[Federal Register Volume 69, Number 70 (Monday, April 12, 2004)]
[Rules and Regulations]
[Pages 19079-19082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8214]



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  Federal Register / Vol. 69, No. 70 / Monday, April 12, 2004 / Rules 
and Regulations  

[[Page 19079]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV04-905-1 FIR]


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

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 relaxed the weekly 
limits on small red seedless grapefruit entering the fresh market under 
the marketing order covering oranges, grapefruit, tangerines, and 
tangelos grown in Florida (order). The Citrus Administrative Committee 
(Committee), which locally administers the order, recommended this 
action. This rule finalizes a relaxation of the weekly limitation set 
for shipments of small-sized red seedless grapefruit entering the fresh 
market from 40 percent to 50 percent during the last week of the 22-
week regulatory period. This change provided an additional volume of 
small red seedless grapefruit to address marketing conditions without 
saturating all markets with these small sizes. This rule helped 
stabilize the market and improve grower returns.

EFFECTIVE DATE: May 12, 2004.

FOR FURTHER INFORMATION CONTACT: William G. Pimental, 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 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.''
    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 finalizes an interim final rule that relaxed the limits 
on the volume of small red seedless grapefruit entering the fresh 
market. The interim final rule allowed for an additional volume of 
sizes 48 and 56 fresh red seedless grapefruit to be shipped during the 
last week of the 22-week percentage of size regulation period for the 
2003-04 season. The relaxation supplied an additional volume of small 
red seedless grapefruit to address current marketing conditions without 
saturating all markets with these small sizes. This action helped 
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 a handler may ship during a particular week is 
established as a percentage of the total shipments of such variety 
shipped by that handler during a prior period, established by the 
Committee and approved by USDA.
    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 22 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 is 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 interim final rule being finalized relaxed the limits on the 
volume of sizes 48 (3\9/16\ inches minimum diameter) and 56 (3\5/16\ 
inches minimum diameter) red seedless grapefruit entering the fresh 
market by increasing the weekly percentage established for week 22 
(February 9 through February 15, 2004),

[[Page 19080]]

from 40 percent to 50 percent. The Committee unanimously recommended 
this change during a January 22, 2004, telephone meeting.
    On July 1, 2003, the Committee recommended regulating all 22 weeks 
(September 15, 2003-February 15, 2004). The Committee recommended that 
the weekly percentages be set at 45 percent for the first 2 weeks, 35 
percent for weeks 3 through 19, and 40 percent for the remaining 3 
weeks. These percentages were established following informal rulemaking 
procedures, with an interim final rule published in the Federal 
Register on September 9, 2003 (68 FR 53015), and a final rule published 
in the Federal Register on November 14, 2003 (68 FR 64494). The interim 
final rule increasing the percentage of small red grapefruit shipments 
for week 22 from 40 percent to 50 percent was published in the Federal 
Register on February 6, 2004 (69 FR 5679).
    The Committee believes that the over shipment of small-sized red 
seedless grapefruit has a detrimental effect on the market. While there 
is a market for small-sized red seedless grapefruit, the availability 
of large quantities oversupplies the fresh market with these sizes and 
negatively impacts the market for all sizes. These smaller sizes, 48 
and 56, normally return the lowest prices when compared to the other 
larger sizes. However, when there is too much volume of the smaller 
sizes available, the overabundance of small-sized fruit pulls the 
prices down for all sizes.
    In its discussion of the relaxation of the percentage for the last 
week when percentage size limitations apply, the Committee reviewed the 
percentages previously recommended and the current state of the crop. 
The Committee also considered some additional information that was not 
available during its earlier meeting. On January 12, 2004, USDA 
released information regarding fruit size distribution developed from a 
December size survey. The size survey showed that more small sizes were 
available than anticipated. The release stated that the mean size 
indicated that only two other seasons during the past ten years have 
had smaller sizes. According to the survey, more than 50 percent of the 
remaining crop was size 48 and smaller. This compares to only 34 
percent at this time last season.
    The Committee had not expected small sizes to represent such a 
large portion of the available crop at this time of the season. With 
small sizes representing a significant amount of this year's crop, 
larger sizes were in shorter supply. Growers had spot picked their 
groves twice looking for larger sizes and to spot pick again would have 
been cost prohibitive. Also, with the fruit size not improving, there 
continued to be a shortage of large sizes. This meant that a sizable 
amount of small sizes would have been available at the end of the 
regulated period.
    With a limited number of larger sizes available, there was also 
market pressure to use small sizes to serve markets that traditionally 
take larger sizes. However, at the same time, markets that 
traditionally demand small sizes were also demanding fruit. There were 
indications that importers of small-sized fruit had begun purchasing 
fruit earlier than in past seasons. Export shipments for the week 
ending January 18, 2004, were nearly 20 percent higher than for the 
same week last season. These factors made supplies of available 
allotment of small-sized fruit tight.
    The Committee offices had been receiving calls from members of the 
industry asking that the weekly percentages be increased. The Committee 
staff was also actively working with handlers on allotment loans and 
transfers to accommodate the needs of handlers desiring to ship more 
small-sized red seedless grapefruit. Requests for loans and transfers 
had increased from 3 requests during week 15, to 19 for week 17, to 24 
requests during week 18.
    However, while the percentage of size regulation provides 
allowances for over shipments, loans, and transfers of allotment during 
regulation weeks 1 through 21, there are no allowances for loans or 
over shipments for week 22 because it is the end of the regulation 
period. The Committee agreed that some increase in the percentage was 
necessary for the last week of regulation to recognize that some 
handlers would be having to reduce their allotment to cover any over 
shipments from the previous week and that no additional over shipments 
would be permitted.
    There was also concern in the industry that if the percentage had 
not been relaxed, a large volume of small-sized fruit would have been 
pushed into the market following the end of the regulation period. This 
would have negatively impacted prices and undermined the success of the 
regulation. During the 2001-02 season, small sizes also represented a 
significant percentage of the crop at the end of the regulation period. 
The Committee had recommended a relaxation in the percentages for the 
last few weeks of the season, but, due to rulemaking time frames, the 
percentage changes were not implemented. Following the end of the 
regulation period, sizable quantities of small sizes were dumped onto 
the market. This contributed to a 35 cent per carton reduction in the 
f.o.b. price. The Committee believed that relaxing the percentage for 
the last week of regulation might help relieve some of the volume of 
small sizes and provide for a smoother transition to the end of the 
regulation period.
    The Committee discussed several alternatives ranging from 
maintaining the percentages at their current rate, increasing week 21 
to 45 percent and week 22 to 50 percent, and just increasing the 
percentage rate for week 22. The Committee agreed it would be difficult 
to get a change to week 21 in place prior to that regulation week, and 
recommended increasing the percentage for week 22 from 40 percent to 50 
percent. Such a change represented an additional industry allotment of 
72,174 cartons for the last week of regulation. The Committee believes 
this provided the industry with some additional flexibility and helped 
with the transition from the end of the 22-week regulation period to 
the unrestricted shipment of small sizes.
    Members agreed that one of the most important goals of percentage 
of size regulation was to create some discipline in the way fruit was 
packed and marketed. However, considering the size survey results, and 
the other information discussed, the Committee decided that increasing 
the weekly percentage for week February 9 through February 15 addressed 
the goals of this regulation, while providing handlers with some 
additional marketing flexibility.
    Section 8e of the Act requires that whenever grade, size, quality, 
or maturity requirements are in effect for certain commodities under a 
domestic marketing order, including grapefruit, imports of that 
commodity must meet the same or comparable requirements. This rule does 
not change the minimum grade and size requirements under the order, 
only the percentages of sizes 48 and 56 red seedless grapefruit that 
may be handled. Therefore, no change is necessary in the grapefruit 
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

[[Page 19081]]

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 75 grapefruit handlers subject to 
regulation under the order and approximately 11,000 growers of citrus 
in the regulated area. Small agricultural service firms, including 
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 2002-03 
season was approximately $7.24 per \4/5\-bushel carton, and total fresh 
shipments for the 2002-03 season are estimated at 22.9 million cartons 
of red grapefruit. Approximately 25 percent of all handlers handled 75 
percent of Florida's grapefruit shipments. Using the average f.o.b. 
price, at least 75 percent of the 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.
    On July 1, 2003, the Committee recommended limiting the volume of 
sizes 48 and 56 red seedless grapefruit shipped during the first 22 
weeks of the 2003-04 season by setting weekly percentages for each of 
the 22 weeks, beginning September 15, 2003. Weekly percentages were 
established at 45 percent for weeks 1 and 2, 35 percent for week 3 
through week 19, and at 40 percent for weeks 20, 21, and 22. 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 
percentages set.
    This rule finalizes the interim final rule that relaxed the weekly 
limitation set for shipments of small-sized red seedless grapefruit 
entering the fresh market from 40 percent to 50 percent during the last 
week of the 22-week regulatory period. This action provided an 
additional volume of small red seedless grapefruit to address marketing 
conditions without saturating all markets with these small sizes. The 
interim final rule helped stabilize the market and improve grower 
returns. Procedures used in determining the weekly allotments of small 
sizes are specified in Sec.  905.153. Authority for this action is 
provided in Sec.  905.52 of the order. The Committee unanimously 
recommended this action during a telephone meeting on January 22, 2004.
    The interim final rule increased the weekly percentage set for the 
last week of regulation. The Committee made this recommendation to 
address the issue that the majority of the remaining crop was made up 
of small sizes. By increasing the percentage, more small sizes were 
available for shipment. This helped handlers meet their market needs 
and provided some additional flexibility without putting too many small 
sizes on the market. This benefited both handler and producer returns.
    The purpose of percentage of size regulation is to help stabilize 
the market and improve grower returns. This change provided a supply of 
small-sized red seedless grapefruit sufficient to meet market demand, 
without saturating all markets with these small sizes. The interim 
final rule was not expected to decrease the overall consumption of red 
seedless grapefruit. It was expected to benefit all red seedless 
grapefruit growers and handlers regardless of their size of operation.
    The Committee considered several alternatives when discussing this 
action, including maintaining the percentages at their current rate, 
increasing week 21 to 45 percent and week 22 to 50 percent, and just 
increasing the percentage rate for week 22. The Committee agreed it 
would be difficult to get a change to week 21 in place prior to that 
regulation week, and recommended increasing the percentage for week 22 
from 40 percent to 50 percent to provide the industry with some 
additional flexibility and provide a smooth transition to the period 
without percentage size limitations.
    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. As with all Federal 
marketing order programs, reports and forms are periodically reviewed 
to reduce information requirements and duplication by industry and 
public sectors.
    USDA 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).
    In addition, while the meeting on January 22, 2004, was a telephone 
meeting, interested persons outside the Committee had an opportunity to 
provide input in the decision. The Committee manager provided a notice 
to the industry and anyone had the opportunity to participate in the 
call. Like all Committee meetings, the January 22, 2004, meeting 
provided both large and small entities the opportunity to express views 
on this issue. Also, the weekly percentage size regulation has been an 
ongoing issue that has been discussed at numerous public meetings so 
that interested parties have had the opportunity to express their views 
on this issue.
    As mentioned before, the interim final rule concerning this action 
was published in the Federal Register on February 6, 2004. Copies of 
the rule were mailed by the Committee's staff to all Committee members 
and grapefruit handlers. In addition, the rule was made available 
through the Internet by USDA and the Office of the Federal Register. 
The interim final rule invited comments until February 10, 2004. 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 this interim final rule, without change, as published in the 
Federal Register (69 FR 5679, February 6, 2004) 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

0
Accordingly, the interim final rule amending 7 CFR part 905 which was 
published at 69 FR 5679 on February 6, 2004, is adopted as a final rule 
without change.


[[Page 19082]]


    Dated: April 6, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-8214 Filed 4-9-04; 8:45 am]
BILLING CODE 3410-02-P