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 FR]

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

Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases 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 began on

August 1 and ends July 31. The assessment rate will remain in effect

indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: August 21, 1999.

FOR FURTHER INFORMATION CONTACT: Cynthia Cavazos, Marketing Assistant,

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.

SUPPLEMENTARY INFORMATION: 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.

This rule is issued under Marketing Agreement and Order No. 906, as

amended (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, 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 increases 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 of oranges and grapefruit 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 budgeted expenditures were $1,181,950. The

assessment rate of $0.12 is $0.01 higher than the rate previously 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

[[Page 45408]]

slightly under $120,000. Thus, the Committee recommended increasing the

assessment rate because the previous rate would not have generated

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

wanted to use a limited amount of reserve funds to meet expenses. The

Committee wanted to ensure that adequate reserve funds were available

to meet unexpected 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 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, should be adequate to cover budgeted expenses.

Funds in the reserve (currently $119,402) will be kept within the

maximum of one fiscal period's expenses permitted by the order

(Sec. 906.35).

The assessment rate established by 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 will be in effect 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

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 final 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 increases 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 assessment rate of $0.12 is $0.01 higher than the

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

because the previous rate would not have generated enough income to

cover 1999-2000 expenses, and the Committee only wanted to use a

limited amount of reserve funds to meet expenses. The Committee wanted

to ensure that adequate reserve funds were available to meet unexpected

expenses. As mentioned earlier, 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, should 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 increasing the assessment

rate to $0.12 per 7/10 bushel carton because the previous rate would

not have generated enough income to cover 1999-2000 expenses, and the

Committee only wanted 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 retaining the previous rate of assessment for the 1999-

2000 fiscal period would have reduced 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 assessment rate of $0.12 per 7/10 bushel

carton of assessable oranges and

[[Page 45409]]

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 will come from the Committee's reserve and interest income.

A review of historical information and preliminary information

pertaining to the 1999-2000 fiscal period indicates that the f.o.b.

price for the 1999-2000 season could range from $4.75 and $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 total pack-out

revenue could range between .96 and 2.5 percent.

This action increases 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

are 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.

This rule 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.

A proposed rule concerning this action was published in the Federal

Register on July 19, 1999 (64 FR 38597). Copies of the proposed rule

were also mailed or sent via facsimile to all Texas orange and

grapefruit handlers. Finally, the proposal was made available through

the Internet by the Office of the Federal Register. A 20-day comment

period ending August 9, 1999, was provided for interested persons to

respond to the proposal. No comments were received.

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 that good

cause exists for not postponing the effective date of this rule until

30 days after publication in the Federal Register because the 1999-2000

fiscal period began 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. The

Committee needs to have sufficient funds to pay its expenses which are

incurred on a continuous basis. Further, handlers are aware of this

rule which was unanimously recommended by the Committee at a public

meeting. Also, a 20-day comment period was provided for in the proposed

rule.

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

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: August 17, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-21673 Filed 8-19-99; 8:45 am]

BILLING CODE 3410-02-P