[Federal Register Volume 69, Number 100 (Monday, May 24, 2004)]
[Proposed Rules]
[Pages 29466-29477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11709]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 69, No. 100 / Monday, May 24, 2004 / Proposed 
Rules  

[[Page 29466]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Parts 301 and 319

[Docket No. 03-022-3]
RIN 0579-AB81


Mexican Hass Avocado Import Program

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: We are proposing to amend the regulations governing the 
importation of fruits and vegetables to expand the number of States in 
which fresh Hass avocado fruit grown in approved orchards in approved 
municipalities in Michoacan, Mexico, may be distributed. We are also 
proposing to allow the distribution of the avocados during all months 
of the year. To reflect these proposed changes, we would also make 
other changes in the regulations, such as removing restrictions on the 
ports through which the avocados may enter the United States and the 
corridor through which the avocados must transit the United States. We 
are proposing this action in response to a request from the Government 
of Mexico and based on our finding that the phytosanitary measures 
described in this proposed rule will reduce the risk of introducing 
plant pests associated with Mexican Hass avocados into the United 
States.

DATES: We will consider all comments that we receive on or before July 
23, 2004.

ADDRESSES: You may submit comments by any of the following methods:
     Postal Mail/Commercial Delivery: Please send four copies 
of your comment (an original and three copies) to Docket No. 03-022-3, 
Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 
River Road Unit 118, Riverdale, MD 20737-1238. Please state that your 
comment refers to Docket No. 03-022-3.
     E-mail: Address your comment to 
[email protected]. Your comment must be contained in the body 
of your message; do not send attached files. Please include your name 
and address in your message and ``Docket No. 03-022-3'' on the subject 
line.
     Agency Web site: Go to http://www.aphis.usda.gov/ppd/rad/cominst.html for a form you can use to submit an e-mail comment through 
the APHIS Web site.
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the instructions for locating this 
docket and submitting comments.
    Reading Room: You may read any comments that we receive on this 
docket in our reading room. The reading room is located in room 1141 of 
the USDA South Building, 14th Street and Independence Avenue, SW., 
Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., 
Monday through Friday, except holidays. To be sure someone is there to 
help you, please call (202) 690-2817 before coming.
    Other Information: You may view APHIS documents published in the 
Federal Register and related information, including the names of groups 
and individuals who have commented on APHIS dockets, on the Internet at 
http://www.aphis.usda.gov/ppd/rad/webrepor.html.

FOR FURTHER INFORMATION CONTACT: Ms. Karen Bedigian, Import Specialist, 
Phytosanitary Issues Management Team, PPQ, APHIS, 4700 River Road Unit 
140, Riverdale, MD 20737-1236; (301) 734-6799.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in ``Subpart--Fruits and Vegetables'' (7 CFR 319.56 
through 319.56-8) prohibit or restrict the importation of fruits and 
vegetables into the United States from certain parts of the world to 
prevent the introduction and dissemination of plant pests, including 
fruit flies, that are new to or not widely distributed within the 
United States.
    Under the regulations in 7 CFR 319.56-2ff (referred to below as the 
regulations), fresh Hass avocado fruit grown in approved orchards in 
approved municipalities in Michoacan, Mexico, may be imported into 
specified areas of the United States, subject to certain conditions. 
Those conditions, which include pest surveys and pest risk-reducing 
cultural practices, packinghouse procedures, inspection and shipping 
procedures, and restrictions on the time of year (October 15 through 
April 15) that shipments may enter the United States, are designed to 
reduce the risk of pest introduction. Further, the regulations limit 
the distribution of the avocados to 31 northeastern and north central 
States (Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, 
Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, 
Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New 
York, North Dakota, Ohio, Pennsylvania, Rhode Island, South Dakota, 
Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming) and the 
District of Columbia.
    In November 2000, the Government of Mexico requested that the 
Animal and Plant Health Inspection Service (APHIS) amend the 
regulations to allow Hass avocados to be imported year round into all 
50 States. We did not act on Mexico's request at the time because we 
did not have documentation available to support Mexico's position that 
such importations would not present a risk of introducing plant pests 
into certain States.
    As part of our evaluation of Mexico's request, we prepared a draft 
pest risk assessment (PRA), titled ``Importation of `Hass' Avocado 
Fruit (Persea americana) from Mexico'' (June 2003), to evaluate the 
importation of fruit to the entire United States throughout the year. 
The draft PRA contained two components: (1) A risk assessment component 
that identifies quarantine pests that are likely to follow the Mexican 
Hass avocado import pathway, and (2) a risk management component that 
evaluates the ability of the selected phytosanitary measures to 
mitigate the risk posed by those quarantine pests.
    The first component revealed that the quarantine pests of concern 
remained the same as those identified in previous risk assessments. 
After eliminating non-quarantine and non-pathway pests from the list, 
eight pests of quarantine significance that follow the pathway remain: 
Three fruit flies (Ceratitis capitata, Anastrepha ludens, A. striata),

[[Page 29467]]

three seed weevils (Conotrachelus aguacatae, C. perseae, and Heilipus 
lauri), one stem weevil (Copturus aguacatae), and one seed moth 
(Stenoma catenifer).
    The second component of the draft PRA evaluated the phytosanitary 
measures that would be applied under this proposed rule (described in 
detail later in this document). This component concluded that imports 
of Mexican avocados subject to the phytosanitary requirements described 
in this proposed rule would result in the following:
     Fewer than 387 infested avocados will enter the United 
States each year, estimated with 95 percent confidence.
     Fewer than 49 avocados infested with stem weevil, seed 
weevils, and seed moth will enter avocado producing areas each year, 
estimated with 95 percent confidence.
     Fewer than 143 avocados infested with fruit flies will 
enter fruit fly susceptible areas each year, estimated with 95 percent 
confidence.
     Fewer than 3 avocados infested with stem weevil, seed 
weevils and seed moth will be discarded in avocado producing areas each 
year, estimated with 95 percent confidence.
     Fewer than 8 avocados infested with fruit flies will be 
discarded in fruit fly susceptible areas each year, estimated with 95 
percent confidence.
     There is an overall low likelihood of pest introduction.
     Based on the statistical models we have used to estimate 
sampling efficacy, it is slightly more likely that zero infested 
avocados will enter the United States than one infested avocado, 
however, we cannot rule out the possibility that some may enter the 
country.
    Only those avocados discarded in susceptible areas pose a risk of 
establishment of the pests in the United States. In the PRA, the risk 
associated with the importation of commercial shipments of avocados is 
compared to the risks associated with infested avocados smuggled into 
the United States. During the 17-year period from 1985 to 2002, an 
average of 30 avocados infested with pathway pests were intercepted and 
denied entry into the United States each year. Studies of port 
efficiency, when searching for prohibited materials, indicates that 
inspectors detect approximately 10-20 percent of what actually arrives. 
That suggests that an estimated average 150 to 300 infested avocados 
are introduced each year through baggage and cargo. During the period 
1985 to 2002, 502 pathway pests were detected in intercepted avocados 
(specific variety or cultivar not recorded) that were found in baggage 
and cargo. During the same period, 24,283 tephritid larvae were 
intercepted at the Mexican border in all types of fruit, most of it 
from baggage. Therefore, prohibited transport of avocados in baggage 
and cargo pose a substantially greater risk of introducing the above 
pests into the United States than commercial imports of Hass avocados 
from Mexico.
    Additionally, APHIS has 6 years worth of data from the avocado 
import program, which gives us confidence that the systems approach 
currently in place provides adequate safeguards against avocado pests. 
The systems approach mitigations include annual pest field surveys; 
orchard certification; and packinghouse, packaging, and shipping 
requirements. The efficacy of the systems approach depends on redundant 
measures. Those measures are backed up by an inspection system that, 
when a pest is detected, shuts down the imports from an affected area, 
depending on the pest, until corrective actions are taken. An 
examination of over 10 million fruit has not revealed any pests in 6 
years of fruit cutting and inspection.
    On June 16, 2003, we published a notice in the Federal Register (68 
FR 35619, Docket No. 03-022-1) in which we advised the public of the 
availability of the draft PRA. We solicited comments for 60 days. On 
August 14, 2003, we published another notice in the Federal Register 
(68 FR 48595-48596, Docket No. 03-022-2) in which we extended the 
comment period on the pest risk assessment until September 15, 2003.
    We received 291 comments by that date. Based on some of those 
comments, we have made changes to the PRA. Those changes are described 
in Appendix G of the revised PRA. APHIS will accept additional comments 
on the revised PRA throughout the comment period for this proposed 
rule. The revised PRA, titled ``Importation of Avocado Fruit (Persea 
americana Mill. var. `Hass') from Mexico'' (February 17, 2004) can be 
viewed on the Internet at http://www.aphis.usda.gov/ppq/avocados/, or 
in our reading room (information on the location and hours of the 
reading room is provided under the heading ADDRESSES at the beginning 
of this proposed rule).
    In the past, fruit flies (Anastrepha spp.) have been a major 
concern and a key focus of previous risk analyses. The PRA cites recent 
research conducted under laboratory conditions that prompted a 
reevaluation of the potential of Anastrepha spp. to infect Hass 
avocados. Based on this research, the Department's Agricultural 
Research Service concluded that commercially produced Hass avocados are 
very poor hosts for the Anastrepha spp. considered. Moreover, Hass 
avocados produced and exported using the systems approach described in 
this document have a low likelihood of being a pathway for Anastrepha 
spp. fruit flies and other quarantine pests.
    As described in the PRA, even if an infested avocado were to arrive 
in an area of the United States where host material was present, 
several additional conditions are required for pest establishment:
     The pest must survive in the avocado during transportation 
and storage;
     The infested avocado must be discarded in close proximity 
to host material;
     The pest must find a mate;
     The pest must successfully avoid predation and other 
threats;
     The adult pest must find appropriate host material; and
     Suitable climatological and microenvironmental conditions 
must exist.
    Although information that would allow quantifying these conditions 
is not currently available, the PRA concludes that collectively they 
substantially reduce the likelihood of pest establishment and the 
overall level of risk.
    The phytosanitary measures in the systems approach are designed to 
reduce the risk posed by the identified pathway pests. The 
effectiveness of this approach is evident from the failure to detect 
arthropods in even one avocado in the commercial pathway to the United 
States, despite very large samples and continuous, concerted survey and 
detection efforts. Further, avocado importations during the last 6 
years have provided APHIS with valuable experience managing the systems 
approach.
    Under Sec.  412(a) of the Plant Protection Act, the Secretary of 
Agriculture may prohibit or restrict the importation and entry of any 
plant or plant product if the Secretary determines that the prohibition 
or restriction is necessary to prevent the introduction into the United 
States or the dissemination within the United States of a plant pest or 
noxious weed.
    The Secretary has determined that it is not necessary to prohibit 
the importation of Hass avocados from Mexico subject to the 
phytosanitary requirements described in this proposed rule in order to 
prevent the introduction into the United States or the dissemination 
within the United States of a plant pest or noxious weed. This 
determination is based on the findings

[[Page 29468]]

of the risk assessment referred to earlier in this document, and the 
Secretary's judgment that the application of the measures required 
under Sec.  319.56-2ff would prevent the introduction or dissemination 
of plant pests into the United States.
    Based on the Secretary's determination, and in response to the 
Mexican Government's request, we are proposing to amend the regulations 
to expand, from 31 to 50, the number of States (plus the District of 
Columbia) in which fresh Hass avocado fruit grown in approved orchards 
in approved municipalities in Michoacan, Mexico, may be distributed. We 
are also proposing to allow the distribution of the Hass avocados 
during all months of the year. The proposed expansion of the Mexican 
Hass avocado import program would necessitate several other changes in 
the regulations, such as removing restrictions on the ports through 
which the avocados may enter the United States and the corridor through 
which the avocados must transit the United States.

Limited Distribution

    We are considering instituting a limited distribution plan that 
would delay the entry of Hass avocados from Mexico into commercial 
avocado-producing areas in the United States for up to 1 full year. 
This would mean that the importation and distribution of Mexican Hass 
avocados would continue to be prohibited into and within California, 
Florida, and Hawaii during the limited distribution period. This delay 
would provide an opportunity for the efficacy of the proposed 
regulations to be demonstrated under actual production and distribution 
conditions for up to 1 full year before Mexican Hass avocado imports 
would be allowed to enter commercial avocado-producing areas of the 
United States. We invite the public to submit information demonstrating 
whether or not this measure is warranted.

Proposed Changes

Shipping Restrictions

    In Sec.  319.56-2ff, paragraph (a), ``Shipping restrictions,'' 
currently provides that the avocados may be imported in commercial 
shipments only, that they may be imported only between October 15 and 
April 15 of the following year, and that they may be distributed only 
in the approved States listed earlier in this proposed rule.
    Under this proposed rule, we would allow the avocados to be 
imported during all months of the year, and would expand the number of 
States in which the avocados may be distributed.
    To make these proposed changes in the regulations, we would remove 
Sec.  319.56-2ff(a)(2), which limits imports to the period between 
October 15 and April 15. We would also remove the list of approved 
States in Sec.  319.56-2ff(a)(3), and would amend the title of the 
section, the introductory text of the section, and current paragraph 
(i) by removing references to ``approved States'' since the avocados 
would be distributed in all areas of the United States.

Safeguards in Mexico

    In Sec.  319.56-2ff, paragraph (c), ``Safeguards in Mexico,'' 
currently provides specific municipality, orchard and grower, and 
packinghouse requirements that must be met in order for the avocados to 
be eligible for entry in the United States. While this paragraph would 
remain largely the same under this proposed rule, we are proposing 
several changes.
    Throughout the paragraph, as well as in paragraphs (d) and (e), we 
would remove the current references to Sanidad Vegetal, which is 
Mexico's national plant protection organization (NPPO), and replace 
them with a more generic reference to ``the Mexican NPPO.'' Similarly, 
we would amend the introductory text of paragraph (c), which refers to 
``the Michoacan State delegate of the Secretaria de Agricultura, 
Ganaderia y Desarrollo Rural (SAGDR),'' so that it simply refers to 
``the Michoacan State delegate of the Mexican NPPO.'' Finally, in 
paragraphs (c)(2)(v) and (c)(3)(vi), we would replace references to a 
``Sanidad Vegetal registration number'' with references to an 
``official registration number.'' Referring to the NPPO generally, 
rather than by name, is consistent with the terminology used in the 
International Plant Protection Convention (IPPC) and would preclude the 
need to amend the regulations should the specific name of Mexico's NPPO 
change in the future.
    The municipality requirements in paragraph (c)(1) currently require 
that municipalities be surveyed at least annually and found to be free 
from the large avocado seed weevil Heilipus lauri, the avocado seed 
moth Stenoma catenifer, and the small avocado seed weevils 
Conotrachelus aguacatae and C. perseae. These surveys must be conducted 
during the growing season and completed prior to the harvest of the 
avocados. Because we are proposing to allow the avocados to be imported 
into the United States during all months of the year, we are proposing 
to require semiannual, rather than annual, surveys for those pests. The 
currently required pre-harvest survey, which is a wet season survey 
that normally occurs between July and September of each year, provides 
a good opportunity to detect fruit fly larvae, seed moth larvae, and 
adult stem weevils. To that we would add a second survey that would be 
conducted approximately 6 months later (starting in January) during the 
dry season, which would provide a good opportunity to detect stem 
weevil larvae in branches and fruit and seed moth larvae at the early 
point of flowering and at the decline of the peak harvest period.
    As part of this proposed change, we would remove the specific 
instructions in paragraph (c)(1)(ii) that the survey must cover at 
least 300 hectares in the municipality and include randomly selected 
portions of each registered orchard and areas with wild or backyard 
avocado trees as well as the requirements regarding the timing of the 
surveys. As the surveys themselves are required by the regulations, we 
believe that it is appropriate to leave the details of how and when the 
surveys are to be conducted to the annual work plan. The regulations 
require that the work plan, which is prepared by the Mexican NPPO, be 
approved by APHIS, and that APHIS will be directly involved in the 
monitoring and supervision of the activities covered by the work plan. 
APHIS would ensure that the surveys would be conducted in a manner that 
is consistent with the text of the current regulations.
    Like the municipality requirements discussed above, the orchard and 
grower requirements in paragraph (c)(2) currently require an annual 
inspection, in this case for the avocado stem weevil Copturus 
aguacatae. The survey must be conducted during the growing season and 
completed prior to the harvest of the avocados. For the same reasons as 
discussed above with respect to the municipality surveys, we are 
proposing to amend the regulations to require semiannual, rather than 
annual, orchard surveys for the avocado stem weevil. Our experience has 
shown that the period between May and July is an opportune time to 
detect seed weevil adults, and seed weevil larvae can be most readily 
detected during the November through April time period. As with the 
municipality surveys, the survey requirement itself would remain in the 
regulations, while the details of conducting the surveys would be 
addressed in the annual work plan. The details specified in the work 
plan would be consistent with those currently in the regulations.

[[Page 29469]]

    In the packinghouse requirements of paragraph (c)(3), paragraph 
(c)(3)(iv) states that prior to the culling process, a sample of 300 
avocados per shipment must be selected, cut, and inspected and found 
free from pests. We are proposing to remove the specific sample size of 
300 fruit and replace it with a requirement for a biometric sample at a 
rate determined by APHIS. We set the current 300 fruit figure, which is 
itself a biometric sample, to reach the 95 percent confidence level of 
detecting a 1 percent infestation for each shipment. (The actual sample 
number that we determined when using the 95 percent confidence level of 
detecting a 1 percent level of infestation ranged from 258 to 288 fruit 
for shipments ranging from 1,000 to 4,000 fruit, but we rounded up to 
300 at the beginning of the program.) This figure, however, does not 
allow us the flexibility to make adjustments that may be indicated by 
our monitoring of field conditions in the growing area. We have 
therefore determined that a biometric sample size as large as 300 fruit 
will be sampled from each shipment. Production areas and orchards with 
a past history of negative pest finds may have fewer then 300 fruit 
sampled. Thus, by requiring a biometric sample rather than a set 300 
fruit, we would have the flexibility to adjust sample sizes as 
appropriate.
    Also, in this paragraph, as well as several other places in the 
regulations, we would replace the term ``shipment'' with 
``consignment.'' ``Consignment'' is a term that is defined in the 
context of international trade agreements, whereas ``shipment'' is not. 
(Consignment is defined in the IPPC's Glossary of Phytosanitary Terms 
as ``a quantity of plants, plant products and/or other regulated 
articles being moved from one country to another and covered by a 
single phytosanitary certificate [a consignment may be composed of one 
or more lots].'')
    The packinghouse provisions in paragraph (c)(3)(vii) require that 
all boxes or crates of avocados be clearly marked with, among other 
things, the statement ``Not for distribution in AL, AK, AZ, AR, CA, FL, 
GA, HI, LA, MS, NV, NM, NC, OK, OR, SC, TN, TX, WA, Puerto Rico, and 
all other U.S. Territories.'' To reflect the proposed expansion of the 
avocado import program into all areas of the United States, we would 
remove that requirement.
    Paragraph (c)(3)(viii) requires that, prior to leaving the 
packinghouse, the truck or container transporting the avocados must be 
secured by Sanidad Vegetal with a seal that will be broken when the 
truck or container is opened. Once sealed, the refrigerated truck or 
refrigerated container must remain unopened until it reaches the port 
of first arrival in the United States. We are proposing to replace the 
requirement for seals with a requirement for the avocados to be packed 
in insect-proof cartons, loaded in insect-proof containers, or covered 
with insect-proof mesh or plastic tarpaulin prior to leaving the 
packinghouse. We believe that these safeguards, which would have to be 
intact when the avocados arrive at the port of first arrival in the 
United States, would provide the necessary protection from pest 
infestation for avocados as they transit Mexico en route to the United 
States. This proposed change from sealed conveyances to safeguarding 
containers is not considered in the PRA. However, we believe this 
change would provide for an equal, if not greater degree of protection 
against the infestation of harvested avocados by fruit flies. Requiring 
the use of insect-proof coverings would help ensure that the fruit 
remains protected from infestation during all phases of transit, 
including those times when Mexican authorities inspect for illegal 
drugs and other contraband.

Pest Detection

    In Sec.  319.56-2ff, paragraph (e), ``Pest detection,'' provides 
that if the stem weevil Copturus aguacatae is detected in an orchard or 
in fruit at a packinghouse, the orchard where the pest was found or 
where the infested fruit originated will lose its export certification 
immediately and will be denied export certification for the entire 
shipping season of October 15 through April 15. Because we are 
proposing to allow the importation of avocados during all months of the 
year, the language regarding the shipping season would no longer be 
applicable. We would, therefore, amend paragraphs (e)(2) and (e)(3) to 
provide that the orchard would lose its export certification 
immediately and that avocado exports from that orchard would be 
suspended until APHIS and the Mexican NPPO agreed that the pest 
eradication measures taken have been effective and that the pest risk 
within that orchard has been eliminated. This is the approach currently 
applied under paragraph (c)(1) when specified pests are detected within 
a municipality, and we believe that it can be effectively employed at 
the orchard level as well.

Ports

    In Sec.  319.56-2ff, paragraph (f), ``Ports,'' currently provides 
that the avocados may enter the United States only at certain ports, 
i.e.:
     Any port located in an approved State;
     The ports of Galveston or Houston, TX, or the border ports 
of Nogales, AZ, or Brownsville, Eagle Pass, El Paso, Hidalgo, or 
Laredo, TX; or
     Other ports within that area of the United States 
specified in Sec.  319.56-2ff(g).
    These port of entry limitations were intended to work in concert 
with the shipping area provisions of Sec.  319.56-2ff(g) described 
below to ensure that the avocados were moved by the most direct route 
from the U.S./Mexican border to the approved States where they may be 
distributed. Because we are proposing to remove the distribution 
restrictions on the avocados once they have entered the United States, 
port of entry limitations of paragraph (f) would no longer be 
necessary. Therefore, we are proposing to remove Sec.  319.56-2ff(f).

Shipping Areas

    In Sec.  319.56-2ff, paragraph (g), ``Shipping areas,'' currently 
describes the areas of the United States that avocados moving by truck 
or rail car may transit while en route to approved States. This transit 
corridor was established to ensure that the avocados were moved by the 
most direct route from the U.S./Mexican border to the approved States 
where they may be distributed. Given that we are proposing to remove 
the distribution restrictions on the avocados once they have entered 
the United States, shipping area provisions of paragraph (g) would no 
longer be necessary. Therefore, we are proposing to remove Sec.  
319.56-2ff(g).

Shipping Requirements

    In Sec.  319.56-2ff, paragraph (h), ``Shipping requirements,'' 
currently provides that the avocados must be moved through the United 
States either by air or in a refrigerated truck or refrigerated rail 
car or in a refrigerated container on a truck or rail car. If the 
avocados are moved in a refrigerated container on a truck or rail car, 
an inspector must seal the container with a serially numbered seal at 
the port of first arrival in the United States. If the avocados are 
moved in a refrigerated truck or a refrigerated rail car, an inspector 
must seal the truck or rail car with a serially numbered seal at the 
port of first arrival in the United States. If the avocados are 
transferred to another vehicle or container in the United States, an 
inspector must be present to supervise the transfer and must apply a 
new serially numbered seal. The

[[Page 29470]]

avocados must be moved through the United States under Customs bond.
    As discussed previously, we are proposing to require that the 
avocados be packed, at the packinghouse in Mexico, in insect-proof 
cartons or covered with insect-proof mesh or a plastic tarpaulin, and 
that those safeguards must remain intact upon the arrival of the fruit 
in the United States. These proposed safeguards would ensure that the 
packed fruit is protected from pest infestation as it is moved in a 
refrigerated truck or refrigerated container through Mexico. Given that 
we are proposing to remove the distribution restrictions on the 
avocados once they have entered the United States, shipping 
requirements of paragraph (h) would no longer be necessary. Therefore, 
we are proposing to remove Sec.  319.56-2ff(h).

Inspections

    In Sec.  319.56-2ff, paragraph (i), ``Inspections,'' currently 
provides that the avocados are subject to inspection by an inspector at 
the port of first arrival, at any stops in the United States en route 
to an approved State, and upon arrival at the terminal market in the 
approved States. At the port of first arrival, an inspector will sample 
and cut avocados from each shipment to detect pest infestation.
    We would amend these provisions by removing the references to 
inspections while the avocados are en route to approved States and at 
terminal markets in approved States, as such references would not be 
necessary with the proposed expansion of the number of States in which 
the avocados could be distributed. Also in this paragraph, we would 
replace the term ``shipment'' with ``consignment'' as discussed above.
    Finally, to reflect the proposed removal of paragraphs (f), (g), 
and (h) discussed above, we would redesignate paragraph (i) as 
paragraph (f).

Repackaging and Compliance Agreements

    In a final rule effective January 5, 2000, and published in the 
Federal Register on December 6, 1999 (64 FR 68001-68005, Docket No. 99-
020-2), we amended the regulations to require handlers and distributors 
to enter into compliance agreements with APHIS and added requirements 
regarding the repackaging of the avocados after their entry into the 
United States. We made those changes to ensure that distributors and 
handlers were familiar with the distribution restrictions and other 
requirements of the regulations and to ensure that any boxes used to 
repackage the avocados in the United States would bear the same 
information that is required to be displayed on the original boxes in 
which the fruit was packed in Mexico. The provisions regarding 
repackaging are found in current paragraph (j) of the regulations, and 
the compliance agreement provisions are in paragraph (k). Because those 
provisions were intended to reinforce the limited distribution 
safeguards of the avocado import program, we believe that they would no 
longer be necessary in light of the proposed expansion of the Mexican 
avocado import program. Therefore, we are proposing to remove 
paragraphs (j) and (k) of Sec.  319.56-2ff.
    While we believe that the repackaging provisions of paragraph (j) 
are no longer necessary for the purpose they were originally intended--
i.e., to reinforce the limited distribution safeguards of the avocado 
import program--we do believe that they may be of use were it to become 
necessary, for any reason, to trace repackaged avocados back to the 
packinghouse from which they were shipped or the orchard in which they 
were grown. In addition, we note that other commodities subject to the 
regulations are required to be packed in boxes that must be marked with 
specific information such as has been required for Mexican avocados. 
For example, under Sec.  319.56-2(g), each box of fruit or vegetables 
imported into the United States in accordance with Sec.  319.56-2(e)(3) 
or (4) and Sec.  319.56-2(f) must be clearly labeled with the name of 
the orchard or grove of origin, or the name of the grower; the name of 
the municipality and State in which it was produced; and the type and 
amount of fruit it contains. Similarly, under Sec.  319.56-2t, boxes of 
papayas from Belize must be marked ``Not for importation into or 
distribution within HI.''
    In order to facilitate the traceback of fruits or vegetables when 
necessary, we believe that it would be useful to apply the repackaging 
requirements described in paragraph (j) to all imported plants and 
plant parts covered under part 319, such as Mexican avocados or the 
papayas from Belize cited above. Therefore, we are planning to publish 
a separate proposed rule that would add a general repackaging 
requirement to the regulations in ``Subpart--Imported Plants and Plant 
Parts'' (Sec. Sec.  301.10 and 301.11), which addresses the interstate 
movement of imported articles that are subject to distribution 
restrictions under part 319. Because this proposed change would affect 
numerous other commodities in addition to avocados, we will address 
this change in a separate rulemaking in order to give all potentially 
affected entities a meaningful opportunity to comment.

Other Proposed Changes

    Elsewhere in the fruits and vegetables regulations, Sec.  319.56-
2bb, ``Administrative instructions governing movement of Hass avocados 
from Mexico to Alaska,'' provides for the importation into Alaska of 
Hass avocados grown in Michoacan, Mexico. With the proposed expansion 
of the Mexican avocado import program, we believe it is no longer 
necessary to have a separate section pertaining specifically to the 
importation of Hass avocados from Mexico into Alaska during all months 
of the year. Therefore, we would remove and reserve Sec.  319.56-2bb.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The rule has been determined to be economically significant for the 
purposes of Executive Order 12866 and, therefore, has been reviewed by 
the Office of Management and Budget.
    For this proposed rule, we have prepared an economic analysis. The 
economic analysis contains cost-benefit analysis as required by 
Executive Order 12866, as well as an initial regulatory flexibility 
analysis that considers the potential economic effects of this proposed 
rule on small entities, as required by the Regulatory Flexibility Act. 
The economic analysis is summarized below. Copies of the full analysis 
may be obtained from the person listed under FOR FURTHER INFORMATION 
CONTACT. In addition, the full analysis may be viewed on the Internet 
at http://www.aphis.usda.gov/ppq/avocados/ or in our reading room 
(information on the location and hours of the reading room is provided 
under the heading ADDRESSES at the beginning of this proposed rule). We 
do not currently have all of the data necessary for a comprehensive 
analysis of the effects of this proposed rule on small entities. 
Therefore, we are inviting comments on potential effects. In 
particular, we are interested in determining the number and kind of 
small entities that may incur benefits or costs from the implementation 
of this proposed rule.
    Under the Plant Protection Act (7 U.S.C. 7701-7772), the Secretary 
of Agriculture is authorized to regulate the importation of plants, 
plant products, and other articles to prevent the introduction of plant 
pests and noxious weeds.

[[Page 29471]]

Summary of Economic Analysis

    This analysis addresses economic impacts of a proposed rule that 
would allow fresh Hass avocados from Mexico to be imported into all 
States of the United States throughout the year. APHIS is proposing 
this action at the request of the Government of Mexico. Economic 
effects of the rule are analyzed as required by Executive Order 12866. 
Possible impacts on small entities are considered in accordance with 
the Regulatory Flexibility Act.
    Economic effects of allowing Hass avocados from Mexico to be 
imported into all States year-round are analyzed using a static, 
partial equilibrium model. The model has three demand regions: 31 
northeastern and central States (and the District of Columbia) 
currently approved to receive Hass avocado imports from Mexico during 
the 6-month period October 15-April 15 (Region A); 16 Pacific and 
southern States, excluding California and Florida, not approved to 
receive Hass avocados from Mexico (Region B); and California and 
Florida (Region C). Separation of California and Florida into a third 
region is based on their much higher per capita demand for Hass 
avocados compared to other States.
    There are three supply regions in the model: California, Mexico, 
and Chile. Nearly all U.S. Hass avocado production takes place in 
California. Over 96 percent of all Hass avocado imports are supplied by 
Chile and Mexico. Two time periods are specified in the model, given 
the current 6-month restriction on Hass avocado imports from Mexico: 
October 15-April 15 (Period 1) and April 16-October 14 (Period 2). 
Throughout the following discussion, ``avocado'' refers only to fresh 
Hass avocados unless otherwise indicated.
    With respect to pest risks, a systems approach currently in place 
provides redundant safeguards against pest introduction. Risk 
mitigation measures include pest field surveys; orchard certification; 
and packinghouse, packaging, and shipping requirements. Since shipments 
into the conterminous United States began in 1997, cutting and 
inspection of over 10 million Mexican avocados has not revealed any 
quarantine pests.
    The proposed rule includes certain changes in the risk mitigations. 
In the approved orchards in Michoac[eacute]n, Mexico, surveys for the 
quarantine pests of concern would be increased from annually to 
semiannually, given that the avocados would be allowed to be imported 
throughout the year. In the packinghouses, a sample of 300 avocados per 
consignment currently must be selected, cut, and inspected and found 
free from pests. APHIS is proposing to remove the specific sample size 
of 300 fruit and replace it with a requirement for a biometric sample 
at a rate determined by APHIS and based on field conditions in the 
growing area. Consignments of avocados would no longer need to be 
officially sealed before shipment, but rather would be required to be 
packed, at the packinghouse in Mexico, in insect-proof cartons or 
covered with insect-proof mesh or a plastic tarpaulin that must remain 
intact upon arrival of the avocados in the United States. Ports-of-
entry and transit pathways would no longer be restricted, since access 
would be allowed to all States. Repackaging requirements specific to 
Mexican avocados after they enter the United States would be replaced 
by general repackaging requirements for imported plants and plant 
parts. Costs related to any of these changes are expected to be small 
and not significantly influence the supply of Mexican avocados. Costs 
associated with risk mitigation changes in Mexico would be borne by 
Mexican entities.

The Model

    The analysis is based on a set of equations that describe, on the 
demand side, avocado consumption in the United States, and on the 
supply side, foreign and domestic avocado production for the U.S. 
market. Demand for avocados in the model is derived from a weakly 
separable utility function for a representative consumer. The utility 
function is assumed to contain two partitions of all goods purchased by 
consumers: Avocados and everything else. In addition, avocados produced 
in each of the three supply regions are assumed to be heterogeneous 
products, based on observed wholesale price differentials. A nested 
constant elasticity of substitution (CES) utility function is used. The 
main advantage of this functional form is the minimal number of 
parameters needed to make the model operational. A major disadvantage 
of the CES utility function is that income elasticities can only equal 
1.
    On the supply side, a constant elasticity of transformation (CET) 
production possibility frontier is used to capture the option of 
producers to leave ripe avocados on the tree and shift their sale 
between time periods as relative prices change. Like the CES utility 
function, the main advantage of the CET function is that it is 
parsimonious in the parameters. Only a single, constant elasticity of 
transformation must be chosen in order to apply this functional form.
    Initial quantities and prices used as the baseline for the model 
are averages for the 2-year period October 15, 2000, to October 15, 
2002. Constant elasticities of substitution and transformation are 
specified, based on demand and supply elasticities derived from the 
literature, namely: A wholesale-level price elasticity of demand for 
California of -0.96, an aggregated wholesale-level price elasticity of 
demand of -0.67, and a price elasticity of supply for California of 
0.35. The elasticities of substitution and transformation are then 
applied to the model's demand and supply equations to replicate the 
baseline quantities and prices, yielding shift parameter values. The 
equations are then resolved using different shift parameters to account 
for the greater access to U.S. markets afforded avocado imports from 
Mexico under the proposed rule. Resulting changes in prices and 
quantities provide the basis for approximating welfare impacts for 
avocado consumers and producers in the United States, and effects for 
small entities.
    Shift parameters for avocados from Mexico have initial zero values 
in Regions B and C (Pacific and southern States) at all times and in 
Region A (northeastern and central States) during Period 2. Without 
adjusting these parameters, the model cannot show the effect on U.S. 
avocado demand of allowing Mexican avocados year-round access to all 
States. This raises the question of what this adjustment should be. 
Changes in the shift parameters can be thought of as changes in non-
price influences on the relative demand for avocados. Even if avocados 
from the three supply regions were equal in price, demand for them 
would not be the same because of consumers' perceptions and 
preferences.
    We assume that with removal of import restrictions, shift parameter 
values for avocados from Mexico that are initially zero can be set 
equal to the shift parameter values for Chilean avocados, by demand 
region and time period. In other words, consumers' preference for 
Mexican avocados would be the same as their preference for Chilean 
avocados. This adjustment rule may overstate this effect for Mexican 
avocados with respect to California avocados, and understate the effect 
with respect to Chilean avocados. Changes in demand for California 
avocados (and impacts for California producers) estimated by the model 
may therefore be larger than would be the case if newly available 
avocados from Mexico were to result in a decline in the shift parameter

[[Page 29472]]

not only for California avocados, but for Chilean avocados as well.
    Another basis for adjustment of the shift parameters would be to 
equate them to the initial parameter values for Region A during Period 
1: Approximately 0.39 for California, 0.14 for Chile, and 0.47 for 
Mexico. However, applying these shift parameters to Region A in Period 
2 and to Regions B and C in both time periods would result in an even 
larger increase in Mexico's supply and decrease in the supply by 
California's producers than is shown by the analysis. Moreover, Region 
A during Period 1 is the demand region and time period of least 
importance to California's producers, whereas most of Mexico's 
worldwide avocado exports occur during the October 15 to April 15 time 
period.
    We invite public comment on the basis by which we adjust the shift 
parameters for this analysis. We welcome suggestions of other possible 
adjustment rules.
    In the model, California producer prices are free on board (FOB) 
prices reported by the California Avocado Commission. Chilean and 
Mexican producer prices are cost insurance freight (CIF) import values 
reported by USDA's Foreign Agricultural Service. ``Producer'' prices 
refer in all cases to the FOB and CIF values.
    Currently, Mexico is exporting to the United States a fraction of 
the avocados that could be exported from approved orchards and 
municipalities in the State of Michoac[aacute]n. An estimated 479 
million pounds of fresh avocados could be certified for export to the 
United States. During the baseline period, imports from Mexico totaled 
approximately 64.2 million pounds, or 13.4 percent of what potentially 
could be certified for export to the United States. It is apparent that 
Mexican producers could readily expand their level of exports to the 
United States at the current price level. Compared to an average 
wholesale price during the baseline period in the United States of 
$1.14 per pound, the average wholesale price in Mexico in 2001 was 
$0.46 per pound, and in 2002, $0.37 per pound. We assume in the model 
that the export supply of avocados from Mexico is perfectly elastic, 
and that the price Mexico's producers receive for their exports is 
constant (or fixed). We recognize that, in reality, prices in Mexico 
are not constant, and that this assumption results in a larger level of 
avocado imports from Mexico than if their demand were modeled as price-
responsive. However, price changes are likely to be very small as long 
as there are large quantities of avocados that meet requirements for 
sale in the United States but are consumed domestically within Mexico 
or are exported elsewhere.

Effects on Supply and Demand

    Impacts on quantities and prices are shown in table 1. Overall, 
U.S. avocado consumption under the proposed rule would increase by 10.4 
percent. Quantities supplied by California and Chile would decline by 
9.5 percent and 8.9 percent, respectively, while imports from Mexico 
would increase to nearly 3.7 times their initial level, from 38.5 
million pounds to over 141 million pounds.
    Given producers' inelastic supply, the decline in price is of 
greater significance for California producers than is the decline in 
the quantity supplied. California's prices would fall by 15.4 percent 
at the wholesale level and by 25.6 percent at the producer level. Price 
impacts for avocados supplied by Chile would be much smaller, since 
their initial price is closer to that of avocados from Mexico.
    Effects by demand region, supply region, and time period are 
provided by the model. Two-thirds of avocado imports from Mexico under 
the proposed rule would enter during Period 1. In Regions B and C 
during Period 1, avocados from Mexico would displace 30 percent and 23 
percent of the avocados that had been supplied by California.
    Because overall demand for avocados from California and Chile would 
decrease in both time periods, wholesale and producer prices for 
avocados from California and Chile also would decrease in both time 
periods. Imports from Mexico during Period 1 would comprise a larger 
share of total avocado consumption and therefore would exert greater 
downward pressure than during Period 2 on prices of avocados supplied 
by California and Chile.

                            Table 1.--Summary of Changes in Quantities and Prices\1\
----------------------------------------------------------------------------------------------------------------
                                         Initial prices
                                         and quantities     With rule \3\          Change          Percentage
                                              \2\                                                    change
----------------------------------------------------------------------------------------------------------------
Quantity (millions of pounds)
    Total............................            537.643            593.785            +56.142             +10.4
Supplied by:
    California.......................            376.629            340.895            -35.734              -9.5
    Chile............................            122.564            111.715            -10.849              -8.9
    Mexico...........................             38.450            141.174           +102.724            +267.2
Wholesale price of avocados (in
 dollars per pound) supplied by:
    California.......................             $1.49              $1.26             -$0.23              -15.4
    Chile............................             $1.24              $1.16             -$0.08               -6.5
Producer price for:
    California.......................             $0.90              $0.67             -$0.23              -25.6
    Chile............................             $0.52              $0.45             -$0.07             -13.5
----------------------------------------------------------------------------------------------------------------
\1\ Prices weighted by regional and time period quantities.
\2\ Baseline.
\3\ Effects of the rule on quantities and prices (simulation results).

Welfare Effects

    Price and quantity changes described by the model translate into 
the welfare changes for U.S. avocado consumers and producers are shown 
in table 2. For consumers, the concept of equivalent variation is used 
to quantify these changes. Equivalent variation (EV) refers to the 
additional amounts of income measured at initial equilibrium prices 
that would be equal to the price and quantity changes from removing the 
restrictions on the importation of avocados from Mexico.
    Under the proposed rule, the decrease in California avocado prices 
due to producers' inelastic supply response would result in large gains 
in consumer

[[Page 29473]]

utility. EV across all regions and time periods would total $115.3 
million. Not surprisingly, consumers in Region A in Period 1 would gain 
the least, since this is the region already approved to receive 
avocados from Mexico. Consumer gains in Regions B and C would be 
similar for both time periods.
    Welfare impacts for avocado producers in California and Chile are 
determined by computing changes in producer surplus based on their 
avocado factor endowment supply curves. A fall in producer prices will 
decrease the amount of factor endowment employed in avocado production. 
Given the decline in producer prices, California avocado producers 
would experience welfare losses equivalent to $84.5 million. Chile's 
suppliers would lose producer surplus equivalent to $8.5 million.
    The net change in U.S. welfare is computed by subtracting the loss 
in producer surplus for California producers from the total EV. As 
shown in table 2, the net welfare gain would be $30.8 million.
    A sensitivity analysis was conducted of the changes in avocado 
supply and demand and changes in consumer and producer welfare, in 
recognition of the uncertainty surrounding parameters and exogenous 
variables such as the demand and supply elasticities. The results of 
the sensitivity analysis for the welfare effects are given in the mean 
and standard deviation columns in table 2. Relative to the baseline and 
mean values, the standard deviations for the EV values are small, 
suggesting that the parameters and exogenous variables used in the 
model are reasonable. The standard deviations for the changes in 
producer surplus are larger, implying a lower level of confidence in 
the precision of the results. In the sensitivity analysis, the loss in 
producer surplus for California producers ranged from $65.3 million to 
$114.2 million.

                                       Table 2.--Welfare Gains and Losses
                                            [in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                             Welfare effect
                                                                   \1\            Mean \2\        Std. dev.\3\
----------------------------------------------------------------------------------------------------------------
Changes in producer surplus
        California........................................           -$84.49           -$86.88            $16.45
        Chile.............................................             -8.46             -9.23              2.98
Equivalent variation
    Time period 1 \4\
        Region A..........................................              7.92              8.31              1.33
        Region B..........................................             24.36             25.02              2.19
        Region C..........................................             23.80             24.57              2.58
    Time period 2 \5\
        Region A..........................................             14.70             14.92              3.19
        Region B..........................................             22.06             22.36              4.25
        Region C..........................................             22.44             22.80              5.21
Net U.S. welfare change...................................             30.78             31.10             2.30
----------------------------------------------------------------------------------------------------------------
\1\ The difference between baseline values and values with the proposed rule.
\2\ Mean values of the sensitivity analysis distributions.
\3\ Standard deviations of the sensitivity analysis distributions.
\4\ October 15-April 15.
\5\ April 16-October 14.

Effects on Small Entities

    As a part of the rulemaking process, APHIS evaluates whether 
regulations are likely to have a significant economic impact on a 
substantial number of small entities. The Small Business Administration 
has set size criteria for small entities according to the categories of 
the North American Industrial Classification System. Entities that 
would be directly affected by the proposed rule are U.S. producers, 
handlers (firms engaged in postharvest activities), and importers of 
avocados.
    APHIS is unable to assess effects of the proposed rule for small-
entity avocado handlers and importers, since we are lacking information 
on the number of firms that would be affected, their size 
distributions, and degree to which their businesses depend on the 
avocado industry. In general, handlers operating in California could be 
expected to experience a decline in business, based on the results of 
the analysis. Negative effects could be at least partially cancelled by 
additional avocado business activities in Mexico in which U.S. handlers 
may be involved.
    U.S. avocado importers as a group would gain from the increased 
volume of imports from Mexico, but gains for the industry would be 
tempered by reduced imports from Chile. We welcome information that 
would allow us to evaluate impacts of the proposed rule for affected 
handlers and importers that are small entities.
    California's large and small avocado producers are expected to 
incur welfare losses as described. APHIS has been unable to obtain 
current information on the size distribution of affected avocado 
producers. For the purposes of our analysis, we rely on information 
provided in the 1997 Census of Agriculture on the size distribution of 
avocado farms. (Information from the 2002 Census of Agriculture is not 
yet available.)
    An avocado farm is considered small if it has annual receipts of 
not more than $750,000. According to the 1997 Census of Agriculture, 
over 98 percent of avocado farms are small entities. The Census of 
Agriculture data include producers of all varieties of avocados. We 
assume Hass avocado production is distributed proportionately among the 
various farm sizes, that is, over 98 percent of the farms growing Hass 
avocados are small.
    Expected impacts can be described in terms of decreases in gross 
revenue for California producers, as shown in table 3. The model 
indicates that the overall decline in gross revenue would be 32.9 
percent.

[[Page 29474]]



     Table 3.--Annual Impact on Gross Revenue for California Avocado
                                Producers
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Initial gross revenue (baseline) \1\...  $339.38 million.
Gross revenue with proposed rule \1\...  $227.83 million.
Decrease in gross revenue incurred by    $111.55 million.
 large and small Hass avocado producers.
Decrease incurred by small entity        $70.28 million.
 avocado producers \2\.
Decrease as a percentage of initial      32.9%.
 gross revenue \3\.
------------------------------------------------------------------------
\1\ Gross revenue values are based on the producer prices and demand
  quantities for avocados supplied by California, shown rounded in table
  1.
\2\ Decreases in gross revenue are multiplied by 63 percent, the
  percentage of the total value produced by farms with less than 100
  acres harvested in 1997. Hass avocado production is assumed to be
  proportionally distributed among farms of all sizes.
\3\ The decrease in gross revenue is assumed to be proportionally spread
  across all producers.

    In evaluating the expected impact on California's small-entity 
avocado producers, the large number of very small farms should be 
acknowledged. As indicated by the 1997 data, over one-half of the 
avocado farms that year harvested less than 5 acres. Average 1997 gross 
income for these farms was about $4,800. Clearly, farms of less than 5 
acres could not be the principal source of income for their owners. 
Notwithstanding this large percentage of very small farms, table 3 
indicates that California small-entity avocado farms could be seriously 
affected by the proposed rule. Generally, we assume regulations that 
entail compliance costs equal to a small business's profit margin--5 to 
10 percent of annual sales--pose an impact that can be considered 
significant. Impacts simulated by this model would meet this criterion.

Alternatives

    One alternative to the proposed rule would be to leave the 
regulations unchanged. In this case, access of Mexican avocados would 
continue to be restricted to the 31 States and the District of Columbia 
currently approved to receive avocados from Mexico between October 15 
and April 15 (and Alaska year-round). Impacts for U.S. producers and 
consumers simulated for the proposed rule would not occur. In general, 
demand for avocados from all three supply regions would be expected to 
continue to expand due to growth in population and income. It is noted, 
however, that increases in avocado imports from Mexico in recent years 
(27.9 million pounds in 2001, 58.8 million pounds in 2002, 76.8 million 
pounds in 2003, as reported by World Trade Atlas) would indicate that 
suppliers of Mexican avocados also may be increasing their market share 
in the currently approved States.
    Other alternatives to the proposed rule would be to increase access 
of Mexican avocados to the United States, but not to all States year-
round. We would expect that any expansion of Mexico's access to the 
U.S. market other than that proposed, either regionally or by time 
period, would result in a lower level of additional avocado imports 
from Mexico and therefore smaller price and quantity impacts for 
California avocado producers. California producers' welfare losses 
would be less, as would welfare gains for consumers. Net welfare 
benefits of such alternatives would depend upon the relative magnitude 
of changes in U.S. producer and consumer surplus.
    To illustrate the impacts of such an alternative, we consider 
effects of allowing access of Mexican avocados to all States except the 
avocado-producing States of California, Florida, and Hawaii. An 
analysis of expected impacts of this alternative, summarized here, is 
based on entry of Mexican avocados into California and Florida 
continuing to be prohibited. These two States produce over 99 percent 
of the Nation's avocados (all varieties). Hawaii's small production is 
largely for intrastate sale.
    Quantity and price changes of allowing Mexican avocados to enter 
all States throughout the year, except California, Florida, and Hawaii, 
are shown in table 4. Under this alternative, avocado consumption would 
increase by 6.8 percent (compared to 10.4 percent under the proposed 
rule). Quantities supplied by California and Chile would decline by 5.6 
percent and 5.8 percent, respectively (compared to 9.5 and 8.9 
percent), while imports from Mexico would increase to 103 million 
pounds (compared to 141 million pounds), about 2\1/2\ times their 
initial level. California's prices would fall by 10.1 percent at the 
wholesale level (compared to 15.4 percent) and by 15.6 percent at the 
producer level (compared to 25.6 percent). Thus, all impacts are 
diminished in comparison to those that would result from the proposed 
rule.
    Welfare effects for this alternative are shown in table 5. Total 
equivalent variation across all regions and time periods would be $76.3 
million, compared to $115.3 million under the proposed rule. California 
avocado producers would experience welfare losses of $52.4 million 
(compared to $84.5 million). The net gain in welfare for the United 
States would be $23.9 million (compared to $30.8 million).

     Table 4.--Alternative of Allowing Avocados From Mexico To Be Imported Year-Round Into All States Except
                 California, Florida, and Hawaii; Summary of Changes in Quantities and Prices\1\
----------------------------------------------------------------------------------------------------------------
                                         Initial prices
                                         and quantities    With alternative        Change          Percentage
                                              \2\                \3\                                 change
----------------------------------------------------------------------------------------------------------------
Quantity (millions of pounds)
    Total............................            537.643            574.296            +36.653              +6.8
Supplied by:
    California.......................            376.629            355.480            -21.149              -5.6
    Chile............................            122.564            115.511             -7.053              -5.8
    Mexico...........................             38.450            103.305            +64.855            +168.7
Wholesale price of avocados (in
 dollars per pound) supplied by:
    California.......................             $1.49              $1.34              $0.15              -10.1
    Chile............................             $1.24              $1.19             -$0.05               -4.0
Producer price for:
    California.......................             $0.90              $0.76             -$0.14              -15.6

[[Page 29475]]

 
    Chile............................             $0.52              $0.47             -$0.05              -9.6
----------------------------------------------------------------------------------------------------------------
\1\ Prices weighted by regional and time period quantities.
\2\ Baseline.
\3\ Effects of the rule on quantities and prices (simulation results).

    As with the sensitivity analysis of impacts of the proposed rule, a 
sensitivity analysis for this alternative indicated small standard 
deviations for the EV values and larger ones for the producer surplus. 
The loss in producer surplus for California producers was found to 
range from $40.6 million to $71.2 million.
    Expected impacts for California's small-entity avocado producers 
under this alternative, in terms of the decreases in gross revenue, are 
shown in table 6. The decline would be 20.5 percent, compared to a 
decline of nearly 33 percent under the proposed rule. California small-
entity avocado farms could still be greatly affected under this 
alternative, but not as severely.
    In sum, effects in terms of changes in prices, quantities, and 
welfare measures would be smaller than the impacts expected under the 
proposed rule. By excluding California, Florida, and Hawaii from the 
proposed increased access for Mexican avocados, California's producers 
would experience smaller welfare losses, but consumers' gains and net 
welfare gains would also be lower. The proposed rule allowing Mexican 
avocados to be imported into all States year-round is based on the pest 
risk assessment's conclusion of an overall low likelihood of quarantine 
pest introduction.

     Table 5.--Alternative of Allowing Avocados From Mexico To Be Imported Year-Round Into All States Except
                            California, Florida, and Hawaii; Welfare Gains and Losses
----------------------------------------------------------------------------------------------------------------
                                                              Wefare effect
                                                                   \1\            Mean \2\        Std. dev.\3\
----------------------------------------------------------------------------------------------------------------
Changes in producer surplus
        California........................................           -$52.39           -$54.11            $10.59
        Chile.............................................             -5.59              6.13              2.05
Equivalent variation
    Time period 1 \4\
        Region A..........................................              3.99              4.20              0.76
        Region B..........................................             18.27             18.64              1.31
        Region C..........................................             12.36             12.97              2.28
    Time period 2 \5\
        Region A..........................................             10.89             11.11              1.87
        Region B..........................................             16.98             17.28              2.49
        Region C..........................................             13.79             14.20              3.47
Net U.S. welfare change...................................             23.89             24.29             1.27
----------------------------------------------------------------------------------------------------------------
\1\ The difference between baseline values and values with the alternative.
\2\ Mean values of the sensitivity analysis distributions.
\3\ Standard deviations of the sensitivity analysis distributions.
\4\ October 15-April 15.
\5\ April 16-October 14.


  Table 6.--Alternative of Allowing Avocados From Mexico To Be Imported
   Year-Round Into All States Except California, Florida, and Hawaii;
     Annual Impact on Gross Revenue for California Avocado Producers
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Initial gross revenue (baseline).......  $338.97 million.
Gross revenue under the alternative....  $269.60 million.
Decrease in gross revenue incurred by    $69.37 million.
 large and small Hass avocado producers.
Decrease incurred by small entity        $43.70 million.
 avocado producers \1\.
Decrease as a percentage of initial      20.5%.
 gross revenue \2\.
------------------------------------------------------------------------
\1\ Decreases in gross revenue are multiplied by 63 percent, the
  percentage of the total value produced by farms with less than 100
  acres harvested in 1997. Hass avocado production is assumed to be
  proportionally distributed among farms of all sizes.
\2\ The decrease in gross revenue is assumed to be proportionally spread
  across all producers.

    This proposed rule contains no new information collection 
requirements. (See Paperwork Reduction Act below.)

Executive Order 12988

    This proposed rule would allow avocados to be imported into the 
United States from certified orchards in Michoacan, Mexico. If this 
proposed rule is adopted, State and local laws and regulations 
regarding avocados imported under this rule would be preempted while 
the fruit is in foreign commerce. Fresh fruits and vegetables are 
generally imported for immediate distribution and sale to the consuming 
public and would remain in foreign commerce until sold to the ultimate 
consumer. The question of when foreign commerce ceases in other cases 
must be addressed on a case-by-case basis. If this proposed rule is 
adopted, no retroactive effect will be given to this rule, and this 
rule will not require administrative

[[Page 29476]]

proceedings before parties may file suit in court challenging this 
rule.

National Environmental Policy Act

    An environmental assessment has been prepared for this proposed 
rule. The environmental assessment, which takes into account the 
findings of the risk assessment, documents our review and analysis of 
the potential environmental impacts associated with the importation of 
Hass avocados from Mexico under the conditions specified in this 
proposed rule. We are making this environmental assessment available to 
the public for review and comment. We will consider all comments that 
we receive on or before the date listed under the heading DATES at the 
beginning of this notice.
    The environmental assessment was prepared in accordance with: (1) 
The National Environmental Policy Act of 1969 (NEPA), as amended (42 
U.S.C. 4321 et seq.), (2) regulations of the Council on Environmental 
Quality for implementing the procedural provisions of NEPA (40 CFR 
parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 
1b), and (4) APHIS' NEPA Implementing Procedures (7 CFR part 372).
    The environmental assessment is available for viewing on the 
Internet at http://www.aphis.usda.gov/ppq/avocados/. Copies of the 
environmental assessment are also available for public inspection in 
our reading room. (Information on the location and hours of the reading 
room is provided under the heading ADDRESSES at the beginning of this 
proposed rule). In addition, copies may be obtained by calling or 
writing to the individual listed under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

    This proposed rule contains no information collection or 
recordkeeping requirements under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.).

List of Subjects 7 CFR Part 319

    Bees, Coffee, Cotton, Fruits, Honey, Imports, Logs, Nursery stock, 
Plant diseases and pests, Quarantine, Reporting and recordkeeping 
requirements, Rice, Vegetables.

PART 319--FOREIGN QUARANTINE NOTICES

    1. The authority citation for part 319 would continue to read as 
follows:

    Authority: 7 U.S.C. 450 and 7701-7772; 21 U.S.C. 136 and 136a; 7 
CFR 2.22, 2.80, and 371.3.


Sec.  319.56-2bb  [Removed and Reserved]

    2. Section Sec.  319.56-2bb would be removed and reserved.
    3. Section 319.56-2ff would be amended as follows:
    a. By revising the section heading and the introductory text of the 
section to read as set forth below.
    b. By revising paragraph (a) to read as set forth below.
    c. By revising the introductory text of paragraph (c) and 
paragraphs (c)(1)(i) and (c)(1)(ii) to read as set forth below.
    d. By revising the introductory text of paragraph (c)(2) and 
paragraphs (c)(2)(i) and (c)(2)(v) to read as set forth below.
    e. By revising the introductory text of paragraph (c)(3) and 
paragraphs (c)(3)(i), (c)(3)(iv), (c)(3)(vi), (c)(3)(vii), and 
(c)(3)(viii) to read as set forth below.
    f. By revising paragraphs (d) and (e) to read as set forth below.
    g. By removing paragraphs (f), (g), (h), (j), and (k) and 
redesignating paragraph (i) as paragraph (f).
    h. By revising newly redesignated paragraph (f) to read as set 
forth below.


Sec.  319.56-2ff  Administrative instructions governing movement of 
Hass avocados from Michoacan, Mexico.

    Fresh Hass variety avocados (Persea americana) may be imported from 
Michoacan, Mexico into the United States only under a permit issued in 
accordance with Sec.  319.56-3, and only under the following 
conditions:
    (a) The avocados may be imported in commercial consignments only.
* * * * *
    (c) Safeguards in Mexico. The avocados must have been grown in the 
Mexican State of Michoacan in an orchard located in a municipality that 
meets the requirements of paragraph (c)(1) of this section. The orchard 
in which the avocados are grown must meet the requirements of paragraph 
(c)(2) of this section. The avocados must be packed for export to the 
United States in a packinghouse that meets the requirements of 
paragraph (c)(3) of this section. The Mexican national plant protection 
organization (NPPO) must provide an annual work plan to APHIS that 
details the activities that the Mexican NPPO will, subject to APHIS'' 
approval of the work plan, carry out to meet the requirements of this 
section; APHIS will be directly involved with the Mexican NPPO in the 
monitoring and supervision of those activities. The personnel 
conducting the trapping and pest surveys must be hired, trained, and 
supervised by the Mexican NPPO or by the Michoacan State delegate of 
the Mexican NPPO.
    (1) * * * (i) The municipality must be listed as an approved 
municipality in the bilateral work plan provided to APHIS by the 
Mexican NPPO.
    (ii) The municipality must be surveyed at least semiannually (once 
during the wet season and once during the dry season) and found to be 
free from the large avocado seed weevil Heilipus lauri, the avocado 
seed moth Stenoma catenifer, and the small avocado seed weevils 
Conotrachelus aguacatae and C. perseae.
* * * * *
    (2) Orchard and grower requirements. The orchard and the grower 
must be registered with the Mexican NPPO's avocado export program and 
must be listed as an approved orchard or an approved grower in the 
annual work plan provided to APHIS by the Mexican NPPO. The operations 
of the orchard must meet the following conditions:
    (i) The orchard and all contiguous orchards and properties must be 
surveyed semiannually and found to be free from the avocado stem weevil 
Copturus aguacatae.
* * * * *
    (v) Harvested avocados must be placed in field boxes or containers 
of field boxes that are marked to show the official registration number 
of the orchard. The avocados must be moved from the orchard to the 
packinghouse within 3 hours of harvest or they must be protected from 
fruit fly infestation until moved.
* * * * *
    (3) Packinghouse requirements. The packinghouse must be registered 
with the Mexican NPPO's avocado export program and must be listed as an 
approved packinghouse in the annual work plan provided to APHIS by the 
Mexican NPPO. The operations of the packinghouse must meet the 
following conditions:
    (i) During the time the packinghouse is used to prepare avocados 
for export to the United States, the packinghouse may accept fruit only 
from orchards certified by the Mexican NPPO for participation in the 
avocado export program.
* * * * *
    (iv) Prior to the culling process, a biometric sample, at a rate 
determined by APHIS, of avocados per consignment must be selected, cut, 
and inspected by the Mexican NPPO and found free from pests.
* * * * *
    (vi) Prior to being packed in boxes, each avocado fruit must be 
cleaned of all stems, leaves, and other portions of plants and labeled 
with a sticker that bears the official registration number of the 
packinghouse.

[[Page 29477]]

    (vii) The avocados must be packed in clean, new boxes, or clean 
plastic reusable crates. The boxes or crates must be clearly marked 
with the identity of the grower, packinghouse, and exporter.
    (viii) The boxes must be placed in a refrigerated truck or 
refrigerated container and remain in that truck or container while in 
transit through Mexico to the port of first arrival in the United 
States. Prior to leaving the packinghouse, avocados must be packed in 
insect-proof cartons, loaded in insect-proof containers, or covered 
with insect-proof mesh or plastic tarpaulin, for transit to the United 
States. These safeguards must be intact when the avocados arrive at the 
port of first arrival in the United States.
* * * * *
    (d) Certification. All consignments of avocados must be accompanied 
by a phytosanitary certificate issued by the Mexican NPPO with an 
additional declaration certifying that the conditions specified in this 
section have been met.
    (e) Pest detection. (1) If any of the avocado seed pests Heilipus 
lauri, Conotrachelus aguacatae, C. perseae, or Stenoma catenifer are 
discovered in a municipality during the semiannual pest surveys, 
orchard surveys, packinghouse inspections, or other monitoring or 
inspection activity in the municipality, the Mexican NPPO must 
immediately initiate an investigation and take measures to isolate and 
eradicate the pests. The Mexican NPPO must also provide APHIS with 
information regarding the circumstances of the infestation and the pest 
risk mitigation measures taken. The municipality in which the pests are 
discovered will lose its pest-free certification and avocado exports 
from that municipality will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that municipality has been eliminated.
    (2) If the Mexican NPPO discovers the stem weevil Copturus 
aguacatae in an orchard during an orchard survey or other monitoring or 
inspection activity in the orchard, the Mexican NPPO must provide APHIS 
with information regarding the circumstances of the infestation and the 
pest risk mitigation measures taken. The orchard in which the pest was 
found will lose its export certification immediately and avocado 
exports from that orchard will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that orchard has been eliminated.
    (3) If the Mexican NPPO discovers the stem weevil Copturus 
aguacatae in fruit at a packinghouse, the Mexican NPPO must investigate 
the origin of the infested fruit and provide APHIS with information 
regarding the circumstances of the infestation and the pest risk 
mitigation measures taken. The orchard where the infested fruit 
originated will lose its export certification immediately and avocado 
exports from that orchard will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that orchard has been eliminated.
    (f) Inspection. The avocados are subject to inspection by an 
inspector at the port of first arrival. At the port of first arrival, 
an inspector will sample and cut avocados from each consignment to 
detect pest infestation.
* * * * *

    Done in Washington, DC, this 19th day of May, 2004.
Bill Hawks,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 04-11709 Filed 5-21-04; 8:45 am]
BILLING CODE 3410-34-P