2022-25123. Decrease of Assessment Rate for Texas Oranges and Grapefruit

AGENCY:

Agricultural Marketing Service, Department of Agriculture (USDA).

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would implement a recommendation from the Texas Valley Citrus Committee to decrease the assessment rate established for the 2022-23 and subsequent fiscal periods. The proposed assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Comments must be received by December 19, 2022.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposed rule. Comments can be sent to the Docket Clerk. Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, DC 20250-0237. Comments can also be sent to the Docket Clerk electronically by Email: [e-mail] or internet: https://www.regulations.gov. Comments should reference the document number and the date and page number of this issue of the Federal Register and can be viewed at: https://www.regulations.gov. All comments submitted in response to this proposed rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT:

Delaney Fuhrmeister, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Region Branch, Market Development Division, Specialty Crops Program, AMS, USDA; Telephone: [phone], Fax: [phone], or Email: [e-mail] or [e-mail].

Small businesses may request information on complying with this regulation by contacting Richard Lower, Market Development Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: [phone], Fax: [phone], or Email: [e-mail].

SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing 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. Part 906 (referred to as “the Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Texas Valley Citrus Committee (Committee) locally administers the Order and is comprised of producers and handlers of oranges and grapefruit operating within the area of production.

The Agricultural Marketing Service (AMS) is issuing this proposed rule in conformance with Executive Orders 12866 and 13563. Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review.

This proposed rule has been reviewed under Executive Order 13175—Consultation and Coordination with Indian Tribal Governments, which requires agencies to consider whether their rulemaking actions would have tribal implications. AMS has determined that this proposed rule is unlikely to have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, Texas citrus handlers 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 for the 2022-23 fiscal period, and continue until amended, suspended, or terminated.

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 Department of Agriculture (USDA) 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, USDA 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 USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of the entry of the ruling.

This proposed rule would decrease the assessment rate for the 2022-23 and subsequent fiscal periods from $0.05 to $0.03 per 7/10-bushel carton or equivalent of oranges and grapefruit.

The Order authorizes the Committee, with the approval of AMS, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are familiar with the Committee's needs and with the costs for goods and services in their local area and are able to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting, and all directly affected persons have an opportunity to participate and provide input.

For the 2021-22 and subsequent fiscal periods, the Committee recommended, and AMS approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other information available to AMS. That regulatory amendment raised the assessment rate from $0.01 per 7/10-bushel carton to its current level of $0.05 per 7/10-bushel carton.

The Committee met on May 24, 2022, and recommended 2022-23 expenditures of $134,970 and an assessment rate of $0.03 per 7/10-bushel carton or equivalent. In comparison, last year's budgeted expenditures were $43,900. The assessment rate of $0.03 is $0.02 lower than the rate currently in effect. The Committee voted to decrease the assessment rate due to an increase in production. The Committee estimates production for 2022-23 fiscal period to be approximately 4 million 7/10-bushel cartons or equivalent, an increase from the 1 million cartons estimated to be produced the previous year. At the current assessment rate, assessment income would equal $200,000, exceeding the Committee's anticipated expenditures of $134,970. By decreasing the assessment rate by $0.02, assessment income would be $120,000. This amount, along with reserve funds and interest income, should provide sufficient funds to meet 2022-23 anticipated expenses.

Major expenditures recommended by the Committee for the 2022-23 year include $66,220 for management expenses, $50,000 for compliance, and $18,750 for administrative expenses. Budgeted expenses for these items in 2021-22 were $20,000, $10,000, and $13,900, respectively.

The assessment rate recommended by the Committee was derived by reviewing anticipated expenses, expected shipments of Texas oranges and grapefruit, and the level of funds in reserve. Orange and grapefruit shipments for the 2022-23 year are estimated at 4,000,000 7/10-bushel cartons or equivalent, which should provide $120,000 in assessment income (4,000,000 cartons multiplied by $0.03). Income derived from handler assessments at the proposed rate, along with reserve funds and interest income, would be adequate to cover budgeted expenses. Funds in the reserve (currently about $89,126) are expected to be kept within the maximum permitted by the Order (approximately one fiscal period's expenses as authorized in § 906.35).

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by AMS 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. Dates and times of Committee meetings are available from the Committee or AMS. Committee meetings are open to the public and interested persons may express their views at these meetings. AMS evaluates Committee recommendations and other available information to determine whether modification of the assessment rate is needed, and further rulemaking would be undertaken as necessary. The Committee's 2022-23 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by AMS.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this proposed rule is consistent with and will effectuate the purposes of the Act.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA)(5 U.S.C. 601-612), AMS has considered the economic impact of this proposed 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 businesses 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.

There are approximately 120 producers of oranges and grapefruit in the production area and 14 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of $3,500,000 or less, and small agricultural service firms are defined as those whose annual receipts are $30,000,000 or less (13 CFR 121.201).

According to data from the National Agricultural Statistics Service (NASS), the weighted average free-on-board price for Texas citrus for the 2019-20 season was approximately $16.20 per 7/10-bushel carton or equivalent with total shipments of around 8.2 million cartons. Based on the number of handlers and the NASS data, handlers have average annual receipts of well below $30 million ($16.20 multiplied by 8.2 million cartons equals $132,840,000, divided by 14 equals $9.5 million).

In addition, based on NASS and Committee data the reported weighted average producer price for the 2020-21 season was around $9.82 per 7/10-bushel carton of Texas citrus with total shipments of around 4.45 million cartons. Based on producer price, shipment data, and the total number of Texas citrus producers, the average annual producer revenue is significantly below $3,500,0000 ($9.82 multiplied by 4.45 million cartons equals $43,699,000 divided by 119 producers equals $367,218). Thus, the majority of Texas citrus handlers and growers may be classified as small entities.

This proposal would decrease the assessment rate established for the Committee and collected from handlers for the 2022-23 and subsequent fiscal periods from $0.05 to $0.03 per 7/10-bushel carton or equivalent of oranges and grapefruit grown in the Lower Rio Grande Valley in Texas. The Committee recommended 2022-23 expenditures of $134,970 and an assessment rate of $0.03 per 7/10-bushel carton. The proposed assessment rate of $0.03 is $0.02 less than the previous rate. The quantity of assessable Texas Citrus for the 2022-23 season is estimated at 4 million 7/10-bushel cartons. Thus, the $0.03 rate should provide $120,000 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.

Major expenditures recommended by the Committee for the 2022-23 fiscal period include $66,220 for management expenses, $50,000 for compliance, and $18,750 for administrative expenses. Budgeted expenses for these items in 2021-22 were $20,000, $10,000, and $13,900, respectively.

The Committee recommended decreasing the assessment rate based on the 2022-23 estimate of 4 million 7/10-bushel carton or equivalent, 3 million more than estimated for the previous year. At the current assessment rate of $0.05 and with the 2022-23 crop estimated to be 4 million 7/10-bushel cartons, assessment income would equal $200,000 ($0.05 multiplied by 4 million cartons), an amount exceeding the Committee's anticipated expenditures of $134,970. By decreasing the assessment rate by $0.02, assessment income would be approximately $120,000 ($0.03 multiplied by 4 million cartons). This amount, along with interest income, and funds from the authorized reserve, should provide sufficient funds to meet 2022-23 anticipated expenses.

Prior to arriving at this budget and assessment rate, the Committee considered maintaining the current assessment rate of $0.05. However, leaving the assessment unchanged would generate excess revenue over the Committee's budgeted expenses for the 2022-23 and potentially cause reserve amounts to surpass the limits specified by the Order. Consequently, the Committee determined the assessment rate should be decreased to $0.03 per 7/10-bushel carton and the alternative rejected.

A review of historical information and preliminary information pertaining to the upcoming season indicates that the producer price for the 2022-23 season should be approximately $12.85 per 7/10-bushel carton or equivalent of oranges and grapefruit. The proposed assessment rate of $0.03 per 7/10-bushel carton or equivalent of oranges and grapefruit represents 0.23 percent of the $12.85 revenue for the 2022-23 fiscal period as a percentage of total producer revenue ($0.03 divided by $12.85 multiplied by 100).

This proposed rule would 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 also reduce the burden on producers.

The Committee's meeting was widely publicized throughout the Texas citrus industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 24, 2022, 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 comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0189 Fruit Crops. No changes in those requirements would be necessary as a result of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large Texas oranges 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.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/​rules-regulations/​moa/​small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 30-day comment period is provided to allow interested persons to comment on this proposed rule. All written comments timely received will be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 906

• Grapefruit
• Marketing agreements
• Oranges
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, the Agricultural Marketing Service is proposing to amend 7 CFR part 906 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:

§ 906.235

Assessment rate.

On and after August 1, 2022, an assessment rate of $0.03 per 7/10-bushel carton or equivalent is established for oranges and grapefruit grown in the Lower Rio Grande Valley in Texas.

Erin Morris,

Associate Administrator, Agricultural Marketing Service.