[Federal Register Volume 66, Number 187 (Wednesday, September 26, 2001)]
[Rules and Regulations]
[Pages 49088-49093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24061]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV01-905-1 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.

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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 and 56 red 
seedless grapefruit shipped during the first 11 weeks of the 2001-2002 
season. This rule establishes the weekly base percentages for each of 
the 11 weeks beginning in September. This limitation supplies enough 
small red seedless grapefruit, without saturating all markets with 
these small sizes. This rule should help stabilize the market and 
improve grower returns.

DATES: Effective September 17, 2001; comments received by October 9, 
2001 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) 720-8938, 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, 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-
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, P.O. Box 
96456, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 
720-8938, 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 requirements are designed to provide fresh markets with citrus of 
acceptable quality and size, to increase returns to

[[Page 49089]]

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 invites comments on limiting 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 shipped during the first 11 weeks of 
the 2001-2002 season beginning September 17, 2001. This rule 
establishes the weekly base percentages for these small sizes at 45 
percent for the first two weeks, 35 percent for week 3, 30 percent for 
weeks 4 through 10, and 40 percent for week 11. 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 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 is 
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 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 limits the volume of sizes 48 and 56 red seedless 
grapefruit entering the fresh market by setting weekly percentages of 
45 percent for the first two weeks, 35 percent for week 3, 30 percent 
for weeks 4 through 10, and 40 percent for week 11. This is a change 
from the percentages originally recommended by the Committee.
    On May 22, 2001, the Committee unanimously voted to establish a 
weekly percentage of 45 percent for the first 2 weeks, 35 percent for 
week 3, and 25 percent for weeks 4 through 11. The Committee's initial 
recommendation was issued as a proposed rule published in the Federal 
Register on July 31, 2001 (66 FR 39459). No comments were received 
during the comment period, which expired August 10, 2001. The Committee 
subsequently met on August 29, 2001, and unanimously recommended 
adjusting the proposed percentages.
    In the 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, 
the Committee would meet and adjust its recommendations as needed. In 
each of the past seasons of regulation the Committee has recommended 
relaxing its initial recommendation of 25 percent for each week. Actual 
weekly percentages established for the 11-week period during the 2000-
01 season 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, this season 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, 
under a 25 percent restriction available allotment would have exceeded 
actual shipments of sizes 48 and 56 for each of the first three weeks 
regulated under this rule. The Committee believed that by setting 
weekly percentages at 45 percent for the first two weeks and 35 percent 
for the third week, handlers would have extra allotment available, 
providing individual handlers with greater flexibility and reducing the 
number of loans and transfers needed to use the available allotment.
    For the remainder of the 11 weeks, the Committee believed that the 
weekly percentages needed to be set at 25 percent. The Committee 
thought it was best to recommend regulation at these levels, given the 
limited information available so early in the growing year, and then 
reexamine the percentages using information available closer to the 
start of the season.
    The Committee met on August 29, 2001, and revisited the weekly 
percentage issue and reviewed information it had acquired since its May 
meeting. 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 to 30 percent for weeks 4 
through 10 and 40 percent for week 11 of the regulated period.
    In its discussion, the Committee reviewed the initial weekly 
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. 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 Committee considered the percentages set last year as a basis 
for discussing this year's percentages. Committee members believed 
relaxing last season's percentages from the initial 25 percent level 
had worked well, providing some restriction while affording volume for 
those markets that prefer small sizes.
    Early indications were that conditions this year would be similar 
to those of last season with the production area dealing with the 
effects of a prolonged drought. The insufficient rainfall early this 
season could have affected the sizing of the crop, producing a larger 
volume of small red seedless grapefruit, further exacerbating the 
problem with small sizes. However, current information indicates that 
the 2001-2002 season crop seems to be sizing well. Due to increased 
rainfall in most growing areas the last two months, the industry may 
see a higher percentage of larger sizes than in the last four seasons. 
Hence, the Committee thought establishing the weekly percentages at 25 
percent for weeks 4 through 11 may be too restrictive.
    Ongoing problems affecting the European and Asian markets also 
continue to be a factor. These markets have historically shown a strong 
demand for small red seedless grapefruit. However, in the past few 
years there has been a reduction from the demand levels of previous 
seasons. This is expected to continue during the upcoming season. This 
could result in a

[[Page 49090]]

greater amount of small sizes for remaining markets to absorb, further 
supporting the need for some restrictions to prevent the volume of 
small sizes from disrupting all markets.
    The Committee also considered the reduction in the overall 
available weekly industry base due to industry consolidation, reduced 
shipments, and packinghouse closings. The available weekly industry 
base is the sum of each individual handler's weekly base. The overall 
available industry base per week was 875,688 cartons last season. For 
the 2001-2002 season, the base calculates to 813,191 cartons.
    Considering the actual percentages established during past seasons, 
the available sizing information, and the reduction in total industry 
base the Committee recommended establishing the weekly percentages at 
levels higher than 25 percent for the last 8 weeks of the regulated 
period. The Committee agreed that the percentage recommended for the 
first two weeks of 45 percent was still appropriate, as was 35 percent 
for week three. However, the Committee recommended that weeks 4 through 
10 should be established at 30 percent, and that week 11 should be 
established at 40 percent. The Committee recommended setting the 
percentage for week 11 at a higher level because that week marks the 
start of the holiday season and a large volume of small sizes are used 
for gift fruit shipments and fundraisers. These percentages when 
compared to last season's percentages represent a 10 percent decrease 
for weeks three through seven, a 5 percent decrease for weeks eight 
through ten, and a 5 percent increase for week 11.
    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. Changing the weekly 
percentages established by this rule would require additional 
rulemaking and the approval of the Secretary.
    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

[[Page 49091]]

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 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.
    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. Also, setting 
the weekly percentages at 25 percent for the 2001-2002 season would 
have provided a total available allotment of approximated 203,300 
cartons (25 percent of the total industry base of 813,191 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.
    Therefore, this rule establishes the weekly percentages at 45 
percent for the first two weeks, 35 percent for week 3, 30 percent for 
weeks 4 through 10, and 40 percent for week 11 for this season. The 
Committee plans to meet as needed during the 11-week period to ensure 
the weekly percentages are at the appropriate levels.
    Under Sec. 905.153, the quantity of sizes 48 and 56 red seedless 
grapefruit a handler may ship during a regulated week is 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 calculates 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 is 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 can fill their 
allotment with size 56, size 48, or a combination of the two sizes such 
that the total of these shipments is within the established limits. The 
Committee staff performs the specified calculations and provides 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 previous 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 percent of 
their total volume of shipments during their first shipping week. 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 17, 2001. Each regulation week begins Monday at 12 a.m. and 
ends at 11:59 p.m. the following Sunday, since most handlers keep 
records based on Monday as 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. 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 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 informs each handler of the quantity of sizes 48 
and 56 red seedless grapefruit they 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 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 its May 22 meeting, the Committee also recommended changing the 
percentage size procedures in Sec. 905.153 to authorize percentage size 
regulation 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

[[Page 49092]]

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 $750,000 (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 rule limits 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 rule sets the weekly percentages at 45 percent for the first two 
weeks, 35 percent for week 3, 30 percent for weeks 4 through 10, and 40 
percent for week 11. This is a change from the Committee's original 
recommendation of 45 percent for the first two weeks, 35 percent for 
week 3, and 25 percent for the remaining 8 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 
for that week. This rule uses 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 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 should 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 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 leave the established weekly percentages at 25 
percent for weeks 4 through 11. The Committee thought this was too 
restrictive and wanted to provide individual handlers more flexibility 
in weeks 4 through 11; therefore this option was 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 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).

[[Page 49093]]

    The Committee's meetings were widely publicized throughout the 
citrus industry and all interested persons were invited to attend the 
meetings and participate in Committee deliberations on all issues. Like 
all Committee meetings, the May 22, 2001, and the August 29, 2001, 
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 31, 2001 (66 FR 39459). Copies of the rule were mailed 
or sent via facsimile to all Committee members and to grapefruit 
growers and handlers. The Office of the Federal Register, the 
Department, and the Committee also made this rule available through the 
Internet.
    A 10-day comment period was provided to allow interested persons to 
respond to the proposal. The comment period ended August 10, 2001. 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 
remain at 45 percent for the first two weeks (September 17 through 
September 30) and 35 percent for week three (October 1 through October 
7), and that the percentages be changed from 25 percent to 30 percent 
for weeks 4 through 10 (October 1 through November 25), and to 40 
percent for week 11 (November 26 through December 2). 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 17, 2001, 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 
17, 2001, 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. Further, handlers 
are aware of this rule, which was recommended at public meetings. Also, 
a 10-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) 9/17/01 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...............................           30
(e) 10/15/01 through 10/21/01..............................           30
(f) 10/22/01 through 10/28/01..............................           30
(g) 10/29/01 through 11/4/01...............................           30
(h) 11/5/01 through 11/11/01...............................           30
(i) 11/12/01 through 11/18/01..............................           30
(j) 11/19/01 through 11/25/01..............................           30
(k) 11/26/01 through 12/2/01...............................           40
------------------------------------------------------------------------


    Dated: September 21, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-24061 Filed 9-21-01; 2:00 pm]
BILLING CODE 3410-02-P