Oranges and Grapefruit Grown in the Lower Rio Grande Valley in Texas; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 906

[Docket No. FV98-906-1 IFR]

Oranges and Grapefruit Grown in the Lower Rio Grande Valley in

Texas; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the assessment rate from $0.125 to $0.11

per \7/10\ bushel carton established for the Texas Valley Citrus

Committee (Committee) under Marketing Order No. 906 for the 1998-99 and

subsequent fiscal periods. The Committee is responsible for local

administration of the marketing order which regulates the handling of

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

Authorization to assess orange and grapefruit handlers enables the

Committee to incur expenses that are reasonable and necessary to

administer the program. The fiscal period begins August 1 and ends July

31. The assessment rate will remain in effect indefinitely unless

modified, suspended, or terminated.

DATES: Effective July 27, 1998. Comments received by September 22,

1998, 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 to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 205-6632. 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: Belinda G. Garza, McAllen Marketing

Field Office, Fruit and Vegetable Programs, AMS, USDA, 1313 E.

Hackberry, McAllen, TX 78501; telephone: (956) 682-2833, Fax: (956)

682-5942; or George Kelhart, Technical Advisor, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

720-2491, Fax: (202) 205-6632. Small businesses may request information

on compliance with this regulation by contacting Jay Guerber, Marketing

Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA,

room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone:

(202) 720-2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule 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 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.''

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. Under the marketing order now in effect, orange and

grapefruit handlers in the Lower Rio Grande Valley in Texas are subject

to assessments. Funds to administer the order are derived from such

assessments. It is intended that the assessment rate as issued herein

will be applicable to all assessable oranges and grapefruit beginning

August 1, 1998, and continue until amended, suspended, or terminated.

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. Such 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 the date of the entry of the ruling.

This rule deceases the assessment rate established for the

Committee for the 1998-99 and subsequent fiscal periods from $0.125 to

$0.11 per \7/10\ bushel carton handled.

The Texas orange and grapefruit marketing order provides authority

for the Committee, with the approval of the Department, to formulate an

annual budget of expenses and collect assessments from handlers to

administer the program. The members of the Committee are producers and

handlers of Texas oranges and grapefruit. They are familiar with the

Committee's needs and with the costs for goods and services in their

local area and are thus in a position to formulate an appropriate

budget and assessment rate. The assessment rate is formulated and

discussed in a public meeting. Thus, all directly affected persons have

an opportunity to participate and provide input.

For the 1996-97 and subsequent fiscal periods, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from fiscal period to fiscal period unless modified,

suspended, or terminated by the Secretary upon recommendation and

information submitted by the Committee or other information available

to the Secretary.

The Committee met on June 10, 1998, and unanimously recommended

1998-99 expenditures of $1,172,950 and an assessment rate of $0.11 per

7/10 bushel carton of oranges and grapefruit handled. In comparison,

last year's budgeted expenditures were $1,100,478. The assessment rate

of $0.11 is $0.015 lower than the rate currently in effect. The

Committee voted to lower its assessment rate and use more of the

[[Page 39698]]

reserve to cover its expenses. The assessment rate decrease is

necessary to bring expected assessment income closer to the amount

necessary to administer the program for the 1998-99 fiscal period. At

the current rate, assessment income would exceed anticipated expenses

by about $14,550, and the projected reserve on July 31, 1999, would

exceed the level the Committee believes to be adequate to administer

the program.

The major expenditures recommended by the Committee for the 1998-99

fiscal period include $768,700 for advertising and promotion, and

$170,000 for the Mexican Fruit Fly support program. Budgeted expenses

for these items in 1997-98 were $712,000 and $170,000, respectively.

Budget increases for 1998-99 (with the 1997-98 budgeted amounts in

parentheses) include administrative at $68,313, ($64,548), and

compliance at $73,369, ($71,112). A new budget item for 1998-99

includes funds totaling $14,000 for promotion program evaluation.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of Texas oranges

and grapefruit. Texas orange and grapefruit shipments for the year are

estimated at 9.5 million cartons which should provide $1,045,000 in

assessment income. Income derived from handler assessments, along with

interest income and funds from the Committee's authorized reserve, will

be adequate to cover budgeted expenses. Funds in the reserve (currently

$270,000) will be kept within the maximum permitted by the order

(approximately one fiscal periods' expenses; Sec. 906.35).

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the

Committee or other available information.

Although this assessment rate is effective for an indefinite

period, the Committee will continue to meet prior to or during each

fiscal period to recommend a budget of expenses and consider

recommendations for modification of the assessment rate. The dates and

times of Committee meetings are available from the Committee or the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department will

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

Further rulemaking will be undertaken as necessary. The Committee's

1998-99 budget and those for subsequent fiscal periods will be reviewed

and, as appropriate, approved by the Department.

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. Accordingly, AMS has

prepared this initial 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 the 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 2,000 producers of oranges and grapefruit

in the production area and 17 handlers subject to regulation under the

marketing order. Small agricultural producers have been defined by the

Small Business Administration (SBA) (13 CFR 121.601) as those having

annual receipts less than $500,000, and small agricultural service

firms are defined as those whose annual receipts are less than

$5,000,000. The majority of orange and grapefruit producers and

handlers may be classified as small entities.

Last year, 4 of the handlers each shipped over 833,000 \7/10\

bushel cartons of oranges and grapefruit, which at an average free-on-

board (f.o.b.) price of $6.00, generated approximately $5 million in

gross sales. These handlers would be considered large businesses under

SBA's definition, and the remaining 13 handlers would be considered

small businesses. Of the approximately 2,000 producers within the

production area, few have sufficient acreage to generate sales in

excess of $500,000; therefore, a majority of producers of Texas oranges

and grapefruit may be classified as small entities.

This rule decreases the assessment rate established for the

Committee and collected from handlers for the 1998-99 and subsequent

fiscal periods from $0.125 to $0.11 per \7/10\ bushel carton handled.

The Committee unanimously recommended 1998-99 expenditures of

$1,172,950 and an assessment rate of $0.11 per \7/10\ bushel carton.

The assessment rate of $0.11 is $0.015 lower than the 1997-98 rate. As

mentioned earlier, the quantity of assessable oranges and grapefruit

for the 1998-99 season is estimated at 9.5 million cartons. Income

derived from handler assessments, along with interest income and funds

from the Committee's authorized reserve, will be adequate to cover

budgeted expenses.

The major expenditures recommended by the Committee for the 1998-99

fiscal period include $768,700 for advertising and promotion, and

$170,000 for the Mexican Fruit Fly support program. Budgeted expenses

for these items in 1997-98 were $712,000 and $170,000, respectively.

Budget increases for 1998-99 (with the 1997-98 budgeted amounts in

parentheses) include administrative at $68,313, ($64,548), and

compliance at $73,369, ($71,112). A new budget item for 1998-99

includes funds totaling $14,000 for promotion program evaluation.

Many producers are still recovering from the devastating freezes of

1983 and 1989 that virtually destroyed the Texas citrus industry. Most

trees in the production area were planted within the past ten years and

have not yet reached full maturity. As a result, yields are still

somewhat low and profit to the producers is marginal. Also, a general

oversupply of citrus from other domestic sources and foreign countries

is depressing prices. To allow more of the revenue from sales to be

retained by those paying assessments, the Committee recommended that

the 1998-99 rate of assessment be reduced to $0.11 per \7/10\ bushel

carton. A reduction in the assessment rate will, however, cause the

Committee to draw approximately $122,950 from reserves to meet the

1998-99 budget. At the end of the 1998-99 fiscal period, the reserve is

expected to be $126,428. Interest income totaling $5,000 also will be

used to cover program expenses in 1998-99.

The Committee reviewed and unanimously recommended 1998-99

expenditures of $1,172,950, which included increases in administrative

costs, compliance, the advertising and promotion program, and the

addition of funds to cover promotion program evaluation. Budgeted

expenses for the Mexican Fruit Fly program were left the same as last

year. In arriving at the budget, the Committee considered information

from various sources. A lower assessment rate was considered. The

Committee, however, concluded that establishing a lower rate would

require it to use to much of its reserve. Based on its estimate of

anticipated 1998-99 shipments, the Committee concluded that an

assessment rate of $0.11 per \7/10\ bushel carton of oranges and

grapefruit would generate the income necessary to administer the

program with an appropriate reserve level.

[[Page 39699]]

A review of historical information and preliminary information

pertaining to the upcoming fiscal period indicates that the f.o.b.

price for the 1998-99 season could range between $4.50 and $9.00 per

\7/10\ bushel carton of oranges and grapefruit, depending upon the

fruit variety, size, and quality. Therefore, the estimated assessment

revenue for the 1998-99 fiscal period as a percentage of the total

pack-out revenue could range between 2.4 and 1.2 percent.

This action decreases the assessment obligation imposed on

handlers. Assessments are applied uniformly on all handlers, and some

of the costs may be passed on to producers. However, decreasing the

assessment rate reduces the burden on handlers and may reduce the

burden on producers. In addition, the Committee's meeting was widely

publicized throughout the Texas orange and grapefruit industry and all

interested persons were invited to attend the meeting and participate

in Committee deliberations on all issues. Like all Committee meetings,

the June 10, 1998, meeting was a public meeting and all entities, both

large and small, were able to express views on this issue. Finally,

interested persons are invited to submit information on the regulatory

and informational impacts of this action on small businesses.

This action imposes no additional reporting or recordkeeping

requirements on either small or large Texas orange and grapefruit

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 rule.

After consideration of all relevant material 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.

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

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary 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 because: (1) The Committee needs to have sufficient funds to

pay its expenses which are incurred on a continuous basis; (2) the

1998-99 fiscal period begins on August 1, 1998, and the marketing order

requires that the rate of assessment for each fiscal period apply to

all assessable oranges and grapefruit handled during such fiscal

period; (3) handlers are aware of this action which was unanimously

recommended by the Committee at a public meeting and is similar to

other assessment rate actions issued in past years; and (4) this

interim final rule provides a 60-day comment period, and all comments

timely received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 906

Marketing agreements, Grapefruit, Oranges, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, 7 CFR part 906 is

amended as follows:

PART 906--ORANGES AND GRAPEFRUIT GROWN IN 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.

2. Section 906.235 is revised to read as follows:

Sec. 906.235 Assessment rate.

On and after August 1, 1998, an assessment rate of $0.11 per \7/10\

bushel carton is established for oranges and grapefruit grown in the

Lower Rio Grande Valley in Texas.

Dated: July 21, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-19886 Filed 7-23-98; 8:45 am]

BILLING CODE 3410-02-P