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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 906

[Docket No. FV99-906-2 PR]

Oranges and Grapefruit Grown in Lower Rio Grande Valley in Texas;

Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate from $0.11 to

$0.12 per 7/10 bushel carton of oranges and grapefruit established for

the Texas Valley Citrus Committee (Committee) under Marketing Order No.

906 for the 1999-2000 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 would remain in effect

indefinitely unless modified, suspended, or terminated.

DATES: Comments must be received by August 9, 1999.

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) 720-5698; or E-mail:

[email protected]. 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, Regional Manager,

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) 720-5698. Small businesses may request

information on complying with this regulation, or obtain a guide on

complying with fruit, vegetable, and specialty crop marketing

agreements and orders by contacting Jay Guerber, Marketing Order

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

Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 720-

2491, Fax: (202) 720-5698, or E-mail: Jay.G[email protected]. You may

view the marketing agreement and order small business compliance guide

at the following web site: http://www.ams.usda.gov/fv/moab.html.

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 proposed herein

would be applicable to all assessable oranges and grapefruit beginning

on August 1, 1999, 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 would increase the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal periods from $0.11 to

$0.12 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 1998-99 and subsequent fiscal periods, the Committee

recommended, and the Department approved, an assessment rate of $0.11

per \7/10\ bushel carton 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 8, 1999, and unanimously recommended

1999-2000 expenditures of $1,148,850 and an assessment rate of $0.12

per \7/10\ bushel carton of oranges and grapefruit handled. In

comparison, last year's

[[Page 38598]]

budgeted expenditures were $1,181,950. The assessment rate of $0.12 is

$0.01 higher than the rate currently in effect. The Committee has

operated under a lower assessment rate in recent years and used

available reserve funds to make up most of the difference between

assessment income and expenses. Since 1994, the Committee's reserve has

decreased from almost $400,000 to slightly under $120,000. Thus, the

Committee recommended increasing the assessment rate because the

current rate would not generate enough income to cover 1999-2000

expenses, and the Committee only wants to use a limited amount of

reserve funds to meet expenses. The Committee wants to ensure that

adequate reserve funds are available to meet unexpected expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $739,000 for advertising, $179,000 for the

Mexican Fruit Fly program, $109,781 for management and administration

of the program, and $73,369 for compliance. Budgeted expenses for these

items in 1998-99 were $768,700, $179,000, $109,781, and $73,369,

respectively.

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 \7/10\ bushel cartons, which should provide

$1,140,000 in assessment income. Income derived from handler

assessments, along with interest income and funds from the Committee's

authorized reserve, would be adequate to cover budgeted expenses. Funds

in the reserve (currently $119,402) would be kept within the maximum of

one fiscal period's expenses permitted by the order (Sec. 906.35).

The proposed assessment rate would 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 would be in effect for an indefinite

period, the Committee would 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 would

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

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

1999-2000 budget and those for subsequent fiscal periods would 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 315 producers of oranges and grapefruit in

the production area and 16 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 Texas orange and grapefruit producers and

handlers may be classified as small entities.

Last year, 5 of the 16 handlers (31 percent) each shipped over

625,000 \7/10\ bushel cartons of oranges and grapefruit. Using an

average f.o.b. price of $8.00 per carton, these handlers could be

considered large businesses by the SBA, and the remaining 11 handlers

(69 percent) could be considered small businesses. Of the approximately

315 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 would increase the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal periods from $0.11 to $0.12 per \7/10\ bushel carton of oranges

and grapefruit. The Committee unanimously recommended 1999-2000

expenditures of $1,148,850 and an assessment rate of $0.12 per \7/10\

bushel carton. The proposed assessment rate of $0.12 is $0.01 higher

than the 1998-99 rate. The Committee recommended increasing the

assessment rate because the current rate would not generate enough

income to cover 1999-2000 expenses, and the Committee only wants to use

a limited amount of reserve funds to meet expenses. The Committee wants

to ensure that adequate reserve funds are available to meet unexpected

expenses. The quantity of assessable oranges and grapefruit for the

1999-2000 season is estimated at 9.5 million \7/10\ bushel cartons.

Assessment income, along with interest income and funds from the

Committee's authorized reserve, would be adequate to cover budgeted

expenses.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $739,000 for advertising and promotion,

$179,000 for the Mexican Fruit Fly program, $109,781 for management and

administration of the marketing order program, and $73,369 for

compliance. Budgeted expenses for these items in 1998-99 were $768,700,

$179,000, $109,781, and $73,369, respectively.

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

depressed prices. The Committee recommended that the 1999-2000 rate of

assessment be increased to $0.12 per \7/10\ bushel carton. The

Committee recommended increasing the assessment rate because the

current rate would not generate enough income to cover 1999-2000

expenses, and the Committee only wants to use a limited amount of

reserve funds ($5,850) to meet expenses. Interest income totaling

$3,000 will also be used to cover program expenses in 1999-2000. At the

end of the 1999-2000 fiscal period, the reserve is expected to be

$113,552.

The Committee reviewed and unanimously recommended 1999-2000

expenditures of $1,148,850, which included a decrease in the

advertising and promotion program. 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,

including the Executive Committee. The Committee considered leaving the

established lower assessment rate unchanged. The Committee, however,

concluded that

[[Page 38599]]

retaining the current $0.11 per \7/10\ bushel carton assessment rate

for the 1999-2000 fiscal period would reduce the Committee's reserve to

an unacceptable level. Alternative expenditure levels were discussed

based upon the relative value of the advertising and promotion program

to the Texas citrus industry. The proposed assessment rate of $0.12 per

\7/10\ bushel carton of assessable oranges and grapefruit was

determined by dividing the total recommended budget by the quantity of

assessable oranges and grapefruit estimated at 9.5 million \7/10\

bushel cartons for the 1999-2000 fiscal period. The $0.12 rate should

provide $1,140,000 in assessment income. The additional $8,850 would

come from the Committee's reserve and interest income.

A review of historical information and preliminary information

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

price for the 1999-2000 season could range from $4.75 to $12.50 per 7/

10 bushel carton of oranges and grapefruit depending upon the fruit

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

for the 1999-2000 fiscal period as a percentage of the total pack-out

revenue could range between .96 and 2.5 percent.

This action would increase the assessment obligation imposed on

handlers. While assessments impose some additional costs on handlers,

the costs are minimal and uniform on all handlers. Some of the

additional costs may be passed on to producers. However, these costs

would be offset by the benefits derived by the operation of the

marketing order. 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 8, 1999, 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 proposed rule would impose 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.

A 20-day comment period is provided to allow interested persons to

respond to this proposed rule. Twenty days is deemed appropriate

because: (1) The 1999-2000 fiscal period begins on August 1, 1999, 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, and handlers will begin harvesting their

fruit in early September; (2) the Committee needs to have sufficient

funds to pay its expenses which are incurred on a continuous basis; and

(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.

List of Subjects in 7 CFR Part 906

Grapefruit, Marketing agreements, Oranges, Reporting and

recordkeeping requirements.

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

proposed to be 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, 1999, an assessment rate of $0.12 per 7/10

bushel carton is established for oranges and grapefruit grown in the

Lower Rio Grande Valley in Texas.

Dated: July 14, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-18318 Filed 7-16-99; 8:45 am]

BILLING CODE 3410-02-P