[Federal Register Volume 68, Number 237 (Wednesday, December 10, 2003)]
[Rules and Regulations]
[Pages 68717-68720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30600]



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 Rules and Regulations
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  Federal Register / Vol. 68, No. 237 / Wednesday, December 10, 2003 / 
Rules and Regulations  

[[Page 68717]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV03-905-1 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule extending for one season 
the exemption for tree run citrus 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 
in effect an exemption for shipments of tree run citrus from grade, 
size, and assessment requirements for the 2003-04 season. This rule 
also continues in effect an increase in the limit on the amount of 
citrus a grower can ship from 1,500 boxes to 3,000 boxes per variety 
and requires growers to identify their containers with their name and 
address. The committee believes this action may be a way to increase 
fresh market shipments, develop new markets, and improve grower 
returns.

EFFECTIVE DATE: January 9, 2004.

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 an extension for one season of an 
exemption to ship tree run citrus free from grade, size, and assessment 
requirements under the order. This rule also continues in effect an 
increase in the limit on the total amount of citrus a grower can ship 
under the exemption from 1,500 boxes to 3,000 boxes per variety and 
requires growers to identify their containers with their name and 
address. This extension is for the 2003-04 season only. The committee 
believes this action may be a way to increase fresh market shipments, 
develop new markets, and improve grower returns. This action was 
recommended unanimously by the committee at its meeting on July 1, 
2003.
    Section 905.80 of the 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 of the order's rules and regulations 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 exempt from 
grade, size, and assessment requirements. The provisions of this 
section were originally established just for the 2002-03 season. It 
allowed growers to ship a maximum of 150 1\3/5\ bushel boxes per 
variety per shipment up to a seasonal total of 1,500 boxes per variety 
of their tree run fruit free from order requirements.
    This rule continues the amendment to Sec.  905.149 and the 
extension of its provisions for another season. This rule extends the 
exemption to ship tree run citrus free from grade, size, and assessment 
requirements as specified in Sec.  905.149 for the 2003-04 season. This 
rule also continues to amend Sec.  905.149 by increasing the limit on 
the amount of citrus a grower can ship during the season from 1,500 
boxes to 3,000 boxes

[[Page 68718]]

per variety and by requiring that each container in each shipment be 
labeled with or contain the name and address of the grower. Growers 
must receive approval from the committee before they can utilize this 
exemption.
    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 implementation 
of this exemption, all tree run citrus had to meet all requirements of 
the marketing order, as well as State of Florida Statutes and Florida 
Department of Citrus regulations. Even with this rule, tree run citrus 
must continue to meet applicable State of Florida Statutes and Florida 
Department of Citrus regulations, including inspection and any 
container marking requirements. However, growers will be able to pick, 
box, and ship directly to buyers, and avoid the costs incurred when 
citrus is handled by packinghouses.
    During the past few seasons, small producers of Florida citrus have 
expressed concerns about problems incurred when trying to sell their 
citrus. These concerns include increasing production costs, limited 
returns, and the availability of markets. For some growers, there is 
limited demand for the variety of citrus they produce or they do not 
produce much volume. Consequently, they have difficulty getting 
packinghouses to pack their fruit. These problems, along with market 
conditions, have driven a fair number of citrus growers out of the 
citrus industry.
    According to Florida Agricultural Statistics Service, over the past 
five years, fresh grapefruit sales have dropped 22 percent and fresh 
orange shipments are down 16 percent. This means fewer cartons are 
being packed. This can cause problems for varieties that may be out of 
favor with handlers and consumers, or for a particular variety of fruit 
where there may be a glut on the market. 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.
    When citrus cannot be sold into the fresh market, it can be sold to 
the processing plants. However, the prices received are considerably 
lower. During the last five years, only the 1999-2000 season produced 
on-tree returns for processed 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 2001-02 
season was $3.08 compared to $4.50 for fresh oranges.
    In addition, the costs associated with growing for the fresh market 
are greater than the costs for growing for the processed market. While 
the costs of growing for the fresh market have been increasing, in many 
cases the returns to the grower have been decreasing. The cost of 
picking, packing, hauling, and associated handling costs for fresh 
fruit is sometimes greater than the grower's return on the fruit. In 
some cases, where the cost of harvesting 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 for their fruit 
in an effort to increase returns. Some growers believe secondary 
markets exist which are not currently being supplied that would provide 
additional outlets for their citrus. They think niche markets exist 
that could be profitable and want the opportunity to service them. They 
believe they can ship quality fruit directly to out-of-state markets 
and that it would be well received. 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 they need to bypass normal handler 
operations and the associated costs for it to be profitable.
    To address these concerns, the committee recommended that for the 
2002-03 season producers be allowed to ship small quantities of their 
own production directly to market exempt from order requirements. The 
exemption was for the 2002-03 season and expired July 31, 2003. A final 
rule on this action was published in the Federal Register on January 
29, 2003 [68 FR 4361]. The committee agreed that following the 2002-03 
season they would review the information provided by growers who 
applied for and used the tree run exemption to determine if the 
exemption should be continued.
    During the 2002-03 season, 75 growers were approved to ship under 
the exemption. Approximately 25 growers actually used the exemption, 
shipping a total of 5,000 1-3/5 bushel boxes of oranges, grapefruit, 
tangerines, and tangelos. Those producers who took advantage of the 
exemption believe the program was successful. They were able to sell 
their fruit and supply markets not already supplied by packed fruit.
    The growers who used the exemption believe that one year was not 
long enough and that it should be extended. They think more time is 
needed to determine the benefits of the exemption and whether it should 
be extended on a continuous basis. Growers believe to successfully 
develop new markets they must demonstrate they can consistently supply 
new markets with quality fruit and this cannot be done in a single 
season or without the exemption.
    Growers also believe more markets exist. They think more time is 
needed to identify and research potential markets. In some cases, 
potential markets were not identified until late in the 2002-03 season 
when there was not enough fruit available to supply them. Growers want 
the opportunity to try to supply these markets in the coming season.
    In addition, some interested growers did not take advantage of the 
exemption during the past season. Some stated if the exemption were to 
be extended for another season, they would use it to try shipping tree 
run citrus. By extending the exemption for another season, growers will 
have more time to utilize this opportunity and it will provide the 
committee with a better indicator of the level of interest and success.
    There was also some discussion that the previously established 
1,500 box limit on the total amount of each variety of citrus a grower 
could ship during the season may prevent growers from fully developing 
new markets. One concern expressed was that should a buyer want 
additional fruit during the season, a grower may not be able to supply 
it because they had reached their shipping limit. Another concern was 
for growers that only produce one variety of citrus. The previous limit 
of 1,500 boxes per variety for the season could prevent them from 
utilizing more of their fruit. Also, a producer may identify two or 
more potential markets, but with the limited amount of fruit that 
previously

[[Page 68719]]

could be shipped, the grower could only supply fruit to one market. 
Growers believe raising the limit on the number of boxes per variety 
they can ship for the season will allow them to supply the markets 
previously developed as well as develop additional markets for their 
tree run fruit.
    The committee reviewed this issue and discussed the concerns of 
small growers and the problems encountered during the past season. The 
committee determined that offering the exemption for another season 
will provide additional information on how fruit shipped under the 
exemption was received by the market. It will also provide a better 
indication of 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. Extending the 
exemption also gives other growers an opportunity to try it.
    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. Continuing the exemption for another 
season allows growers to sell directly to similar markets outside of 
the state, supplying markets that might not otherwise be supplied. The 
committee believes this action will allow the industry to service more 
non-traditional markets and may be a way to increase fresh market 
shipments and to develop new markets.
    The committee also discussed the limits on the amount of fruit 
growers can ship during the season. Several different combinations of 
shipment totals were discussed. The committee determined that the limit 
of 150 boxes of each variety per shipment was still appropriate because 
it allowed the grower to ship a sufficient amount of fruit to make the 
exemption cost effective, but prevented too much fruit from entering 
market channels exempt from order requirements. However, the committee 
did agree that by raising the total amount of citrus a grower can ship 
during the season, the grower may be able to service more markets and 
sell more fruit. The committee continues to support the increase in the 
volume limit from 1,500 boxes to 3,000 boxes per variety under the 
exemption. This amount provides additional volume for the grower while 
limiting the amount of fruit that can be shipped under the exemption. 
Maintaining shipments at these levels will help keep this fruit in non-
competitive outlets.
    With the potential for additional fruit entering the market under 
the exemption, ensuring compliance with the provisions of the exemption 
and reducing the chances of tree run fruit getting into regular market 
channels is an important consideration. As a means of tracking the 
fruit and ensuring compliance, the committee decided that each 
container of tree run fruit should contain the name and address of the 
grower. Because tree run fruit can be shipped in a variety of 
containers, the committee thought requiring a label on the containers 
themselves may be impractical. For some containers, such as a cardboard 
box, having the name and address printed on the outside of the 
container would not be problematic. However, on other containers, such 
as field boxes, plastic boxes, or mesh bags, it can be difficult to 
print the name and address or affix a label. Therefore, the committee 
agreed that placing the name and address inside the container provides 
a means for identifying the owner of the fruit with the least amount of 
difficulty.
    Consequently, for the reasons discussed, the committee voted 
unanimously to extend the tree run exemption for the 2003-04 season, 
raise the limit on the amount of citrus a grower can ship from 1,500 
boxes to 3,000 boxes per variety, and require that growers identify 
each container with their name and address. The exemption is extended 
for the 2003-04 season only, and will expire on July 31, 2004. At the 
end of the season, the committee will review all available information 
and decide whether the exemption should be continued on a permanent 
basis.
    Growers will continue to be required to apply to the committee, on 
the ``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 their name; address; 
phone number; legal description of the grove; variety of citrus to be 
shipped; and the approximate number of boxes produced in the specified 
grove. The grower must also certify that the fruit to be shipped comes 
from the grove owned by the grower applicant. The application form will 
be submitted to the committee manager and reviewed for completeness and 
accuracy. The manager will also verify the information provided. After 
the application has been reviewed, the manager will notify 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 will 
provide 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 committee. This 
report will enable 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.
    This rule does not affect the provisions 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 specified 
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

[[Page 68720]]

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 75 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, the average annual f.o.b. 
price for fresh Florida oranges, grapefruit, tangerines, and tangelos 
during the 2002-03 season was approximately $8.55 per 4/5 bushel 
carton, and total fresh shipments for the 2002-03 season were around 
49.3 million cartons of oranges, grapefruit, tangerines, and tangelos. 
Approximately 20 handlers handled 65 percent of Florida's citrus 
shipments in 2002-03. Considering the average f.o.b. price, at least 55 
percent of the orange, grapefruit, tangerine, and tangelo handlers 
could be considered small businesses under SBA's definition. Therefore, 
the majority of Florida citrus handlers may be classified as small 
entities. The majority of Florida citrus producers may also be 
classified as small entities.
    This rule continues in effect an extension in the provisions of 
Sec.  905.149 of the rules and regulations under the order for one more 
season. This rule exempts shipments of small quantities of tree run 
citrus from the grade, size, and assessment requirements for the 2003-
04 season. This rule also continues in effect an increase in the limit 
on the amount of citrus a grower can ship from 1,500 boxes to 3,000 
boxes per variety during the season and requires growers to identify 
their containers with their name and address. Growers must receive 
approval from the committee before they can use this exemption. 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 at $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, but 
have the opposite effect, providing growers the opportunity to reduce 
the costs associated with having fruit handled by a packinghouse. This 
action allows growers to ship small quantities of their tree run citrus 
directly into interstate commerce exempt from the order's grade, size, 
and assessment requirements and their related costs. With this action, 
growers will be able to reduce handling costs and use those savings 
toward developing additional markets not serviced by packed fruit. This 
rule will benefit all growers regardless of size, but it is expected to 
have a particular benefit for the small grower.
    The committee considered alternatives to this action. One possible 
alternative was not extending the exemption for another season. 
However, the committee believes the exemption does provide other 
possible outlets for fruit and may help increase returns to growers, so 
this alternative was rejected. Another alternative considered was 
removing the limit on the total amount of citrus a grower could ship 
during the season. Committee members had concerns about allowing this 
exemption without some limit on total shipments. The committee agreed 
that an increase in the limit would provide additional opportunities 
for growers without causing any market disruption or making it more 
difficult to keep tree run fruit in noncompetitive outlets. 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 contained in this 
rule have been previously approved by the Office of Management and 
Budget (OMB) and assigned OMB No. 0581-0189. In addition, as noted in 
the initial regulatory flexibility analysis, 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.
    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 July 1, 2003, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue.
    An interim final rule concerning this action was published in the 
Federal Register on September 3, 2003 (68 FR 52325). 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 November 3, 2003. 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 (68 FR 52325, September 3, 2003) will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 905

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

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

    Accordingly, the interim final rule amending 7 CFR part 905 which 
was published at 68 FR 52325 on September 3, 2003, is adopted as a 
final rule without change.

    Dated: December 4, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-30600 Filed 12-9-03; 8:45 am]
BILLING CODE 3410-02-P