[Federal Register Volume 65, Number 180 (Friday, September 15, 2000)]
[Rules and Regulations]
[Pages 55885-55890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23820]



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  Federal Register / Vol. 65, No. 180 / Friday, September 15, 2000 / 
Rules and Regulations  

[[Page 55885]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV00-905-4 IFR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: This rule limits 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 limits the volume of sizes 48 (at least 3\9/16\ 
inches in diameter) and 56 (at least 3\5/16\ inches in diameter) red 
seedless grapefruit handlers can ship during the first 11 weeks of the 
2000-2001 season beginning September 18, 2000.
    This limitation provides a sufficient supply of small-sized red 
seedless grapefruit to meet market demand, without saturating all 
markets with these small sizes. This rule should help stabilize the 
grapefruit market and improve grower returns.

DATES: Effective September 18, 2000; comments received by September 25, 
2000, 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, 
Marketing Order Administration 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 Administration 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 complying 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 rule 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 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 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 establishes 
limits on the volume of sizes 48 and 56 red seedless grapefruit 
handlers can ship during the first 11 weeks of the 2000-2001 season 
beginning September 18. This rule supplies enough small-sized red 
seedless grapefruit to meet market demand, without saturating all 
markets with these small sizes. This rule will help stabilize the 
grapefruit 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 
is established as a percentage of the total shipments of such variety 
by such handler in a prior period, established by

[[Page 55886]]

the Committee and 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 rule limits the volume of small red seedless grapefruit that 
can enter the fresh market for each week of the 11-week period 
beginning September 18, 2000. This rule establishes the weekly 
percentage for the first three weeks (September 18 through October 8) 
at 45 percent; for the fourth through seventh weeks (October 9 through 
November 5) at 40 percent; and for the last four weeks (November 6 
through December 3) at 35 percent. This is a change from the 
percentages originally recommended by the Committee.
    On May 26, 2000, the Committee unanimously voted to establish a 
weekly percentage of 25 percent for each of the 11 weeks. The 
Committee's initial recommendation was issued as a proposed rule 
published in the Federal Register on July 11, 2000 (65 FR 42642). No 
comments were received during the comment period, which expired August 
10, 2000. The Committee subsequently met on August 31, 2000, and 
unanimously recommended adjusting the proposed percentages.
    As in the previous three seasons, the Committee initially 
recommended that the weekly percentage of size regulation be set at 25 
percent for each week during the regulatory period. The Committee 
thought it was best to recommend regulation at the most restrictive 
level, 25 percent for each of the 11 weeks in the regulated period, and 
then relax the percentages as warranted by information available closer 
to the start of the season.
    The Committee recognizes the need for and the benefits of the 
weekly percentage regulation. Members believe that the problems 
associated with an uncontrolled volume of small sizes entering the 
market early in the season will recur without such action. However, the 
Committee believes based on information now available that the initial 
recommendation was too restrictive, and recommended raising the 
established base percentages from 25 percent for each of the regulation 
weeks.
    The Committee met on August 31, 2000, and revisited the weekly 
percentage issue and reviewed information it had acquired since its May 
meeting. In its discussion, the Committee reviewed the initial 
percentages recommended and the current state of the crop. The 
Committee also reexamined shipping information from past seasons, 
looking particularly at volume across the 11 weeks. The Committee noted 
that more information helpful in determining the appropriate weekly 
percentages is available closer to the start of the harvesting season. 
At the time of the May meeting, grapefruit had not yet 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.
    The 2000-2001 season crop seems to be sizing well. Current 
indications are that early-season conditions for this year are similar 
to those of last season. Due to the anticipated similarities, the 
Committee considered the percentages established last year as a basis 
for discussing this year's percentages. Committee members thought that 
last season's percentages had worked well, providing some restriction 
while affording volume for those markets that prefer the smaller sizes. 
In making its recommendation, the Committee considered that there had 
been a reduction in the overall available weekly industry base due to 
industry consolidation, a reduction in shipments, and packinghouse 
closings.
    The available weekly industry base is the sum of each individual 
handler's weekly base. A handler's base is calculated by taking that 
handlers total red seedless grapefruit shipments during the 33 week 
season for each of the past five seasons, adding them together and 
dividing by five to calculate an average season. This number is then 
divided by 33 to derive the average week. This average week is the base 
for each handler for each of the 11 weeks of the regulatory period. The 
overall available industry base per week was 937,257 cartons last 
season. For the 2000-2001 season, the base calculates to 875,688 
cartons.
    To recognize this reduction in available base, the Committee 
recommended establishing the weekly percentages at levels slightly 
higher than those established for last season. The Committee agreed 
that the percentage established for the first two weeks of last season 
of 45 percent was still appropriate, and recommended that the 
percentages for the first two weeks of the 2000/2001 season be 
established at 45 percent. The Committee recommended that the third 
week should also be established at 45 percent, a five percent increase 
from last season's third week percentage. For the next four weeks the 
Committee recommended that the weekly percentage be established at 40 
percent, an increase from 37 percent for last season. For the last four 
weeks of regulation, the Committee recommended that the percentage be 
established at 35 percent, an increase from last season's 32 percent 
for the final four weeks.
    The ongoing problems affecting the European and Asian markets are 
also a factor. 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.
    Therefore, based on available information and the experiences from 
past seasons, the Committee recommended changing the initial weekly 
percentages from their most restrictive level. The Committee could meet 
again during the regulation period, as needed, when additional 
information is available, and determine whether the set percentage 
levels are appropriate. Any changes to the weekly percentages 
established by this rule would require additional rulemaking and the 
approval of the Secretary.
    During the three seasons prior to implementation of weekly 
percentage regulations (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,

[[Page 55887]]

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 market price has 
been higher than for the three years prior to regulation. In late 
October, the average market 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. Market prices also 
remained at a higher level following the regulation period, with an 
average price of $7.31 in mid-December 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.
    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.
    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 size 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

[[Page 55888]]

domestic shipments during the same period in 1997-98, as small sizes 
were used to supply export customers with preferences for small-sized 
grapefruit.
    During deliberations in past seasons as to weekly percentages, the 
Committee considered how past shipments had affected the market. Based 
on available statistical information, the Committee members believed 
that once shipments of sizes 48 and 56 reach 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 250,000 cartons a week, prices 
should stabilize and demand for larger, more profitable sizes should 
increase.
    While the Committee did eventually vote last season to increase the 
weekly percentages, 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 
the 2000-2001 season, the total available allotment would have 
approximated 218,922 (25 percent of the total industry base of 875,688 
cartons). Consequently, there is room to increase the percentages while 
holding weekly shipments of sizes 48 and 56 close to the 250,000-carton 
mark, as was done last season.
    In making its recommendation, the Committee reviewed 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. 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 September 18, 2000.
    Therefore, this rule establishes the weekly percentages for these 
small sizes at 45 percent for the first three weeks (September 18 
through October 8); for the fourth through seventh weeks (October 9 
through November 5) at 40 percent; and for the last four weeks 
(November 6 through December 3) at 35 percent.
    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 
will be calculated using the recommended percentages 45, 40, or 35 
percent, depending on the week. By taking the 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.
    The Committee calculates 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 is the base for each handler for each 
of the 11 weeks of the regulatory period. The weekly percentage, in 
this case either 45, 40, or 35 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 this rule 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 limits. The Committee staff will 
perform the specified calculations and provide them to each handler.
    The average week for handlers with less than five previous seasons 
of shipments is 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 have no prior period on which to base their 
average week. Therefore, a new handler can ship small sizes equal to 
45, 40, or 35 percent, depending on the week, of their total volume of 
shipments during their first shipping week (depending on when they 
begin shipping). Once a new handler has established shipments, their 
average week is 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 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 workweek.
    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 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) will be 
deducted from the handler's allotment for the following week. 
Overshipments are not allowed during week 11 because there are 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 are not carried forward to the following week. 
However, a handler to whom an allotment has been issued can lend or 
transfer all or part of such allotment (excluding the overshipment 
allowance) to another handler. In the event of a loan, each party, 
prior to the completion of the loan agreement, notifies the Committee 
of the proposed loan and date of repayment. If a transfer of allotment 
is desired, each party will promptly notify the Committee so that 
proper adjustments of the records can be made. In each case, the 
Committee confirms in writing all such transactions prior to the 
following week.
    The Committee can also act on behalf of handlers wanting to arrange 
allotment loans or participate in the transfer of allotment. Repayment 
of an allotment loan is at the discretion of the handlers party to the 
loan. The Committee will notify each handler prior to that particular 
week of the quantity of sizes 48 and 56 red seedless grapefruit such 
handler can 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

[[Page 55889]]

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 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.
    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 
majority of Florida grapefruit handlers may be classified as small 
entities. The majority of Florida grapefruit producers also may be 
classified as small entities.
    This rule limits the volume of small red seedless grapefruit 
entering the fresh market during the first 11 weeks of the 2000-01 
season, beginning September 18, 2000. 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 rule limits the volume of sizes 48 and 56 red seedless grapefruit 
by setting the weekly percentage for the 11 weeks at 45 percent for the 
first three weeks (September 18 through October 8); for the fourth 
through seventh weeks (October 9 through November 5) at 40 percent; and 
for the last four weeks (November 6 through December 3) at 35 percent. 
This is a change from the Committee's original recommendation of a 25 
percent weekly percentage for the 11 weeks. The quantity of sizes 48 
and 56 red seedless grapefruit that may be shipped by a handler during 
a particular week is calculated using the recommended percentage. This 
rule utilizes 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. 
Over the past three seasons, producers have adjusted their harvesting 
operations to more efficiently conform with the percentage size 
regulation and to keep their harvesting costs as low as possible.
    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 market 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 prior seasons.
    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 more than 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 rule provides 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 one alternative to taking this action. The 
alternative was leaving the weekly percentages at 25 percent. However, 
the Committee believed that the 25 percent level was too restrictive. 
Therefore, this option was rejected.
    Handlers utilizing the flexibility of the loan and transfer aspects 
of this action are required to submit a form to the Committee. The rule 
increases the reporting burden on approximately 75 handlers of red 
seedless grapefruit who will be taking about 0.03 hour to complete each 
report regarding allotment loans or transfers. The information 
collection requirements

[[Page 55890]]

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 interim final 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 and the August 31, 2000, meetings 
were public meetings 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 proposed rule concerning this action was published in the Federal 
Register on July 11, 2000 (65 FR 42642). Copies of the rule were mailed 
or sent via facsimile to all Committee members and grapefruit growers 
and handlers. The Office of the Federal Register, the Department, and 
the Committee also made this rule available through the Internet.
    A 30-day comment period was provided to allow interested persons to 
respond to the proposal. The comment period ended August 10, 2000. No 
comments were received.
    As previously stated, subsequent to the issuance of the proposed 
rule, the Committee met and recommended modifying its original 
recommendation. The Committee recommended that the weekly percentages 
be changed from 25 percent for each of the 11 regulated weeks to 45 
percent for the first three weeks (September 18 through October 8); 40 
percent for the next four weeks (October 9 through November 5); and 35 
percent for the last four weeks (November 6 through December 3). 
Because of this recommendation, the Department has determined that 
interested parties should be provided the opportunity to comment on the 
changes to the original recommendation. However, the Department has 
further determined that extending the comment period with no 
percentages in effect limiting the shipment of small red seedless 
grapefruit when the period of regulation begins would be detrimental to 
the industry. Therefore, the Department is instituting the regulations 
on small red seedless grapefruit through this interim final rule that 
allows 10 additional days to comment.
    Ten days is deemed appropriate because the regulation period begins 
September 18, 2000, and continues for 11 weeks. Adequate time will be 
necessary so that any changes made to the regulations based on comments 
filed could be made effective during the 11 week period. All comments 
received will be considered before a final determination is made on 
this matter.
    After consideration of all relevant material presented, including 
the information and recommendations submitted by the Committee, and 
other information, it is 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 good cause exists for not postponing the effective date of 
this rule until 30 days after publication in the Federal Register. This 
rule needs to be in place when the regulatory period begins September 
18, 2000, and handlers begin shipping grapefruit. This issue has been 
widely discussed at various industry and association meetings, and the 
Committee has kept the industry well informed. Interested persons have 
had time to determine and express their positions. In addition, these 
small red grapefruit are already being harvested and handlers need to 
know the amount they will be allowed to ship. Further, handlers are 
aware of this rule, which was recommended at public meetings. Also a 
30-day comment period was provided for in the proposed rule and a 10-
day comment period is provided in this rule.

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 
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................................           45
(b) 9/25/00 through 10/1/00................................           45
(c) 10/2/00 through 10/8/00................................           45
(d) 10/9/00 through 10/15/00...............................           40
(e) 10/16/00 through 10/22/00..............................           40
(f) 10/23/00 through 10/29/00..............................           40
(g) 10/30/00 through 11/5/00...............................           40
(h) 11/6/00 through 11/12/00...............................           35
(i) 11/13/00 through 11/19/00..............................           35
(j) 11/20/00 through 11/26/00..............................           35
(k) 11/27/00 through 12/3/00...............................           35
------------------------------------------------------------------------


    Dated: September 12, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-23820 Filed 9-12-00; 3:43 pm]
BILLING CODE 3410-02-U