually addressed and not for resale, and fruit shipped for animal 
feed are also exempt from handling requirements under specific 
conditions. Also, fruit shipped to commercial processors for conversion 
into canned or frozen products or into a beverage base are not subject 
to the handling requirements under the order.
    The introductory text of Sec. 905.350 is proposed to be modified to 
reflect the Committee recommendation to establish the minimum size for 
red seedless grapefruit at size 56 on a continuous basis. A proposed 
rule to implement this recommendation will be published in a separate 
issue of the Federal Register.
    Section 8e of the Act requires that whenever grade, size, quality, 
or maturity requirements are in effect for certain commodities under a 
domestic marketing order, including grapefruit, imports of that 
commodity must meet the same or comparable requirements. This rule does 
not change the minimum grade and size requirements under the order, 
only the percentages of sizes 48 and 56 red grapefruit that may be 
handled. Therefore, no change is necessary in the grapefruit import 
regulations as a result of this action.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), 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. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 75 grapefruit handlers subject to 
regulation under the order and approximately 11,000 growers of citrus 
in the regulated area. Small agricultural service firms, which includes 
handlers, have been defined by the Small Business Administration (SBA) 
as those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000 (13 CFR 121.201).
    Based on industry and Committee data, the average annual f.o.b. 
price for fresh Florida red grapefruit during the 1999-2000 season was 
around $7.52 per \4/5\ bushel carton, and total fresh shipments for the 
1999-2000 season are estimated at 25.6 million cartons of red 
grapefruit. Approximately 25 percent of all handlers handled 70 percent 
of Florida grapefruit shipments. In addition, many of these handlers 
ship other citrus fruit and products which are not included in 
Committee data but would contribute further to handler receipts. Using 
the average f.o.b. price, about 69 percent of grapefruit handlers could 
be considered small businesses under SBA's definition. Therefore, the

[[Page 42646]]

majority of Florida grapefruit handlers may be classified as small 
entities. Florida grapefruit producers also may be classified as small 
entities.
    This proposed rule would limit the volume of small red seedless 
grapefruit entering the fresh market during the first 11 weeks of the 
2000-01 season, beginning the third Monday in September. The over 
shipment of smaller-sized red seedless grapefruit early in the season 
has contributed to below production cost returns for growers and lower 
on tree values. This proposal would limit the volume of sizes 48 and 56 
red seedless grapefruit by setting the weekly percentage for each of 
the 11 weeks at 25 percent. The quantity of sizes 48 and 56 red 
seedless grapefruit that may be shipped by a handler during a 
particular week would be calculated using the recommended percentage. 
This rule would utilize the provisions of Sec. 905.153. Authority for 
this action is provided in Sec. 905.52 of the order.
    While this rule may necessitate spot picking, which could entail 
slightly higher harvesting costs, many in the industry are already 
using the practice. In addition, because this regulation is only in 
effect for part of the season, the overall effect on costs is minimal. 
This rule is not expected to appreciably increase costs to producers.
    If a 25 percent restriction on small sizes had been applied during 
the 11-week period for the three seasons prior to the 1997-98 season, 
an average of 4.2 percent of overall shipments during that period would 
have been constrained by regulation. A large percentage of this volume 
most likely could have been replaced by larger sizes for which there 
are no volume restrictions. Under regulation, larger sizes have been 
substituted for smaller sizes with a nominal effect on overall 
shipments. Also, handlers can transfer, borrow or loan allotment based 
on their needs in a given week. Handlers also have the option of over 
shipping their allotment by 10 percent in a week, provided the 
overshipment is deducted from the following week's shipments. 
Approximately 120 loans and transfers were utilized last season. 
Statistics for 1999-2000 show that in none of the regulated weeks was 
the total available allotment used. Therefore, the overall impact of 
this regulation on total shipments should be minimal.
    Handlers and producers have received higher returns under 
percentage size regulation. In late October, during the last three 
years with regulation, the average price for red seedless grapefruit 
was $9.31 compared to $7.22 for the same time during the three years 
prior to regulation. Prices have also remained higher, with an average 
price of $7.31 in mid-December during regulation compared to $6.02 for 
the three years prior to regulation. The average season price was also 
higher, with the past three seasons with regulation averaging $7.13 
compared to $5.83 for the three years prior.
    The on-tree earnings per box have also increased for the past three 
years, providing better returns to growers. The on-tree price increased 
from $3.42 for 1997-98, to $5.04 for 1998-99, to an estimated $6.46 for 
the 1999-2000 season. These increased returns when coupled with the 
overall volume of red seedless grapefruit would offset any additional 
costs associated with this regulation.
    The purpose of this rule is to help stabilize the market and 
improve grower returns by limiting the volume of small sizes marketed 
early in the season. This proposal would provide a supply of small-
sized red seedless grapefruit sufficient to meet market demand, without 
saturating all markets with these small sizes. The opportunities and 
benefits of this rule are expected to be available to all red seedless 
grapefruit handlers and growers regardless of their size of operation.
    The Committee considered alternatives to taking this action. One 
alternative was to not recommend using the percentage size rule. 
However, the Committee believes that the problems created by excessive 
volumes of small sizes entering the market early in the season would 
return absent the establishment of a percentage size regulation. 
Therefore, this option was rejected. Another alternative considered was 
to establish the weekly percentages at levels different than 25 
percent. The Committee believes that the pattern of setting the weekly 
percentages at their most restrictive level, 25 percent, and then 
revisiting them prior to the beginning of the season has been very 
successful. Therefore, the Committee rejected this option, choosing 
instead to reconsider the recommended percentages closer to the 
beginning of the season.
    Handlers utilizing the flexibility of the loan and transfer aspects 
of this action would be required to submit a form to the Committee. The 
rule would increase the reporting burden on approximately 75 handlers 
of red seedless grapefruit who would be taking about 0.03 hour to 
complete each report regarding allotment loans or transfers. The 
information collection requirements contained in this section have been 
approved by the Office of Management and Budget (OMB) under the 
provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 
35) and assigned OMB number 0581-0094. As with all Federal marketing 
order programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public 
sectors.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this proposed rule. However, red 
seedless grapefruit must meet the requirements as specified in the U.S. 
Standards for Grades of Florida Grapefruit (7 CFR 51.760 through 
51.784) issued under the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621 through 1627).
    The Committee's meeting was widely publicized throughout the citrus 
industry and all interested persons were invited to attend the meeting 
and participate in Committee deliberations on all issues. Like all 
Committee meetings, the May 26, 2000, meeting was a public meeting and 
all entities, both large and small, were able to express views on this 
issue. Interested persons are invited to submit information on 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/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this rule would need to be in place as soon as possible since handlers 
will begin shipping grapefruit in September. In addition, because of 
the nature of this rule, handlers need time to consider their allotment 
and how best to service their customers. Also, the industry has been 
discussing this issue for some time, and the Committee has kept the 
industry well informed. It has also been widely discussed at various 
industry and association meetings. Interested persons have had time to 
determine and express their positions. This action is similar to those 
taken in the previous three seasons, and it was unanimously recommended 
by the Committee. All written comments timely received will be 
considered before a final determination is made on this matter.

[[Page 42647]]

List of Subjects in 7 CFR Part 905

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

    For the reasons set forth in the preamble, 7 CFR part 905 is 
proposed to be amended as follows:

PART 905--ORANGES, GRAPEFRUIT, TANGERINES, AND TANGELOS GROWN IN 
FLORIDA

    1. The authority citation for 7 CFR Part 905 continues to read as 
follows:

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

    2. Section 905.350 is revised to read as follows:


Sec. 905.350  Red seedless grapefruit regulation.

    This section establishes the weekly percentages to be used to 
calculate each handler's weekly allotment of small sizes. Handlers can 
fill their allotment with size 56, size 48, or a combination of the two 
sizes such that the total of these shipments are within the established 
weekly limits. The weekly percentages for size 48 (3\9/16\ inches 
minimum diameter) and size 56 (3\5/16\ inches minimum diameter) red 
seedless grapefruit grown in Florida, which may be handled during the 
specified weeks are as follows:

------------------------------------------------------------------------
                                                               Weekly
                           Week                              percentage
------------------------------------------------------------------------
(a) 9/18/00 through 9/24/00...............................            25
(b) 9/25/00 through 10/1/00...............................            25
(c) 10/2/00 through 10/8/00...............................            25
(d) 10/9/00 through 10/15/00..............................            25
(e) 10/16/00 through 10/22/00.............................            25
(f) 10/23/00 through 10/29/00.............................            25
(g) 10/30/00 through 11/5/00..............................            25
(h) 11/6/00 through 11/12/00..............................            25
(i) 11/13/00 through 11/19/00.............................            25
(j) 11/20/00 through 11/26/00.............................            25
(k) 11/27/00 through 12/3/00..............................            25
------------------------------------------------------------------------


    Dated: July 5, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-17424 Filed 7-10-00; 8:45 am]
BILLING CODE 3410-02-P