Oranges and Grapefruit Grown in the Lower Rio Grande Valley in Texas; Revision of Pack and Size Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 906

[Docket No. FV96-906-3 FIR]

Oranges and Grapefruit Grown in the Lower Rio Grande Valley in

Texas; Revision of Pack and Size Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a

final rule, with minor modification, the provisions of an interim final

rule revising pack requirements for grapefruit and certain types of

oranges under the marketing order covering oranges and grapefruit grown

in the Lower Rio Grande Valley in Texas to allow larger sizes of fruit

to be marketed in fresh channels. This rule also reduces current

minimum size requirements for Texas grapefruit. These actions were

recommended by the Texas Valley Citrus Committee (TVCC), the agency

responsible for local administration of the marketing order. These

changes will enable the industry to market a wider range of sizes of

citrus fruit in fresh market channels, thereby meeting consumer demand,

increasing sales, and improving returns to growers.

EFFECTIVE DATE: December 26, 1996.

FOR FURTHER INFORMATION CONTACT: Charles L. Rush, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.

Box 96456, room 2522-S, Washington, DC 20090-6456, telephone (202) 690-

3670, Fax #(202) 720-5698; or Belinda G. Garza, McAllen Marketing Field

Office, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, 1313 E. Hackberry, McAllen, Texas 78501; telephone

(210) 682-2833, Fax # (210) 682-5942. Small businesses may request

information on compliance with this regulation by contacting: Jay

Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, Room 2525-S, Washington, DC 20090-

6456; telephone (202) 720-2491, Fax # (202) 720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement and Order No. 906 (7 CFR part 906), as amended, regulating

the handling of oranges and grapefruit grown in the Lower Rio Grande

Valley in Texas, hereinafter referred to as the ``order.'' The order is

effective under the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This final rule is not intended to have

retroactive effect. This final rule will not preempt any State or local

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

conflict with this rule.

The Act provides that administrative proceedings must be exhausted

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

Act, any handler subject to an order may file with 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 request a modification of the order or to be exempted

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

petition. After the hearing 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 to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after date of the entry of the ruling.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this rule 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.

There are approximately 20 handlers of oranges and grapefruit

subject to regulation under the order and approximately 2,000 orange

and grapefruit producers in the production area. Small agricultural

service firms are defined by the Small Business Administration (13 CFR

121.601) as those whose annual receipts are less than $5,000,000, and

small agricultural producers have been defined as those having annual

receipts of less than $500,000. The majority of Texas orange and

grapefruit handlers and producers may be classified as small entities.

This final rule revises pack requirements for grapefruit and

certain varieties of oranges to allow larger sizes to be marketed in

fresh channels. Pack requirements are stated in terms of certain size

designations. Size designations are defined in terms of minimum and

maximum diameter. Improved irrigation methods, technological advances,

and improved cultural practices have resulted in the Texas citrus

industry growing larger, good quality fruit. Pack regulations preclude

this fruit from being marketed in fresh market channels (with the

exception of small amounts allowed to exceed the maximum specific

diameters), and it is generally directed to the processing market. The

[[Page 59821]]

processing market is currently in an oversupply situation and yields

low returns to growers. Providing for additional supplies (an

additional 5 to 10 percent) to be marketed fresh should enhance grower

returns.

This final rule also reduces the minimum size requirements for

grapefruit by allowing a broader range of sizes of grapefruit to be

marketed. This final rule provides that pack size 112 grapefruit (if it

grades at least U.S. No. 1) may be shipped throughout the entire

season. This has been done in recent seasons. There is a market for

this smaller grapefruit particularly in juice bars, health food stores,

and other types of outlets that use smaller fruit for juicing. Some

markets, such as Canada, prefer smaller fruit. Also, current drought

conditions can lead to an abundance of smaller sizes. This rule enables

handlers to market a broader range of sizes of citrus fruit in fresh

market outlets, thereby meeting consumer demand, increasing fresh fruit

sales, and enhancing returns to handlers and producers.

Therefore, the AMS has determined that this action will not have a

significant economic impact on a substantial number of small entities.

An interim final rule was issued on August 16, 1996, and published

in the Federal Register (61 FR 43139, August 21, 1996), with an

effective date of August 22, 1996. That rule amended Sec. 906.340 of

the rules and regulations in effect under the order. That rule provided

a 30-day comment period which ended September 20, 1996. No comments

were received.

This action is in accordance with Sec. 906.40(a) of the order. This

section authorizes the Secretary to limit the handling of particular

grades, sizes, qualities, maturities, or packs of any or all varieties

of fruit during a specified period or periods. Currently, minimum grade

and size requirements, as well as pack and container requirements, are

in effect for both grapefruit and oranges throughout the season.

Shipments for certain purposes, including processing, are exempt from

these requirements.

The TVCC met on May 29, 1996, and unanimously recommended changes

in pack and minimum size requirements. The TVCC meets prior to and

during each season to review the handling regulations effective on a

continuous basis for each citrus fruit regulated under the order. TVCC

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

their views at these meetings. The Department reviews TVCC

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.

Revision of Pack Requirements

Pack requirements for oranges and grapefruit are in effect under

Sec. 906.340 of the order's rules and regulations. These requirements

provide, among other things, that oranges and grapefruit be packed in

accordance with certain size designations. These size designations are

defined in terms of minimum and maximum diameters.

Oranges are divided into two categories for the purpose of pack

regulations: (1) Navel, Valencia and similar late-type oranges, and (2)

all other oranges. Navel, Valencia and similar late-type oranges must

be packed in accordance with 13 size designations. The smallest of

these is Size 324, which ranges from 2\3/16\ to 2\8/16\ inches in

diameter. The largest size defined is Size 46, which ranges from 4\3/

16\ to 5 inches in diameter. Prior to issuance of the interim final

rule, oranges other than navel, Valencia and similar late-type oranges

were required to be packed in accordance with the various pack sizes in

Sec. 51.691(c) of the United States Standards for Grades of Oranges

(Texas and States other than Florida, California, and Arizona),

hereinafter referred to as the ``orange standards.''

The orange standards define seven pack sizes, from Size 324 (2\3/

16\ to 2\8/16\ inches in diameter) to Size 100 (3\7/16\ to 3\13/16\

inches in diameter). To allow for variations incident to proper

packing, a tolerance for undersized and oversized fruit is provided.

The tolerance is in terms of the number of fruit in a sample that may

be off-size--with the actual number increasing as the sample size

increases. Otherwise oversized oranges other than navel, Valencia and

similar late-type oranges would be diverted to exempt outlets, such as

processing.

The TVCC recommended revising the orange pack regulations to allow

all types of oranges to be packed in the full range of sizes--from Size

324 to Size 46. Thus, this rule finalizes a revision of

Sec. 906.340(a)(2)(i)(a), which specified pack requirements for oranges

other than navel, Valencia and similar late-type oranges, to define the

13 size designations authorized for such oranges. The 7 smallest sizes

are defined in the same way they are in the orange standards. (The

minimum diameters are \2/16\ inch larger than those specified for

navels, Valencias and similar late-type oranges, while the maximum

diameters are the same). The 6 sizes added for these oranges are

defined similarly (that is, the minimum diameters differ, but the

maximum diameters are the same). The differences in the minimum

diameters take into account varietal differences between these two

categories of oranges and current industry practice.

Grapefruit are required to be packed within the diameter limits

specified for the various pack sizes defined in Sec. 51.630(c) of the

United States Standards for Grades of Grapefruit (Texas and States

other than Florida, California, and Arizona), hereinafter referred to

as the grapefruit standards. Exceptions are that the minimum diameter

for pack size 96 grapefruit is 3\9/16\ inches, and for pack size 112

grapefruit, the minimum diameter is 3\5/16\ inches.

The grapefruit standards define 8 pack sizes. The smallest is Size

125/126, which ranges from a minimum of 3 inches to a maximum of 3\8/

16\ inches in diameter. The largest is Size 46 which ranges from 4\5/

16\ to 5 inches in diameter. This rule adds a new, larger Size 36

grapefruit, which ranges in size from 4\15/16\ to 5\9/16\ inches in

diameter.

Improved irrigation methods, technological advances, and improved

cultural practices have resulted in the Texas citrus industry growing

larger, good quality fruit. Pack regulations preclude this fruit from

being marketed in fresh channels (with the exception of small amounts

allowed to exceed the maximum specified diameters), and it is generally

diverted to the processing market. The processing market is currently

in an oversupply situation and yields low returns to growers. Providing

for additional supplies (an estimated 5 to 10 percent) to be marketed

fresh should, therefore, enhance grower returns.

Additionally, the TVCC indicated that there has been increased

demand from consumers in recent years for a broader range of sizes of

oranges and grapefruit. Providing that these larger sizes may be

shipped will provide greater supplies and more choices to consumers. It

should also make the Texas citrus industry more competitive with other

citrus-growing areas, which have adapted their marketing efforts to

meet consumer demands.

Finally, varying growing conditions in Texas result in diverse size

distributions of oranges and grapefruit from season to season. Severe

drought conditions may cause a season's crop to be 5 to 10 percent

small sizes. Conversely, a rainy season may result in 5 to 10 percent

large sizes. These changes in pack requirements to approve the shipment

of all commercial sizes of oranges and grapefruit will provide handlers

with the flexibility to market available

[[Page 59822]]

supplies in light of existing market conditions.

Revision of Minimum Size Requirements for Grapefruit

Minimum size requirements for grapefruit are in effect under

Sec. 906.365 of the order's rules and regulations. During the period

November 16 through January 31 each season, grapefruit must be at least

pack size 96, with a minimum diameter of 3\9/16\ inches. At other

times, grapefruit that is pack size 112 (with a minimum diameter of

3\5/16\ inches), may be shipped if it grades at least U.S. No. 1.

Otherwise, the minimum grade requirement for grapefruit is Texas

Choice. The smaller fruit is subject to a higher grade requirement

because experience indicates that a market exists for this smaller

fruit only if it meets a higher quality standard.

This final rule provides that pack size 112 grapefruit (if it

grades at least U.S. No. 1) may be shipped throughout the entire

season. This has been done in recent seasons. The Texas citrus industry

has found that there is a market for this smaller grapefruit,

particularly in juice bars, health food stores, and other types of

retail outlets that use smaller fruit for juicing. In addition, some

markets, such as Canada, prefer smaller fruit.

Also, as previously indicated, drought conditions can lead to an

abundance of smaller sizes. Such conditions currently exist in the

Lower Rio Grande Valley in Texas. The expected small sized grapefruit,

which cannot be marketed profitably in processing outlets, will be made

available to meet fresh market needs through this rule. This action is

expected to result in improved grower returns.

Permitting shipments of pack size 112 grapefruit grading at least

U.S. No. 1 will enable Texas grapefruit handlers to meet market needs

and compete with similar size grapefruit expected to be shipped from

Florida.

These changes in pack and size requirements for Texas oranges and

grapefruit are intended to broaden the range of sizes and increase the

amount of fruit available to consumers and increase grower returns. An

alternative to this rule is to leave the current regulations in place.

However, that would result in more of the larger oranges and grapefruit

and the smaller grapefruit going to processors, and less fruit going to

the more lucrative fresh market, which yields higher returns to

growers.

In the interim final rule, a conforming change to all references to

``Table I'' of paragraph (a)(2)(i)(c) of Sec. 906.340 was inadvertently

omitted. The interim final rule did not specifically request that all

references to ``Table I'' be revised to read ``Table II.'' The final

rule will be modified by revising the phrase ``Table I'' each time it

appears to read ``Table II.''

After consideration of all relevant material presented, the

information and recommendations submitted by the committee, and other

information, it is found that finalizing the interim final rule, with

modification, will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 906

Grapefruit, Marketing agreements, Oranges, Reporting and

recordkeeping requirements.

Accordingly, the interim final rule amending 7 CFR part 906 which

was published at 61 FR 43139 on August 21, 1996, is adopted as a final

rule with the following change:

PART 906--ORANGES AND GRAPEFRUIT GROWN IN THE LOWER RIO GRANDE

VALLEY IN TEXAS

1. The authority citation for 7 CFR part 906 continues to read as

follows:

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

Sec. 906.340 [Amended]

2. In Sec. 906.340, paragraph (a)(2)(i)(c), the phrase ``Table I''

is revised to read ``Table II'' each time it appears.

Dated: November 15, 1996.

Eric M. Forman,

Acting Director, Fruit and Vegetable Division.

[FR Doc. 96-30033 Filed 11-22-96; 8:45 am]

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