Limes Grown in Florida and Imported Limes; Change in Regulatory Period

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 911 and 944

[Docket No. FV-97-911-1A IFR]

Limes Grown in Florida and Imported Limes; Change in Regulatory

Period

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule changes the regulatory period

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 revokes the temporary

suspension of grade and size requirements and maintains continuous,

year round, implementation of regulations. This rule will maintain

quality standards ensuring continued customer satisfaction with fresh

limes. The change in import requirements is necessary under section 8e

of the Agricultural Marketing Agreement Act of 1937.

EFFECTIVE DATE: This interim final rule becomes effective June 9, 1997;

comments received by July 7, 1997, will be considered prior to issuance

of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. 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 made 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 Anne Dec, Marketing Order Administration Branch,

F&V, AMS, USDA, room 2522-S, P.O. Box 96456, Washington, DC 20090-6456;

telephone: (202) 720-2491, 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 rule is issued under Marketing

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

amended, regulating the handling of limes grown in Florida, hereinafter

referred to as the ``order.'' The marketing agreement and order are

effective under the Agricultural Marketing Agreement Act of 1937, as

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

This interim final 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 rule has been reviewed under Executive Order 12988, Civil

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

This rule will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

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

Act, any handler subject to an order may file with 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 interim final rule revokes the temporary suspension of

regulations currently prescribed under the lime marketing order and the

lime import regulations. The temporary suspension was published in the

Federal Register on August 21, 1996 (61 FR 43141) and suspended both

the domestic and import regulations for the period June 1, 1997,

through December 31, 1997. This rule keeps the regulations in effect

beginning with its effective date and through the remainder of 1997.

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. Prior to this rule, the requirements specified

under Sections 911.311, 911.329 and 911.344 were temporarily suspended

from June 1, 1997, through December 31, 1997.

Beginning with its effective date, this rule revokes the suspension

of regulations. 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 FR 20754). A notice,

published in the June 26, 1996, Federal Register (61 FR 33047),

extended the comment period of the proposed rule from June 7, 1996, to

July 8, 1996. The final rule was

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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 to

suspend regulations. 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 original rule suspending regulations 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 operated off reserves last season with a

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

assessment for the current 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.

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 will change the regulatory period under the domestic handling

regulations, a corresponding change to the import regulations must also

be made.

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 interim final rule revokes the temporary suspension

period for both the domestic and import regulations. Beginning with its

effective date, this rule leaves the lime import regulations in effect

throughout the remainder of 1997. This reflects the same changes being

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 size and grade requirements are 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 67 percent of the total, 6,190,321

bushels, shipped during the 1996-97 season that ended in March. Mexico

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

June 1996, approximately 9 percent of the total, 6,190,321 bushels,

shipped in the 1996-97 season.

Pursuant to requirements set forth in the Regulatory Flexibility

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

economic impact of this action on small entities. Accordingly, AMS has

prepared this 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

[[Page 30431]]

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.

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. Using the average f.o.b. price, about 80 percent

of lime handlers could be considered small businesses under SBA's

definition and about 20 percent of the handlers could be considered

large businesses. The majority of lime handlers, producers, and

importers may be classified as small entities.

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 interim final rule changes the regulatory period currently

prescribed under the lime marketing order and the lime import

regulations. Beginning on its effective date, this interim final rule

revises both the domestic and import regulations by removing a

temporary suspension of regulations and thereby maintaining handling

regulations for the remainder of 1997. The regulations are specified in

sections 911.311, 911.329 and 911.344 and establish pack, container,

grade and size requirements. The committee recommended this change to

maintain the quality of limes in the marketplace. Additionally, the

need to suspend regulations to reduce handling costs has diminished.

This interim final rule will 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 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 action will 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

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. Maintaining quality to the consumer will 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 shipments were 398,279 bushels. A steady

increase in production is indicated. Mexican exports have also

increased from 2,626,707 bushels in the 1990-91 season to 6,190,321

bushels in the 1996-97 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. Accordingly, the committee

unanimously recommended this change as outlined.

This action will 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.

A proposed rule concerning this action was issued by the Department

on April 25, 1997, and published in the Federal Register on Tuesday,

April 29, 1997 (62 FR 23185). That rule also proposed an increase in

the minimum size for the month of June. Copies of the rule were mailed

or sent via facsimile to all Committee members and lime handlers and

producers. The rule was also made available through the Internet by the

Office of the Federal Register.

[[Page 30432]]

A 30-day comment period, ending May 29, 1997, was provided to allow

interested persons to respond to the proposal. Two comments were

received. The commenters, one representing a Mexican exporter and the

other a Mexican exporters' and packers' union, requested that the

comment period for the rule be extended to allow for additional time,

30 days and 90 days, respectively, to analyze the proposal. One

commenter concluded the proposal would have a negative effect on its

business and the other noted that the proposal would have a direct

effect on its business.

The Department has reviewed the requests, and has determined that

an extended period with no minimum quality or size standards in place

would be detrimental to the industry. As previously discussed, the

suspension was originally recommended at a time when cost savings were

of utmost concern to the Florida lime industry. Now, however, the

benefits of maintaining quality and ensuring customer satisfaction and

repeat purchases outweigh the diminished need to take action that would

result in cost savings.

Therefore, the Department is instituting the revocation of the

suspension through this interim final rule which will allow 30

additional days to comment.

However, with regard to increasing the minimum size requirement,

the Department is issuing in a separate Federal Register publication an

extension of the proposed comment period concerning implementing the

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

month of June. Any additional comments received during the extended

comment period would be considered before the rule is finalized.

This rule also modifies language in the regulations to return the

minimum size requirement of 1 \7/8\ inches from June 1 through December

31. The 1 \7/8\ inch minimum size requirement was inadvertently removed

when the temporary suspension was issued on August 14, 1996 (61 FR

43141).

After consideration of all relevant matter presented, including the

information and recommendation submitted by the committee and other

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

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

the Act.

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

Representative has concurred with the issuance of this rule, as it

pertains to limes imported into the United States.

Pursuant to 5 U.S.C. 553, it is also found and determined that it

is impracticable, unnecessary and contrary to the public interest to

give further notice prior to putting this rule into effect and 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 handlers are already shipping limes from the 1997-98 crop. The

industry also needs the regulation in effect as close to June 1 as

possible, to minimize any negative effects caused by a period of

deregulation. Further, handlers are aware of this rule, which was

recommended at a public meeting. A 30-day comment period is provided

for in this interim final rule. A proposed rule was published

previously with opportunity for comments.

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 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. Temporary suspension of Secs. 911.311 and 911.329 is revoked

effective June 9, 1997.

Sec. 911.344 [Amended]

3. Temporary suspension of Sec. 911.344 is revoked effective June

9, 1997, 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 May 31, and at least

1 \7/8\ inches in diameter from June 1 through December 31''.

PART 944--FRUITS, IMPORT REGULATIONS

Sec. 944.209 [Amended]

4. Temporary suspension of Sec. 944.209 is revoked effective June

9, 1997.

Dated: May 29, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-14650 Filed 6-2-97; 10:02 am]

BILLING CODE 3410-02-P