[Federal Register Volume 68, Number 19 (Wednesday, January 29, 2003)]
[Rules and Regulations]
[Pages 4361-4364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2014]



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  Federal Register / Vol. 68, No. 19 / Wednesday, January 29, 2003 / 
Rules and Regulations  

[[Page 4361]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV02-905-4 FIR]


Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; 
Exemption for Shipments of Tree Run Citrus

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule that changed the rules and 
regulations prescribed under the Florida citrus marketing order 
(order). The order regulates the handling of oranges, grapefruit, 
tangerines, and tangelos grown in Florida and is administered locally 
by the Citrus Administrative Committee (committee). This rule continues 
to exempt shipments of small quantities of tree run citrus from the 
grade, size, and assessment requirements of the order. Producers can 
ship 150 1-\3/5\ bushel boxes per variety, per shipment, of their own 
citrus free from order regulations, not to exceed 1,500 boxes per 
variety for the season. This change is effective for the 2002-03 season 
only. The committee believes this action may be a way to increase fresh 
market shipments, develop new markets, and improve grower returns.

EFFECTIVE DATE: February 28, 2003.

FOR FURTHER INFORMATION CONTACT: Doris Jamieson, Southeast Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 799 Overlook Drive, Suite A, Winter 
Haven, Florida 33884-1671; telephone: (863) 324-3375, Fax: (863) 325-
8793; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; 
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, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; 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 order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    USDA 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 USDA 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 USDA 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 USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule continues in effect changes to the rules and regulations 
under the order to exempt shipments of small quantities of tree run 
citrus from grade, size, and assessment requirements. Tree run citrus 
is wholesome citrus picked and boxed in the field and taken directly to 
market without being graded or sized. With this change, producers are 
allowed to ship 150 1-\3/5\ bushel boxes per variety, per shipment, of 
their own citrus free from marketing order regulations. Total shipments 
cannot exceed 1,500 boxes per variety for the season. This action was 
unanimously recommended by the committee at its meeting held on May 22, 
2002.
    Section 905.80 of the marketing order provides authority for the 
committee to exempt certain types of shipments from regulation. 
Exemptions can be implemented for types of shipments of any variety in 
such minimum quantities, or for such purposes as the committee with the 
approval of USDA may specify. No assessment is levied on fruit so 
shipped. The committee shall, with the approval of USDA, prescribe such 
rules, regulations, or safeguards as it deems necessary to prevent 
varieties handled under the provisions of this section from entering 
channels of trade for other than the purposes authorized by this 
section.
    Section 905.149 is continued in effect. This section defines grower 
tree run citrus and outlines the procedures to be used for growers to 
apply to the committee to ship their own tree run citrus fruit exempt 
from grade, size, and assessment requirements under the order. Under 
this section, once the exemption has been approved, the grower must 
report to the committee the volume of fruit shipped, the date of the 
shipment, and type of transportation used.
    According to Florida Department of Citrus (FDOC) regulation 20-
35.006, ``Tree run grade is that grade of naturally occurring sound and 
wholesome citrus fruit which has not been separated either as to grade 
or size after severance from the tree.'' Also, FDOC regulation 20-
62.002 defines wholesomeness as fruit free from rot, decay, sponginess, 
unsoundness, leakage, staleness, or other conditions showing physical 
defects of the fruit. By definition, this fruit is handled by the 
grower and bypasses normal handler operations. Prior to this change, 
all tree run citrus had to meet all requirements of the marketing 
order, as well as State

[[Page 4362]]

of Florida Statutes and Florida Department of Citrus regulations. Even 
with this change, tree run citrus must continue to meet applicable 
State of Florida Statutes and Florida Department of Citrus regulations, 
including inspection. Growers are able to pick, box, and ship directly 
to buyers, and avoid the costs incurred when citrus is handled by 
packinghouses.
    Over the past few years, small producers of Florida citrus have 
expressed concerns regarding problems incurred when selling their 
citrus. These concerns include costs, returns, and available markets. 
These problems, along with market conditions, have driven a fair number 
of citrus growers and handlers out of the citrus industry. These 
concerns have been discussed at committee meetings, as well as meetings 
of other industry groups.
    Some small growers have stated they have had difficulty getting 
packinghouses to pack their fruit. There is limited demand for certain 
varieties of citrus produced. In some cases, supply exceeds demand in 
the standard markets. According to committee data, over the past five 
years, fresh grapefruit sales have dropped 25 percent and fresh orange 
shipments are down 11 percent. In some cases, varieties may be out of 
favor with handlers and consumers, or there may be a glut on the market 
of a particular variety of fruit. As a result, packinghouses do not 
wish to become over stocked with fruit which is difficult to market 
and, therefore, will not pack less popular minor varieties of fruit or 
fruit that is in oversupply. Packinghouses do not want to pack what 
they cannot sell. These factors have caused wholesome fruit to be 
shipped to processing plants or left on the tree.
    The costs of growing for the fresh market have been increasing, 
while in many cases, the returns to the grower have been decreasing. 
The cost of picking, packing, and hauling, and associated handling 
costs for fruit going to the fresh market, is sometimes greater than 
the grower's return on the fruit. The costs associated with growing for 
the fresh market are greater than the costs for growing for the 
processed market.
    When citrus cannot be sold into the fresh market, it can be sold to 
the processing plants. However, the prices received are considerably 
lower. For example, during the last five years, only the 1999-2000 
season produced on-tree returns for processed red seedless grapefruit 
that exceeded one dollar per box. Over the period from 1977 through 
2000, the differential between fresh prices and processed prices has 
averaged $3.55 per box. The average on-tree price for processed Florida 
oranges during the 2000-02 season was $2.72 compared to $4.25 for fresh 
oranges.
    In some cases, where the cost of harvesting citrus exceeds the 
returns to the grower or the grower cannot find a buyer for the fruit, 
economic abandonment can occur. According to information from the 
National Agricultural Statistics Service, the seasons of 1995-96, 1996-
97, 1997-98, and 2000-01 had an average economic abandonment of two 
million boxes or more of red seedless grapefruit alone.
    Consequently, growers are looking for other outlets to move their 
fruit in an effort to increase returns. Several growers at the meeting 
stated that regulations previously imposed on the citrus industry made 
it difficult for them to ship homegrown fruit into interstate markets. 
Some growers believe secondary markets exist (which previously could 
not be supplied) that will provide them additional outlets to sell 
their citrus. They think niche markets exist that could be profitable. 
They believe they can ship quality fruit directly to out-of-state 
markets and that it would be well received.
    Growers want the opportunity to continue pursuing those niche 
markets. These growers contend tree run citrus does not need a minimum 
grade and size to be marketable, and that they can supply quality fruit 
to secondary markets not served by packed fruit. However, they believe 
to do it profitably, they need to bypass the normal handler operations 
and the associated costs.
    The committee listened to the concerns of these small growers and 
the problems they have encountered. In an effort to allow these growers 
to pursue these niche markets, the committee, which consists of growers 
and handlers, unanimously voted to allow a minimum quantity of citrus 
to be shipped exempt from the grade, size, and assessment regulations. 
The committee recommended growers be allowed to ship up to 150 1-\3/5\ 
bushel boxes of each variety, per shipment, from their own groves, with 
total shipments for the season not to exceed 1,500 boxes per variety.
    Throughout industry discussions, many different combinations of 
varieties and shipment totals were discussed. In making this 
recommendation, the committee determined that 150 boxes of each variety 
per shipment allows the grower to ship a sufficient amount of fruit to 
make the exemption cost effective and yet not allow too much fruit to 
enter market channels exempt from marketing order requirements. The 
committee believes this level of volume will help keep this fruit in 
non-competitive outlets.
    The committee believes this tree run fruit will be sold primarily 
to non-competitive, niche markets, such as farmers' markets, flea 
markets, roadside stands, and similar outlets and will not compete with 
non-exempt fruit shipped under the order. Fruit is sold in similar 
markets within the state, and such markets have been successful. This 
change allows growers to sell directly to similar markets outside of 
the State. The committee believes this action allows the industry to 
service more non-traditional markets and that this may be a way to 
increase fresh market shipments and develop new markets. Granting this 
exemption allows growers to supply markets that might not otherwise be 
supplied. Some members expect that this tree run or grove fresh fruit 
may create greater consumer interest in fresh citrus fruit.
    Under this provision, the grower is required to apply to the 
committee, on a ``Grower Tree Run Certificate Application'' form 
provided by the committee, for an exemption to ship tree run citrus 
fruit to interstate markets. On this form, the grower must provide the 
committee with their name; address; phone number; legal description of 
the grove; variety of citrus to be shipped; and the approximate number 
of boxes produced on the specified grove. The grower must also certify 
that the fruit to be handled comes from the grove owned by the grower 
applicant. The grower will also report to the committee the actual 
number of boxes per variety shipped under the exemption.
    The Grower Tree Run Certificate Application form is submitted to 
the committee manager. The manager reviews the application for 
completeness and accuracy. The manager also verifies the information 
provided. After the application has been reviewed, the manager notifies 
the grower applicant in writing whether the application is approved or 
denied.
    Once the grower has received approval for their application for 
exemption and begins shipping fruit, a ``Report of Shipments Under 
Grower Tree Run Certificate'' form, also provided by the committee, 
must be completed for each shipment. On this form, the grower provides 
the location of the grove, the amount of fruit shipped, the shipping 
date, and the type of transportation used to ship the fruit, along with 
the vehicle license number. The grower must supply the Road Guard 
Station with a copy of the grower certificate report for each shipment, 
and provide a copy of the report to the

[[Page 4363]]

committee. This report enables the committee to maintain compliance and 
gather data, which will be used to determine the effectiveness of the 
exemption. Failure to comply with these requirements may result in the 
cancellation of a grower's certificate.
    The FDOC defines tree run grade and wholesomeness of citrus fruit. 
This fruit is handled by the grower and bypasses normal handler 
operations. Even with the change to the provisions under the order, 
tree run citrus must still meet the requirements of the State of 
Florida Statutes and FDOC regulations, including inspection. 
Consequently, growers will need to continue to have the fruit inspected 
to meet current State requirements.
    This exemption is effective for the current season beginning 
October 8, 2002, and ending July 1, 2003, only. The committee 
determined that offering the exemption for one season will provide 
sufficient information on how the fruit shipped under the exemption was 
received on the market. It will also indicate whether or not other 
markets exist that packed fruit is not currently supplying, where these 
markets are located, and approximately how much fruit can be sold in 
such markets. It will also indicate the number of growers interested in 
utilizing the exemption and the volume of citrus shipped under the 
exemption. In addition, it will provide the committee with information 
regarding any potential impact on competitive outlets. The committee 
will also have information available regarding any compliance issues 
not previously discussed. At the end of the season, the committee will 
review all available information and decide whether the exemption 
should be continued.
    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.
    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 citrus, 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. 
Therefore, no change is necessary in the citrus import regulations as a 
result of this action.

Final 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 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 the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 11,000 producers of Florida citrus in the 
production area and approximately 80 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (13 CFR 121.201) as those having 
annual receipts less than $750,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$5,000,000.
    Based on industry and committee data, and average annual f.o.b. 
price for fresh Florida citrus during the 2001-02 season was 
approximately $8.10 per \4/5\-bushel carton for all shipments, and the 
total fresh shipments for the 2001-02 season were around 55 million \4/
5\-bushel cartons of Florida citrus. Approximately 50 percent of the 
handlers handled 94 percent of Florida citrus shipments. Using 
information provided by the committee, about 54 percent of citrus 
handlers could be considered small businesses under the SBA definition. 
Although specific data is unavailable, USDA believes that the majority 
of Florida citrus producers may be classified as small entities.
    This rule continues in effect the addition of Sec.  905.149 to the 
rules and regulations under the order exempting shipments of small 
quantities of tree run citrus from the grade, size, and assessment 
requirements of the order. This action allows growers to ship 150 1-\3/
5\ bushel boxes per variety, per shipment, of their own tree run citrus 
free from marketing order regulations into interstate markets. Total 
shipments cannot exceed 1,500 boxes per variety for the season per 
individual grower. This change is effective for the 2002-03 season 
only. The committee believes this action may be a way to increase fresh 
market shipments, develop new markets, and improve grower returns. 
Authority for this action is provided in Sec.  905.80(e).
    According to a recent study by the University of Florida--Institute 
of Food and Agricultural Sciences, production costs for the 2001-02 
season ranged from $1.71 per box for processed oranges to $2.41 per box 
for grapefruit grown for the fresh market. The average packing charge 
for oranges is approximately $6.50 per box, for grapefruit the charge 
is approximately $5.75 per box, and for tangerines the charge can be as 
high as $9 per box. In a time when grower returns are weak, sending 
fruit to a packinghouse can be cost prohibitive, especially for the 
small grower. This rule may provide an additional outlet for fruit that 
might otherwise be forced into the processing market or left on the 
tree altogether.
    This rule will not impose any additional costs on the grower. This 
rule has the opposite effect. It reduces the costs associated with 
having fruit handled by a packinghouse. This rule enables growers to 
ship their tree run citrus free from grade, size, and assessment 
requirements under the order. This action allows growers to ship 
minimum quantities of their citrus directly into interstate commerce 
exempt from some order requirements and their related costs. With this 
action, growers can reduce handling costs and use those savings toward 
developing additional markets. This benefits all growers regardless of 
size but it is expected to have a particular benefit for the small 
grower.
    The committee considered several alternatives to this action, 
including making no change to the current regulations. The committee 
believed that some change was necessary to help Florida citrus growers. 
The committee considered allowing growers to ship unlimited quantities 
of any grower's citrus. This option was rejected because it would have 
caused market disruption and compliance problems, because growers could 
become shippers for other growers. It would have also made it more 
difficult to keep this fruit in noncompetitive outlets. Other 
alternatives considered were increasing the number of boxes available 
to be shipped per load, and increasing the number of boxes available to 
be shipped per season. These options were also rejected amid concerns 
that too much fruit could be shipped and find its way into the 
competitive markets.
    This action requires two additional forms. In accordance with the 
Paperwork Reduction Act of 1995 (44

[[Page 4364]]

U.S.C. chapter 35), AMS obtained emergency approval for a new 
information collection request under OMB No. 0581-NEW for Oranges, 
Grapefruit, Tangerines, and Tangelos Grown in Florida, Marketing Order 
No. 905. The emergency request was necessary because insufficient time 
was available to follow normal clearance procedures. This information 
collection will be merged with the forms currently approved for use 
under OMB No. 0581-0189 ``Generic OMB Fruit Crops.''
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this rule. As with all Federal marketing order 
programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public sector 
agencies.
    Further, 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. Like all 
committee meetings, the May 22, 2002, meeting was a public meeting and 
all entities, both large and small, were able to express their views on 
this issue.
    Also, the committee has a number of appointed subcommittees to 
review certain issues and make recommendations to the committee. A 
subcommittee met May 21, 2002, and discussed the tree run issue in 
detail. That meeting was also a public meeting and both large and small 
entities were able to participate and express their views.
    An interim final rule concerning this action was published in the 
Federal Register on October 7, 2002. Copies of the rule were mailed by 
the committee's staff to all committee members and citrus handlers. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register and USDA. That rule provided for a 60-
day comment period which ended December 6, 2002. No comments were 
received.
    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.
    After consideration of all relevant material presented, including 
the committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (67 FR 62313, October 7, 2002) will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 905

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

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

    Accordingly, the interim final rule amending 7 CFR part 905 which 
was published at 67 FR 62313 on October 7, 2002, is adopted as a final 
rule without change.

    Dated: January 23, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-2014 Filed 1-28-03; 8:45 am]
BILLING CODE 3410-01-P