2018-24493. Oranges and Grapefruit Grown in Lower Rio Grande Valley in Texas; Decreased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule implements a recommendation from the Texas Valley Citrus Committee (Committee) to decrease the assessment rate established for the 2018-19 and subsequent fiscal periods. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Effective December 10, 2018.

FOR FURTHER INFORMATION CONTACT:

Doris Jamieson, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement 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, Marketing Order and Agreement 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, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). 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. 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 Committee locally administers the Order and is comprised of producers and handlers of oranges and grapefruit operating within the production area.

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 13563 and 13175. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).

This 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 will be applicable to all assessable oranges and grapefruit for the 2018-19 crop year 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 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 not later than 20 days after the date of the entry of the ruling.

The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Committee's needs and with the costs of goods and services in their local area and can 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.

This rule decreases the assessment rate from $0.02, the rate that was established for the 2017-18 and subsequent fiscal periods, to $0.01 per 7/10-bushel carton or equivalent of oranges and grapefruit handled for the 2018-19 and subsequent fiscal periods. The Committee recommended decreasing the assessment rate and utilizing funds from its authorized reserve to reduce the reserve balance. The reserve balance has been greater than the sum allowable under § 906.35 of the Order, which is approximately equivalent to one year's operating expenses, since 2017. In 2017-18, the Committee was able to reduce its budget by more than $595,000 when an alternative funding source was found for the Mexican fruit fly control program. This dramatic reduction in the overall budget prompted the Committee's need to reduce the balance of the authorized reserve to reflect the lower operating budget.

The Committee met on May 23, 2018, and unanimously recommended 2018-19 expenditures of $152,920 and an assessment rate of $0.01 per 7/10-bushel carton or equivalent of oranges and grapefruit. The itemized budgeted expenses, including $79,220 for management, $50,000 for compliance, and $23,700 for operating expenses, are the same as the previous fiscal period. However, the assessment rate of $0.01 is lower than the $0.02 rate currently in effect.

The assessment rate recommended by the Committee was derived by considering anticipated expenses, expected shipments of 7.5 million 7/10-bushel cartons, and the amount of funds available in the authorized reserve. Income derived from handler assessments, calculated at $75,000 (7.5 million × $0.01), along with interest income and funds from the Committee's authorized reserve, should be adequate to cover budgeted expenses of $152,920. Funds in the reserve are estimated to be $287,295 at the end of the 2017-18 fiscal period. No additional funds can be added to the reserve until the balance drops below approximately one fiscal period's expenses as stated in § 906.35.

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA 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 USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA 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 2018-19 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), 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 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 170 producers of oranges and grapefruit in the production area and 13 handlers subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

According to Committee data, the average price for Texas citrus during the 2016-17 season was approximately $16 per carton and total shipments were 7.6 million cartons. Using the average price and shipment information, the number of handlers, and assuming a normal distribution, the majority of handlers would have average annual receipts of greater than $7,500,000 ($16 per carton times 7.6 million cartons equals $121.6 million, divided by 13 equals $9.4 million per handler).

In addition, based on National Agricultural Statistics Service information, the weighted grower price for Texas citrus during the 2016-17 season was approximately $9.35 per carton. Using the weighted average price and shipment information, the number of producers and assuming a normal distribution, the majority of producers would have annual receipts of $418,000, which is less than $750,000 ($9.35 per carton times 7.6 million cartons equals $71.06 million, divided by 170 equals $418,000 per producer). Thus, the majority of handlers of Texas citrus may be classified as large entities, while the majority of producers may be classified as small entities.

This rule decreases the assessment rate collected from handlers for the 2018-19 and subsequent fiscal periods from $0.02 to $0.01 per 7/10-bushel carton or equivalent of Texas citrus. The Committee unanimously recommended 2018-19 expenditures of $152,920 and an assessment rate of $0.01 per 7/10-bushel carton or equivalent handled. The assessment rate of $0.01 is $0.01 lower than the 2017-18 rate. The quantity of assessable oranges and grapefruit for the 2018-19 fiscal period is estimated at 7.5 million 7/10-bushel cartons. The $0.01 rate should provide $75,000 in assessment income (7.5 million × $0.01). Income derived from handler assessments, 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 2018-19 year include $79,220 for management, $50,000 for compliance, and $23,700 for operating expenses. Budgeted expenses for these items in 2017-18 were the same.

The Committee recommended decreasing the assessment rate and utilizing funds from its authorized reserve to reduce the reserve balance to bring it in line with the limitation under the Order of approximately one year's expenses.

Prior to arriving at this budget and assessment rate, the Committee considered information from various sources, such as the Committee's Budget and Personnel Committee, and the Research Committee. Alternative expenditure levels were discussed by these committees who reviewed the relative value of various activities to the Texas citrus industry. These committees determined that all program activities were adequately funded and essential to the functionality of the Order; thus, no alternative expenditure levels were deemed appropriate. Additionally, the Committee discussed alternatives of maintaining the current assessment rate of $0.02 and lowering the assessment rate to $0.015 per 7/10-bushel carton or equivalent. These alternatives were not recommended because the Committee determined that these assessment rates would not draw enough funds from the authorized reserve to bring the reserve fund total in line with Order requirements.

Based on these discussions and estimated shipments, the recommended assessment rate of $0.01 should provide $75,000 in assessment income. The Committee determined that assessment revenue, along with funds from the reserve and interest income, should be adequate to cover budgeted expenses for the 2018-19 fiscal period.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the average grower price for the 2018-19 season should be approximately $9.50 per 7/10-bushel carton or equivalent of oranges and grapefruit. The estimated assessment revenue for the 2018-19 crop year as a percentage of total grower revenue would be about 0.1 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. 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. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 23, 2018, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue.

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 the OMB and assigned OMB No. 0581-0189, Fruit Crops. No changes in those requirements because of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

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. As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.

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.

A proposed rule concerning this action was published in the Federal Register on August 24, 2018 (83 FR 42805). Copies of the proposed rule were also mailed or sent via facsimile to all Texas citrus handlers. The proposal was made available through the internet by USDA and the Office of the Federal Register. A 30-day comment period ending September 24, 2018, was provided for interested persons to respond to the proposal.

One comment was received. The commenter expressed concern that the beginning of the applicable timeframe for the new assessment rate precedes the closing date for public comments. The Order requires that the rate of assessment for each fiscal period apply to all assessable Texas citrus handled during such fiscal period. Further, the rulemaking process is designed to provide interested parties with the opportunity to comment on actions being considered by USDA. All comments timely received were considered prior to the finalization of this rule. Accordingly, no changes will be made to the rule as proposed, based on the comment received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://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.

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 will tend to effectuate the declared policy of the Act.

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:

§ 906.235

Assessment rate.

On and after August 1, 2018, an assessment rate of $0.01 per 7/10-bushel carton or equivalent is established for oranges and grapefruit grown in the Lower Rio Grande Valley in Texas.

Dated: November 5, 2018.

Bruce Summers,

Administrator, Agricultural Marketing Service.