Limes Grown in Florida and Imported Limes; Change in Regulatory Period and Minimum Size Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 911 and 944

[Docket No. FV97-911-1PR]

Limes Grown in Florida and Imported Limes; Change in Regulatory

Period and Minimum Size Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on proposed changes to the

regulatory period and the minimum size requirements currently

prescribed under the lime marketing order and the lime import

regulations. The marketing order regulates the handling of limes grown

in Florida and is administered locally by the Florida Lime

Administrative Committee (committee). This rule would revoke the

suspension and maintain continuous, year round, implementation of

regulations. This proposed rule would also increase the minimum size

requirement from 1\7/8\ to 2 inches in diameter for the month of June.

This would result in the 2 inch minimum being required from January 1

through June 30 of each year. This rule would maintain and improve

quality standards ensuring continued customer satisfaction with fresh

limes. The changes in import requirements are necessary under section

8e of the Agricultural Marketing Agreement Act of 1937.

DATES: Comments must be received by May 29, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments must be sent in triplicate to the

Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S,

P.O. Box 96456, Washington, DC 20090-6456, Fax: (202) 720-5698. All

comments should reference the docket number and the date and page

number of this issue of the Federal Register and will be available for

public inspection in the Office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT: Aleck Jonas, Southeast Marketing Field

Office, Marketing Order Administration Branch, F&V, AMS, USDA, P.O. Box

2276, Winter Haven, Florida 33883; telephone: (941) 299-4770, Fax:

(941) 299-5169; or Caroline Thorpe, Marketing Order Administration

Branch, F&V, AMS, USDA, room 2522-S, P.O. Box 96456, Washington, DC

20090-6456; telephone: (202) 720-8139, Fax: (202) 720-5698. 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 proposal is issued under Marketing

Agreement No. 126 and Marketing Order No. 911 (7 CFR part 911), both as

amended, regulating the handling of limes, hereinafter referred to as

the ``order.'' The marketing agreement and order are effective under

the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.

601-674), hereinafter referred to as the ``Act.''

This proposed rule is also issued under section 8e of the Act,

which provides that whenever certain specified commodities, including

limes, are regulated under a Federal marketing order, imports of these

commodities into the United States are prohibited unless they meet the

same or comparable grade, size, quality, or maturity requirements as

those in effect for the domestically produced commodities.

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

conformance with Executive Order 12866.

This proposal has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to have retroactive effect.

This proposal 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.

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.

This proposal would make two changes to the regulations currently

prescribed under the lime marketing order and the lime import

regulations. The first change would revoke the temporary suspension of

regulations scheduled for June 1, 1997, through December 31, 1997. This

proposal would keep the regulations in effect throughout all of 1997

and thereafter. The second change would increase the minimum size from

1\7/8\ inches to 2 inches for the month of June. This change would

extend the current regulations requiring a minimum diameter of 2 inches

from January 1 through May 31 to January 1 through June 30.

Section 911.48 of the lime marketing order provides authority to

issue regulations establishing specific pack, container, grade and size

requirements. These requirements are specified under Sections 911.311,

911.329 and 911.344. Currently, the requirements specified under

Sections 911.311, 911.329 and 911.344 are temporarily suspended from

June 1, 1997, through December 31, 1997.

This rule would revoke the scheduled suspension of regulations from

June 1, 1997, through December 31, 1997. The committee met on February

5, 1997, and, on a unanimous vote, recommended terminating the

scheduled suspension.

The suspension of regulations was first published, as a proposed

rule, in the May 8, 1996, Federal Register (60

[[Page 23186]]

FR 20754). A notice, published in the June 26, 1996, Federal Register

(61 FR 33047), extended the comment period of the proposed rule. The

final rule was published in the August 21, 1996, Federal Register (61

FR 43141).

In its deliberations, the committee noted that this issue has been

argued and debated by the committee since its original proposal. Even

then, the committee was divided, passing the measure on a split vote of

six in favor and four opposed, January 10, 1996. Comments from growers

and grower/handlers concerning the changes in the proposed rule

expressed concern that the loss of regulation and the associated

quality standards would result in poor quality limes on the market and

consumer dissatisfaction.

The committee, upon further discussion, shared these concerns. In

fact, the committee revisited the issue on April 17, 1996. After

deliberations on the possibilities of what could occur without

regulations, the committee recommended, on a vote of seven in support,

none against and one abstention, that the original proposal be modified

from a permanent change to a one year experiment. This action was taken

to provide the committee with an opportunity to study the effects the

suspension of the handling regulations would have on the industry and

market versus the cost savings derived from it.

The change was originally to have begun on June 1, 1996. However,

an extended comment period, and the requested modifications to the

proposal itself, resulted in the start date being delayed to June 1,

1997. This one year delay in implementation has allowed the committee

time to reevaluate the need to suspend regulations.

The proposed rule was issued in response to changes in the market,

rising costs of production and the cost of replanting in the aftermath

of Hurricane Andrew. The committee commented that when the change was

originally recommended on January 10, 1996, the industry's position and

future prospects appeared quite different from today. At that time,

many of the lime trees were less than 3 years old and too young to bear

fruit. These lime trees had been replanted after Hurricane Andrew.

Money was being expended on replanting and no revenue was coming in

from these young non-bearing trees. Further, last year citrus leaf

minor was a new threat to the lime trees and at that time predictions

called for expensive control methods that may or may not have worked.

Throughout the industry, the concern to save money was great, and the

suspension of regulations was thought to be a money saving avenue. By

reducing the regulatory period and its associated costs, the committee

hoped to provide a decrease in industry expenses. The committee hoped

the reduced costs of no regulations, no inspection fees and reduced

committee expenses, resulting from fewer meetings and less compliance

monitoring, would benefit the industry and foster growth.

The industry's present situation is much improved over what it was

when the changes to the regulation were proposed and made final. The

young lime trees are now 3 and 4 years old and bearing fruit, resulting

in a larger crop and more revenue. Citrus leaf minor is far less a

threat than originally presumed, due, in part, to native insect

predation against it. This has resulted in less funds being required to

combat this pest.

Also, the lime committee has operated off reserves this current

season with a zero assessment, and it has budgeted to work off reserves

with a zero assessment for the next season. This will result in

industry savings of approximately $75,000 each season. The committee

believes that all of these factors have eliminated the critical need

for the further cost savings which prompted the original request for

the change.

Reviewing the past year, committee members stated that fresh limes

sold were generally plentiful and of good quality. However, they also

noted that even with quality regulations in effect, some poor quality

limes do reach the retail market. The committee is now concerned that

removing quality regulations, even for an experimental period, may

result in even larger quantities of poor quality fruit reaching the

retail market, resulting in consumer dissatisfaction and product

substitution. Committee members commented that past experience has

indicated the difficulty of enticing customers to return to a product

once substitution has taken place.

Committee members maintain that although some poor quality limes

still appear on the market, the regulations have done much to reduce

the number and help provide uniform quality. This, in turn, has ensured

customer satisfaction with fresh limes which is a primary concern to

the industry. Thus, the committee believes the benefits of the quality

regulations outweigh the now diminished need to take action that would

result in cost savings.

This proposed rule would also change the minimum size regulations

established under the order. This proposal would increase the minimum

size diameter from 1\7/8\ inches to 2 inches for the month of June.

This change would extend the current regulations requiring a minimum

diameter of 2 inches to January 1 through June 30, with 1\7/8\ inches

the standard for the remainder of the year. This change was recommended

by the committee, on a unanimous vote, at its February 5, 1997,

meeting.

Section 911.344 of the regulations specifies that limes contain not

less than 42 percent juice by volume. This section was amended by a

final rule published on December 4, 1996, and effective on January 3,

1997, (61 FR 64255). That rule was intended to increase the minimum

size requirement for limes grown in Florida from 1\7/8\ inches to 2

inches in diameter during the period January 1 through May 31. The

December 4, 1996, rule when read with the May 8, 1996, proposed

suspension would result in a minimum size diameter of 2 inches for the

months of January through May. During that time prices are high and

quality lower, resulting in an incentive to pack lower quality fruit.

From January 1, 1996, through May 31, 1996, Florida shipped 50,365

bushels of limes, approximately 14 percent of the total, 362,289

bushels, shipped in 1996. Florida shipped 55,136 bushels of limes in

June 1996, approximately 14 percent of the total, 387,833 bushels,

shipped thus far in the 1996-97 season which ends in March.

Limes that are 2 inches or larger in diameter have a higher juice

content than smaller limes. The larger limes have a greater chance of

meeting the 42 percent juice content requirement. Increasing the

minimum size to 2 inches in diameter would result in more fresh limes

meeting the 42 percent juice content requirement. The larger size

should also reduce the number of limes failing inspection for low juice

content. This would help lower handling costs by reducing the expense

of repacking and regrading fruit that fails inspection.

During committee deliberations, members commented that the current

2 inch minimum diameter rule has been well received by their customers.

Committee members expressed that the 2 inch requirement ends too early

in the season. The committee agreed that the problem with limes with

low juice content extends into June and July. Committee members were

concerned that customers would switch to a substitute product in place

of fresh limes after being disappointed with the lack of juice.

The committee discussed increasing the minimum size requirements

for both June and July. The committee members noted that weather

conditions in South Florida are in transition during the month of July,

changing from relatively

[[Page 23187]]

dry, to increasing rains and tropical storms as the month progresses.

The increasing rains allow the smaller limes to contain more juice.

Unfortunately, the same rains cause larger limes to begin having

problems, such as stylar-end break down and yellowing. Also, limes left

on the tree to gain size can be lost during topical storms. Although

some retail samples in July had low juice content in the smaller limes,

committee members reasoned that the transitory weather conditions of

July and its corresponding problems support maintaining the current

minimum of 1\7/8\ for July. Therefore, the committee is recommending

that the 2 inch minimum diameter extension end June 30 with 1\7/8\ inch

minimum diameter the standard for the rest of the season.

Section 8e of the Act provides that when certain domestically

produced commodities, including limes, are regulated under a Federal

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

comparable grade, size, quality, and maturity requirements. Since this

rule would change the regulatory period and the minimum size

requirements under the domestic handling regulations, a corresponding

change to the import regulations must also be considered.

Minimum grade and size requirements for limes imported into the

United States are currently in effect under Section 944.209 [7 CFR

944.209]. This proposed rule would revoke the temporary suspension

period scheduled for June 1, 1997, through December 31, 1997. This rule

would leave the lime import regulations in effect throughout 1997 and

thereafter. This proposal would also increase the minimum size

requirement for imported limes during the month of June. Under this

rule, the minimum size requirement for June would increase from the

current 1\7/8\ inches to 2 inches. This reflects the same changes that

would be made under the order for Florida limes. The minimum size and

grade requirements for Florida limes are specified in section 911.344

under marketing order 911. The minimum diameter size requirement is not

specifically stated in the lime import regulation. Therefore, no change

is needed in the text of Section 944.209.

Mexico is the largest exporter of limes to the United States.

During the 1995-96 season, Mexico exported 5,591,451 bushels to the

United States, while all other import sources shipped a combined total

of 167,832 bushels during the same time period. From June 1, 1996,

through December 31, 1996, Mexico exported 4,151,867 bushels of limes

to the United States, approximately 71 percent of the total, 5,819,410

bushels, shipped thus far in the 1996-97 season ending in March. Mexico

exported 559,525 bushels of limes to the United States for the month of

June 1996, approximately 10 percent of the total, 5,819,410 bushels,

shipped thus far in the 1996-97 season.

Pursuant to the requirements set forth in the Regulatory

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

considered the economic impact of this action on small entities.

Accordingly, AMS has prepared this regulatory flexibility analysis.

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

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and 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 those established under Federal marketing orders.

There are approximately 10 handlers subject to regulation under the

order and about 50 producers of Florida limes. There are approximately

35 importers of limes. Small agricultural service firms, which include

lime handlers and importers, have been 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 are defined as those

whose annual receipts are less than $500,000. A majority of these

handlers, producers, and importers may be classified as small entities.

Based on the Florida Agricultural Statistic Service and committee

data for the 1995-96 season, the average annual f.o.b. price for fresh

Florida limes during the 1995-96 season was $16.50 per 55 pound bushel

box equivalent for all domestic shipments, and the total shipments for

the 1995-96 season were 371,413. Approximately 20 percent of all

handlers handled 86 percent of Florida lime shipments. In addition,

many of these handlers ship other tropical fruit and vegetable products

which are not included in committee data but would contribute further

to handler receipts.

Section 911.48 of the lime marketing order provides authority to

issue regulations establishing specific grade and size requirements,

and section 8e of the Act requires that when such regulations are in

effect for limes, the same or comparable requirements be applied to

imports.

This proposal would change the regulatory period and the minimum

size requirements currently prescribed under the lime marketing order

and the lime import regulations. This rule would revise both the

domestic and import regulations by removing a scheduled, June 1, 1997,

through December 31, 1997, suspension of regulations and maintaining

continuous, year round, handling regulations. The regulations are

specified in sections 911.311, 911.329 and 911.344 and establish pack,

container, grade and size requirements. This proposed rule would also

increase the minimum size requirement from 1\7/8\ inches to 2 inches in

diameter for the month of June. The committee recommended these changes

to maintain and improve the quality of limes in the marketplace.

This proposal is expected to have a positive impact on growers,

handlers and importers, as fruit and vegetable prices are quite

responsive to quality differentials. This action is intended to

maintain and improve quality. At the meeting, the committee discussed

the impact of this change on handlers and producers in terms of cost.

Any costs to handlers and importers caused by this proposal would be

the loss of projected savings from the suspension. The majority of

possible cost savings would have resulted from eliminating inspection

fees during the suspension.

The scheduled suspension period would have only been effective for

one year, resulting in limited cost savings. The industry is already

used to budgeting for inspection and associated regulation costs. The

Federal/State Inspection Service assesses fees to provide their

service. The cost for inspection is equitable. Small and large handlers

are charged the same base rate, with the overall cost determined by a

handler's volume.

During this season, and the season prior, the committee voted to

operate on reserves rather than assessing the industry. This will

result in an industry cost savings of approximately $75,000, the

approximate cost of operating the committee for a year, during each of

these two years. This will do much to offset any costs that result from

the revocation of the suspension period. Assessments, when they are

applied, are based on the amount of fruit handled, therefore, the costs

are borne proportionally by small and large operations. Consequently,

the benefits of no assessments are received equally. Importers do not

have to pay assessments to maintain the marketing order.

Since the recommendation to establish the suspension period was

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made, industry needs for cost savings have diminished. The focus has

shifted to the need for stable markets and returns. Customers are

willing to pay for quality, and complementary studies show that

customers return purchase rate declines considerably if they are

disappointed by the quality of the original purchase. The current cost

of inspection is $.14 per 55 pound equivalent. However, a drop in

quality could result in a price reduction measured in dollars rather

than cents on the same equivalent. Thus, the benefits of a quality

standard outweigh the minimal cost savings that may have resulted from

the suspension.

The increase in the minimum size for June would also provide a cost

benefit. With an increase in the minimum size, limes are more likely to

meet the 42 percent minimum juice content requirement. This is expected

to reduce the incidence of repacking, resulting in lower costs to

handlers and importers. Maintaining and increasing quality to the

consumer would result in a strong and stable market, benefiting

growers, handlers and importers.

Shipments of Florida limes for the 1994-95 season were 289,213

bushels, for the 1995-96 season they were 371,413 bushels, and for the

current 1996-97 season, though not complete, shipments through February

18, 1997, with 41 days remaining in the season, stand at 382,991

bushels. A steady increase in production is indicated. Mexican exports

have also increased from 2,626,707 bushels in the 1990-91 season to

5,591,451 bushels in the 1995-96 season.

Committee members have considered alternatives to rescinding the

suspension period. The committee considered a continuous period of no

regulations for the months of June through December. They reconsidered

the merits of such an action, determining that removing regulations to

save money may have costs, such as lost market share, which would

overshadow any potential savings. The committee determined that in the

time that had passed since the original consideration of a suspension

period, the need for cost savings measures had passed, and that the

benefits of the quality standards outweighed the cost savings that may

have been realized. The committee was unanimous in its belief that the

need for the suspension has passed.

Under the change in minimum size, the committee considered the

alternative of also changing the minimum size for July. While the

committee agreed that there are limes with low juice in July, there

were problems with increasing the minimum size requirement for that

month. During July, the weather begins to shift to more tropical

conditions. Rainfall increases, which adds juice to the limes, but it

also causes problems with the larger sized fruit. Because of these

problems, this alternative was rejected. Accordingly, the committee

unanimously recommended the changes as outlined.

This action would not impose any additional reporting or

recordkeeping requirements on either small or large lime handlers. As

with all Federal marketing order programs, reports and forms are

periodically reviewed to reduce information requirements and

duplication by industry and public sector agencies.

The Department has not identified any relevant Federal rules that

duplicate, overlap or conflict with this proposed rule. However, limes

must meet the requirements as specified in the U.S. Standards for

Grades of Persian Limes (7 CFR 51.1000 through 51.1016) issued under

the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 through 1627).

The committee's meeting was widely publicized throughout the lime

industry and all interested persons were invited to attend the meeting

and participate in committee deliberations on all issues. Like all

committee meetings, the February 5, 1997, meeting was a public meeting

and all entities, both large and small, were able to express views on

these issues. The committee itself is composed of ten members, of which

four are handlers, five are producers and one is a public member. The

majority of committee members represent small entities. Finally,

interested persons are invited to submit information on the regulatory

and informational impacts of this action on small businesses.

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

Representative has concurred with the issuance of this proposed rule,

as it pertains to limes imported into the United States.

A 30-day comment period is provided to allow interested persons to

respond to this proposal. All written comments timely received will be

considered before a final determination is made on this matter.

List of Subjects

7 CFR Part 911

Limes, Marketing agreements, Reporting and recordkeeping

requirements.

7 CFR Part 944

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

Kiwifruit, Limes, Olives, Oranges.

For the reasons set forth in the preamble, 7 CFR parts 911 and 944

are proposed to be amended as follows:

1. The authority citation for 7 CFR parts 911 and 944 continues to

read as follows:

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

PART 911--LIMES GROWN IN FLORIDA

Secs. 911.311, 911.329 [Amended]

2. Scheduled suspension of Secs. 911.311 and 911.329 effective June

1, 1997, through December 31, 1997, is terminated.

Sec. 911.344 [Amended]

3. Scheduled suspension of Sec. 911.344, effective June 1, 1997,

through December 31, 1997, is terminated, and paragraph (a)(3) is

amended by removing the words ``at least 2 inches diameter'' and

adding, in their place, the words ``at least 2 inches in diameter from

January 1 through June 30, and at least 1\7/8\ inches in diameter from

July 1 through December 31''.

PART 944--FRUITS, IMPORT REGULATIONS

Sec. 944.209 [Amended]

4. Scheduled suspension of Sec. 944.209 effective June 1, 1997,

through December 31, 1997, is revoked.

Dated: April 25, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-11164 Filed 4-25-97; 1:54 pm]

BILLING CODE 3410-02-P