[Federal Register Volume 63, Number 197 (Tuesday, October 13, 1998)]
[Rules and Regulations]
[Pages 54553-54556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27311]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 906
[Docket No. FV98-906-1 FIR]
Oranges and Grapefruit Grown in Lower Rio Grande Valley in Texas;
Decreased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
which decreased 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 began on August 1 and ends
July 31. The assessment rate will remain in effect indefinitely unless
modified, suspended, or terminated.
EFFECTIVE DATE: November 12, 1998.
FOR FURTHER INFORMATION CONTACT: Belinda G. Garza, McAllen Marketing
[[Page 54554]]
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 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 continues to decrease the assessment rate established for
the Committee for the 1998-99 and subsequent fiscal periods from $0.125
per \7/10\ bushel carton 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. On August 18,
1998, the Committee met again and unanimously approved a $9,000
increase to the 1998-99 budget, which increased the total budget to
$1,181,950. In comparison, last year's budgeted expenditures were
$1,100,478. The assessment rate of $0.11 is $0.015 lower than the rate
previously in effect. The Committee voted to lower its assessment rate
and use more of the reserve to cover its expenses. The assessment rate
decrease was necessary to bring expected assessment income closer to
the amount necessary to administer the program for the 1998-99 fiscal
period. At the previous rate, assessment income would have exceeded
anticipated expenses by about $5,550, and the projected reserve on July
31, 1999, would have exceeded the level the Committee believes 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
$179,000 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 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 final regulatory flexibility analysis.
[[Page 54555]]
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 continues to decrease 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
$1,181,950 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
$179,000 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. The reduction in the assessment rate will, however, cause the
Committee to draw approximately $131,950 from reserves to meet the
1998-99 budget. At the end of the 1998-99 fiscal period, the reserve is
expected to be $117,428. 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 a promotion program evaluation. Budgeted
expenses for the Mexican Fruit Fly program were left the same as last
year. In a subsequent meeting on August 18, 1998, however, the
Committee approved a $9,000 increase for the Mexican Fruit Fly program,
which increased the total budget to $1,181,950. 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 too 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. Funds in the
reserve will be kept within the maximum permitted by the order
(approximately one fiscal period's expenses; Sec. 906.35).
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 continues to decrease 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 and August 18, 1998, meetings were public meetings and all
entities, both large and small, were able to express views on this
issue.
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.
An interim final rule concerning this action was published in the
Federal Register on July 24, 1998 (63 FR 39697). Copies of that rule
were also mailed or sent via facsimile to all Texas orange and
grapefruit handlers. Finally, the interim final rule was made available
through the Internet by the Office of the Federal Register. A 60-day
comment period was provided for interested persons to respond to the
interim final rule. The comment period ended on September 22, 1998, and
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.
List of Subjects in 7 CFR Part 906
Marketing agreements, Grapefruit, Oranges, Reporting and
recordkeeping requirements.
[[Page 54556]]
PART 906--ORANGES AND GRAPEFRUIT GROWN IN LOWER RIO GRANDE VALLEY
IN TEXAS
Accordingly, the interim final rule amending 7 CFR part 906 which
was published at 63 FR 39697 on July 24, 1998, is adopted as a final
rule without change.
Dated: October 6, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-27311 Filed 10-9-98; 8:45 am]
BILLING CODE 3410-02-P
