[Federal Register Volume 66, Number 147 (Tuesday, July 31, 2001)]
[Proposed Rules]
[Pages 39459-39463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19141]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 66, No. 147 / Tuesday, July 31, 2001 / 
Proposed Rules  

[[Page 39459]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV01-905-1 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.

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

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 sizes 48 and 56 red seedless grapefruit shipped during the first 11 
weeks of the 2001-2002 season. This rule would establish the weekly 
base percentages for each of the 11 weeks beginning in September. This 
proposal would supply enough small red seedless grapefruit, 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, 2001.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, PO Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-8938, 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 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, PO 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, PO Box 96456, 
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-
8938.
    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, PO Box 
96456, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 
720-8938 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 requirements are designed to provide fresh markets with citrus of 
acceptable quality and size, and to increase returns to Florida citrus 
growers. This helps create buyer confidence and contributes to stable 
marketing conditions and is in the interest of growers, handlers, and 
consumers. 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 would limit the volume of sizes 48 and 56 red seedless 
grapefruit shipped during the first 11 weeks of the 2001-2002 season 
beginning September 17, 2001. This rule would establish the weekly base 
percentages for these small sizes at 45 percent for the first two 
weeks, 35 percent for week 3, and 25 percent for weeks 4 through 11. 
This proposal would supply enough small 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 a handler may ship during a particular week would be 
established as a percentage of the total shipments of such variety 
shipped by a handler in a prior period, established by the Committee 
and approved by the Secretary.
    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

[[Page 39460]]

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 
seedless 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 would limit the volume of sizes 48 and 56 red seedless 
grapefruit entering the fresh market by setting weekly percentages of 
45 percent for the first 2 weeks, 35 percent for week 3, and 25 percent 
for weeks 4 through 11. The Committee recommended this action by a 
unanimous vote at a meeting on May 22, 2001. This action is similar to 
those taken the previous four seasons (1997-98, 1998-99, 1999-2000 and 
2000-01.)
    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 to 
get fruit into the market early 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, the f.o.b. price for large 
sizes dropped to within $1 or $2 of the f.o.b. price for small sizes by 
the end of the 11-week period covered in this rule.
    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 the over shipment of smaller sized red 
seedless grapefruit contributes to poor returns for growers and lower 
on-tree values. To address this issue, the Committee successfully used 
the provisions of Sec. 905.153, and recommended weekly percentage of 
size regulation during the first 11 weeks of the 1997-98, 1998-99, 
1999-2000, and 2000-01 seasons. Under regulation, f.o.b. and on-tree 
prices have increased and movement has stabilized.
    Average f.o.b. prices have been higher during regulation than for 
the three years prior to regulation. The average price for red seedless 
grapefruit in late October was $8.46 for the last four years compared 
to $7.22 for the same period for the three years prior to regulation. 
Prices also remained at a higher level, with a weighted average price 
of $7.29 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 four seasons averaging $7.15 compared to $5.83 
for the three prior years.
    The on-tree prices per box for red seedless grapefruit for the 
fresh market have also improved during the past three years of 
regulation, providing better returns to growers. The on-tree price 
increased from $3.26 in 1996-97 to $3.42 in 1997-98, to $5.04 in 1998-
99, to $5.62 for the 1999-2000 season.
    Another benefit of regulation has been in maintaining higher prices 
for the larger-sized fruit. Larger fruit commands a premium price early 
in the season. However, the glut of smaller, lower-priced fruit on the 
early market was driving down the prices for all sizes. During the 
three years before regulation, the average differential between the 
f.o.b. carton price for a size 27 and a size 56 was $3.47 at the end of 
October. However, by mid-December the price for the larger size had 
dropped to within $1.68 of the price for the smaller-size fruit.
    In the four years of regulation, the average differential between 
the f.o.b. carton price for a size 27 and a size 56 was $5.38 at the 
end of October and remained at $3.42 in mid-December. In fact, the 
average f.o.b. prices for each size were higher during the four 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 four years were $9.41, $8.12, $7.26, and 
$6.68, 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 helped stabilize 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 four 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 2000-01.
    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

[[Page 39461]]

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.
    In making its recommendation, the Committee considered the success 
of previous regulations and its experiences from the past seasons. 
Members reviewed shipment data covering the 11-week regulatory period 
for the last four regulated seasons. The information contained the 
amounts and percentages of sizes 48 and 56 shipped during each week.
    The Committee believes the problems associated with an unregulated 
volume of small sizes entering the market early in the season would 
recur without regulation and that establishing weekly percentages 
during the last four seasons has proven successful. Therefore, the 
Committee recommended weekly percentages be set at 45 percent for the 
first two weeks, 35 percent for week 3, and 25 percent for weeks 4 
through 11.
    In past four 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 would meet again and adjust its 
recommendations for the weekly percentages as needed. In each of the 
past seasons of regulation the Committee has recommended that the 
weekly percentages be relaxed from the initial recommendation of 25 
percent for each week. Actual weekly percentages established during the 
11-week period during the 2000-01 season based on additional 
information were 45 percent for the first three weeks, 40 percent for 
the next four weeks, and 35 percent for the last four weeks.
    Drawing on this experience, the Committee decided to make its 
initial recommendation for the first three weeks at levels higher than 
25 percent. Based on shipments from the past four seasons, available 
allotment under a 25 percent restriction would have exceeded actual 
shipments of sizes 48 and 56 for each of the first three weeks 
regulated under this rule.
    Establishing weekly percentages at 45 percent for the first two 
weeks and 35 percent for the third week would provide each handler with 
additional allotment during these three weeks. This would give 
individual handlers greater flexibility during this period. This would 
reduce the number of loans and transfers needed to utilize the 
available allotment. For the remainder of the 11 weeks, the Committee 
believed that the weekly percentages needed to be set at 25 percent 
until more information is available.
    More information helpful in determining the appropriate weekly 
percentages will 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. The production area is also suffering through a period 
of insufficient rainfall. This could affect the sizing of the crop, 
producing a larger volume of small-sized red seedless grapefruit, 
further exacerbating the problem with small sizes.
    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.
    Consequently, the Committee believes it is best to set regulation 
at these levels, and then relax the percentages later in the season if 
conditions warrant. The Committee recognized that they could meet again 
in August and in the months following and use the most current 
information to consider adjustments in the weekly percentage rates as 
done in past seasons. 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.
    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 red seedless 
grapefruit remained below 250,000 cartons for 10 of the 11 regulated 
weeks. This may have contributed to the success of the regulation.
    In setting the weekly percentages at 45 percent for the first two 
weeks and 35 percent for week 3, the total available allotment would be 
slightly more than 250,000 cartons in the first three weeks. However, 
in the last four seasons, shipments of sizes 48 and 56 have never 
exceeded 250,000 cartons during the first three weeks. Setting the 
remaining weeks at 25 percent should provide slightly less than 250,000 
cartons of available allotment. Initiating the weekly percentages at 
these levels would allow total shipments of small red seedless 
grapefruit to approach the 250,000-carton mark during the regulated 
period without exceeding it.
    Therefore, this rule would establish the weekly percentage at 45 
percent for the first two weeks, 35 percent for week 3, and 25 percent 
for weeks 4 through 11 for this season. The Committee plans to meet in 
August and as needed during the 11-week period to ensure the weekly 
percentages are at the appropriate levels.
    Under 905.153, the quantity of sizes 48 and 56 red seedless 
grapefruit a handler may ship during a regulated week would be 
calculated using the recommended percentage. By taking the weekly 
percentage times the average weekly volume of red seedless 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. To 
calculate an average week, 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 from the previous five 
seasons are added together, then divided by five to establish an 
average season. This average season is 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 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. Handlers could fill their 
allotment with size 56, size 48, or a combination of the two

[[Page 39462]]

sizes such that the total of these shipments is 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 previous 
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 45 
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 17, 2001. 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 as 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. Section 905.153(d) provides allowances for 
overshipments, loans, and transfers of allotment. These provisions 
should allow handlers the opportunity to supply their markets while 
limiting the impact of small sizes.
    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 
handlers party to the loan. The Committee would inform each handler of 
the quantity of sizes 48 and 56 red seedless grapefruit they 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.
    At the meeting, the Committee also recommended changing the 
percentage size procedures in Sec. 905.153 to authorize percentages for 
an additional 11 weeks, or the first 22 weeks of the season. A proposed 
rule to revise Sec. 905.153 to implement this recommendation will be 
published in a separate issue of the Federal Register. If the authority 
to establish percentages for the additional 11 weeks is implemented, 
the Committee would be able to implement, with Department approval, 
marketing percentages to limit the shipment of small-sized red seedless 
grapefruit for that additional time period, if warranted.
    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.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this 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, are 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 seedless grapefruit during the 2000-01 
season was approximately $7.20 per 4/5 bushel carton, and total fresh 
shipments for the 2000-01 season are estimated at 24.7 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 may also be 
classified as small entities.
    The over shipment of small-sized red seedless grapefruit early in 
the season has contributed to poor returns for growers and lower on 
tree values. This proposed rule would limit the volume of sizes 48 and 
56 red seedless grapefruit entering the fresh market during the first 
11 weeks of the 2001-02 season, beginning September 17, 2001, by 
setting weekly percentages governing the volume of small sizes that may 
be shipped. This proposal would set the weekly percentages at 45 
percent for the first two weeks, 35 percent for week 3, and 25 percent 
for weeks 4 through 11. 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 
use 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.
    In addition, 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

[[Page 39463]]

2000-01 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 four years with 
regulation, the average f.o.b. price for red seedless grapefruit was 
$7.99 compared to $7.22 for the three years prior to regulation. F.o.b. 
prices have also remained higher, with an average price of $7.29 in 
mid-December during regulation compared to $6.02 for the three years 
prior to regulation. The average season price has also been higher 
under regulation averaging $7.14 compared to $5.83 for the three years 
prior.
    On-tree earnings per box of red seedless grapefruit for the fresh 
market improved under regulation, providing better returns to growers. 
The on-tree price increased from $3.26 in 1996-97, to $3.42 for 1997-
98, to $5.04 for 1998-99, to $5.62 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 benefits of this 
rule are expected to be available to all red seedless grapefruit 
handlers and growers regardless of their size of operation.
    This action is expected to stabilize the supply of small sizes 
entering the marketplace. It also is expected to encourage growers to 
leave the grapefruit on the tree longer, which improves size and 
maturity. Improved size and maturity provides greater consumer 
satisfaction and promotes repeat purchases. In addition, this action is 
not expected to decrease the overall consumption of red seedless 
grapefruit.
    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 25 percent for all 11 weeks. The 
Committee wanted to provide individual handlers more flexibility in the 
first three weeks of regulation. Therefore, this alternative was also 
rejected.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements that are contained 
in this rule have been previously approved by the Office of Management 
and Budget (OMB) and assigned OMB No. 0581-0189. 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 22, 2001, 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 10-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen 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. 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 four 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.

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) 9/17/01 through 9/23/01.................................         45
(b) 9/24/01 through 9/30/01.................................         45
(c) 10/1/01 through 10/7/01.................................         35
(d) 10/8/01 through 10/14/01................................         25
(e) 10/15/01 through 10/21/01...............................         25
(f) 10/22/01 through 10/28/01...............................         25
(g) 10/29/01 through 11/4/01................................         25
(h) 11/5/01 through 11/11/01................................         25
(i) 11/12/01 through 11/18/01...............................         25
(j) 11/19/01 through 11/25/01...............................         25
(k) 11/26/01 through 12/2/01................................         25
------------------------------------------------------------------------


    Dated: July 27, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-19141 Filed 7-27-01; 12:02 pm]
BILLING CODE 3410-02-P