Oranges Grown in the Lower Rio Grande Valley in Texas and Imported Oranges; Suspension of Regulations for Domestic and Imported Oranges

SUMMARY: This rule suspends the handling regulations for oranges grown

in the Lower Rio Grande Valley in Texas and the orange import

regulations for the period July 1 through August 31 indefinitely.

Currently, the effective period for both domestic and imported oranges

is January 1 through December 31 of each year. The purpose of the

suspension is to remove unnecessary handling regulations applicable to

shipments of Texas oranges for the two month period July and August.

The suspension of regulations applicable to imported oranges is

necessary under section 8e of the amended Agricultural Marketing

Agreement Act of 1937.

EFFECTIVE DATE: July 1, 1995.

FOR FURTHER INFORMATION CONTACT:

Charles L. Rush, Marketing Specialist, Marketing Order Administration

Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room

2523-S, Washington, DC 20090-6456; telephone: 202-690-3670;

or

Belinda G. Garza, McAllen Marketing Field Office, USDA/AMS, 1313 East

Hackberry, McAllen, TX 78501; telephone: 210-682-2833.

SUPPLEMENTARY INFORMATION: This suspension is issued under Marketing

Agreement and Order No. 906 (7 CFR part 906) regulating the handling of

oranges and grapefruit grown in the Lower Rio Grande Valley in Texas,

hereinafter referred to as the ``order''. The 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.''

This suspension is also issued pursuant to section 8e of the Act,

which requires the Secretary of Agriculture to issue grade, size,

quality, or maturity requirements for certain listed commodities

imported into the United States that are the same as, or comparable to,

those imposed upon the domestic commodities under Federal marketing

orders.

The Department of Agriculture (Department) is issuing this

suspension in conformance with Executive Order 12866.

This suspension has been reviewed under Executive Order 12778,

Civil Justice Reform. This suspension is not intended to have

retroactive effect. This action would not preempt any State or local

laws, regulations, or policies, unless they present an irreconcilable

conflict with this suspension.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and requesting a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing, the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction in equity to review the

Secretary's ruling on the petition, provided a bill in equity is filed

not later than 20 days after the date of the entry of the ruling.

There are no administrative procedures which must be exhausted

prior to any judicial challenge to the provisions of import regulations

issued under section 8e of the Act.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this action on small

entities.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules issued thereunder, are unique in that

they are brought about through group action of essentially small

entities acting on their own behalf. Thus, both statutes have small

entity orientation and compatibility. Import regulations issued under

the Act are based on domestic grade, size, quality or maturity

regulations established under Federal marketing orders.

There are approximately 15 handlers of oranges and grapefruit

regulated under the marketing order each season and approximately 750

orange and grapefruit producers in South Texas. In addition, there are

approximately 20 importers of oranges subject to the requirements of

the orange import requirements. Small agricultural service firms, which

include handlers and importers, have been defined by the Small Business

Administration (13 CFR Sec. 121.601) as those having annual receipts of

less than $5,000,000, and small agricultural producers are defined as

those whose annual receipts are less than $500,000. The majority of

these handlers, producers, and importers may be classified as small

entities.

Oranges grown in the Lower Rio Grande Valley in Texas are subject

to a minimum grade requirement of U.S. No. 2 and a minimum size

requirement of 2\6/16\ inches in diameter. These requirements are in

effect throughout the year on a continuous basis. The grade and size

requirements for oranges grown in the Lower Rio Grande Valley in Texas

are found in Sec. 906.365 (7 CFR part 906) under the order. In

addition, there are container and pack requirements found in

Sec. 906.340.

The Texas Valley Citrus Committee (Committee), the agency

responsible for local administration of the order, meets prior to and

during each season to review the handling regulations effective on a

continuous basis for oranges regulated under the order. Committee

meetings are open to the public, and interested persons may express

their views at these meetings.

[[Page 33678]]

The Department reviews Committee recommendations and information, as

well as information from other sources, and determines whether

modification, suspension, or termination of the handling regulations

would tend to effectuate the declared policy of the Act.

The Committee met on March 9, 1995, and recommended by a 14 to 1

vote to relax the effective dates of the regulatory period for oranges

from continuous to July 15 through August 31, 1995, for one year.

Committee members limited the relaxation to one year because of

concerns about imported oranges being in commercial channels after

August 31, and the need to study the impact of such a change. The

Committee acknowledged that the Texas orange requirements only need to

be in effect when there are shipments of Texas oranges.

The Committee member who voted in opposition to the recommended

change expressed concern about the potential impact imported oranges

could have on the marketing of Texas oranges if substandard imports are

in commercial channels when the Texas orange shipping season begins.

However, with this rule the quality and size regulations for both Texas

and imported oranges will be effective when the Texas shipping season

begins and all fruit handled during the Texas shipping season will be

subject to these requirements.

According to the Committee, Texas orange shipments typically begin

in mid to late September and end in mid to late June. The Texas citrus

industry has been in a vigorous recovery since the freeze of 1989.

Prior to the freeze, shipments of oranges during the 1986/87 season

totaled 1,334,548 cartons, shipments for the 1987/88 season totaled

2,240,181 cartons, and shipments for the 1988/89 season totaled

1,220,101 cartons. The 1989/90 shipping season ended in early January

1990 due to the harsh freeze. There was no commercial production or

shipments of oranges during the 1990/91 season due to the December 1989

freeze. Orange shipments were minimal during the 1991/92 season as the

recovery from the freeze of 1989 was still underway. Shipments for the

1992/93 season totaled approximately 688,000 cartons and shipments in

the 1993/94 season approximated 833,000 cartons. The Committee expects

the 1994/95 season to be an excellent year for orange production and

sales. A review of 1986/87 to 1993/94 Texas orange shipment data

revealed that the industry's shipping season consistently runs from

September through the following June. This pattern was consistent in

both pre-freeze and post-freeze seasons.

The Department reviewed the Committee's recommendation and

determined that the quality and size requirements for Texas oranges

should be suspended for the period July 1 through August 31, when there

are no Texas orange shipments. The regulatory period would begin in

September and end in June. There have been production changes over the

last five to six seasons. However, as mentioned above, the change in

production is a result of the freeze of 1989. The change in production

has not resulted in a change in the industry's shipping pattern. The

industry's shipping pattern consistently begins in September and ends

in June. Although shipping patterns have not changed to date, in the

future there may be changes in production. An annual evaluation will be

conducted to determine the impact of the suspension on the Texas orange

industry. If it is determined that the suspension has been deleterious

to the Texas orange industry, necessary modifications will be made.

Minimum grade and size requirements for fresh oranges grown in

Texas are in effect under Sec. 906.365 (7 CFR 906.365). This action

suspends the provisions of Sec. 906.365 that apply to oranges during

the months of July and August.

Since the grade and size requirements for Texas oranges will be

effective during the entire Texas shipping season, this change should

not have an adverse impact on the Texas orange industry.

Section 8e of the Act provides that when certain domestically

produced commodities, including oranges, are regulated under a Federal

marketing order, imports of that commodity must meet the same or

comparable grade, size, quality, and maturity requirements. Section 8e

further provides that whenever two or more marketing orders regulating

the same agricultural commodity produced in different areas of the

United States are concurrently in effect, the imports shall be subject

to the requirements applicable to the commodity produced in the area

with which the imported commodity is in most direct competition. The

Secretary has determined that oranges imported into the United States

are in most direct competition with oranges grown in Texas regulated

under M.O. No. 906, and has found that the minimum grade and size

requirements for imported oranges should be the same as those

established for oranges under M.O. No. 906.

Imported oranges are subject to minimum grade and size requirements

under Sec. 944.312 (7 CFR part 944.312). These requirements are in

effect on a continuous basis because domestic oranges are subject to

the minimum grade and size requirements under Marketing Order No. 906

on a continuous basis. This rule suspends section 944.312(a) for the

period July 1 through August 31 indefinitely so that it is effective

September 1 through June 30, the same time period that is effective in

the Texas orange regulation. According to the Department's Market News

Branch, U.S. fresh orange imports during the 1993/94 season (beginning

November 1) totaled 37.2 million pounds, up nearly 60 percent from the

1992/93 total. The increase is attributable to additional supplies from

Australia as compared with the prior season. Australia's largest

shipments arrive in July and August. By comparison, U.S. orange imports

averaged 48.3 million pounds per season from 1988/89 through 1992/93,

ranging from a low of nearly 19 million pounds to 137.3 million pounds

in 1990/91 when domestic supplies were reduced following freeze damage

to the California crop. In both 1992/93 and 1993/94, Australia was the

principal source of fresh orange imports. Other sources of orange

imports were the Dominican Republic, whose largest shipments arrive in

August and September, Mexico, Israel, and Jamaica. In the 1992/93

season, Australia accounted for 10.1 million pounds, or 43 percent of

U.S. fresh orange imports and 20.7 million pounds, or 56 percent of the

U.S. total in 1993/94. Mexico is an important source of orange imports

during the fall and winter. Imports from Israel are most active during

the winter, with imports from other countries widely distributed

throughout the season.

This rule relaxes import requirements because the orange import

regulations will not be in effect during the months of July and August.

This may result in reduced costs to importers. This action should not

have an adverse impact on the Texas industry, however, because its

shipping season does not begin until September. Domestic producers will

not be significantly impacted, since all oranges in commercial channels

during the domestic shipping season would be subject to the same

minimum grade and size requirements.

The purpose of these changes is to assure that applicable quality

requirements are in place only during such periods as needed by the

Texas orange industry to provide a consistent supply of oranges of

acceptable quality to fresh market outlets.

[[Page 33679]]

A proposed rule concerning this suspension was issued on April 18,

1995, and published in the Federal Register on April 24, 1995 (60 FR

60059). That rule provided a 20-day comment period which ended May 15,

1995. Six comments were received, four in support and two opposed to

the proposed rule.

Comments received in favor of suspending the regulations for

domestic and imported oranges as proposed were submitted by Mr. David

M. Cain of the Citrus Board of South Australia (Citrus Board), Mr. N.

Perry Hansen of Waverly Growers Cooperative, and Mr. Gregory P. Nelson

on behalf of DNE World Fruit Sales and Bernard Egan & Company.

Mr. Cain states that the Citrus Board speaks on behalf of almost

900 South Australian citrus growers. It is his contention that the

suspension of the regulation during the months of July and August, when

under current arrangements, South Australian oranges arrive in the

United States, will remove an unnecessary obstacle to their

importation. He points out that there are no maximum decay level

restrictions imposed on imports of U.S. oranges into Australia. Mr.

Hansen supports the suspension, as proposed.

Mr. Nelson stated that, as president of a major exporter of Florida

citrus and a major grower of Florida citrus, it is important that all

import requirements in the United States be reasonable and fair. He

further stated that he expects no adverse consequences on the domestic

industry as a result of implementation of the proposed suspension.

Comments in opposition to the suspension of the orange regulations

were submitted by Mr. Dwayne Bair, Chairman of the Texas Valley Citrus

Commitee and Mr. Bobby F. McKown, Executive Vice President/CEO of

Florida Citrus Mutual.

Mr. Bair states that the proposal is contrary to the Committee's

recommendation which was to relax the Texas orange regulations for a

single season rather than suspending them indefinitely as proposed. The

Committee recommended relaxing the effective dates of the regulatory

period for Texas oranges from July 15 through August 31, 1995, for one

year only. As explained earlier in this rule, past and present

production and shipping trends support suspending the orange

regulations during the period July 1 through August 31 indefinitely.

Also as previously stated an annual evaluation will be conducted to

determine the impact of this suspension on the Texas orange industry.

Mr. McKown believes that any reduction in the grade, size, quality,

or maturity requirements for fresh oranges, could pose long-term

adverse consumer perceptions of the quality of fresh oranges offered

for sale in the United States by Florida citrus growers. He further

postulates that the suspension of the regulations will further depress

returns to Florida citrus growers.

The Department currently has no information to support Mr. McKown's

contention that the suspension will depress returns to Florida citrus

growers. A review of the impact of the suspension will be conducted

annually. If it is determined that the domestic industry has been

negatively impacted, appropriate modifications will be proposed to the

suspension.

This suspension reflects the Department's appraisal of the need to

revise the dates of the regulatory period for imported oranges, as

hereinafter set forth, to effectuate the declared policy of the Act.

After thoroughly analyzing the comments received and other

available information the Department has concluded that its decision to

suspend the orange regulations during the above mentioned period is

appropriate.

In accordance with section 8e of the Act, the United States Trade

Representative has concurred with the issuance of this final rule.

Based on the above, the Administrator of the AMS has determined

that this rule will not have a significant economic impact on a

substantial number of small entities.

After consideration of all relevant matter presented, including the

information and recommendations submitted by the Committee and other

available information, it is hereby found that this suspension, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

It is further found that good cause exists for not postponing the

effective date of this rule until 30 days after publication in the

Federal Register (5 U.S.C. 553) because this suspension should be in

effect on July 1, 1995. Also, a 20-day comment period was provided for

in the proposed rule.

List of Subjects

7 CFR Part 906

Oranges, Marketing agreements, Reporting and recordkeeping

requirements.

7 CFR Part 944

Avocados, Food grades and standards, Grapes, Imports, Kiwifruit,

Limes, Olives, Oranges.

For the reasons set forth in the preamble, 7 CFR parts 906 and 944

are amended as follows:

PART 906--ORANGES GROWN IN THE LOWER RIO GRANDE VALLEY IN TEXAS

1. The authority citation for both 7 CFR parts 906 and 944

continues to read as follows:

Authority: 7 U.S.C. 601-674.

2. In Sec. 906.365, a new paragraph (a)(7) is added, to read as

follows:

Sec. 906.365 Texas Orange and Grapefruit Regulation 34.

(a) * * *

(7) Beginning in 1995, this paragraph (a) is suspended each year

from July 1 through August 31 of each year.

* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

3. In Sec. 944.312, paragraph (a) is amended, by adding a sentence

at the end of the paragraph to read as follows:

Sec. 944.312 Orange import regulation.

(a) * * * Effective July 1 through August 31 of each year this

paragraph is suspended.

* * * * *

Dated: June 22, 1995.

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-15858 Filed 6-26-95; 5:08 pm]

BILLING CODE 3410-02-P