E9-8171. Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; Secretary's Decision and Referendum Order on Proposed Amendments to Marketing Agreement 84 and Order No. 905

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule and referendum order.

SUMMARY:

This decision proposes amendments to Marketing Agreement No. 84 and Order No. 905 (order), which regulate the handling of oranges, grapefruit, tangerines, and tangelos (citrus) grown in Florida; and provides growers with the opportunity to vote in a referendum to determine if they favor the changes. The amendments are based on proposals by the Citrus Administrative Committee (committee), which is responsible for local administration of the order. These amendments would: (1) Modify committee representation by cooperative entities; (2) allow substitute alternates to temporarily represent absent members at committee meetings; (3) authorize the committee to conduct meetings by telephone or other means of communication; and (4) authorize the committee to conduct research and promotion programs, including paid advertising, for fresh Florida citrus. The amendments are intended to improve the operation and administration of the order and provide the industry with additional tools for the marketing of fresh citrus.

DATES:

The referendum will be conducted from May 4 through May 18, 2009. The representative period for the purpose of the referendum is August 1, 2007, through July 31, 2008.

ADDRESSES:

Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW. Third Avenue, Room 385, Portland, OR 97204.

FOR FURTHER INFORMATION CONTACT:

Melissa Schmaedick, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW. Third Avenue, Room 385, Portland, Oregon 97204; Telephone: [phone], Fax: [phone], or e-mail: [e-mail]; or Laurel May, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; Telephone: [phone], fax: [phone], or e-mail: [e-mail].

Small businesses may request information on this proceeding by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; Telephone: [phone], fax: [phone], e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

Prior documents in this proceeding: Notice of Hearing issued on January 24, 2008, and published in the January 29, 2008, issue of the Federal Register (73 FR 5130), and a Recommended Decision issued on December 19, 2008, and published in the December 24, 2008, issue of the Federal Register (73 FR 79028).

This action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and is therefore excluded from the requirements of Executive Order 12866.

Preliminary Statement

The proposed amendments are based on the record of a public hearing held February 12, 2008, in Winter Haven, Florida, to consider such amendments to the order. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation of marketing agreements and orders (7 CFR part 900). The Notice of Hearing was published in the Federal Register on January 29, 2008 (73 FR 5130), and contained amendment proposals submitted by the committee.

The amendments included in this decision would:

1. Modify committee representation by cooperative entities;

2. Allow substitute alternates to temporarily represent absent members at committee meetings;

3. Authorize the committee to conduct meetings by telephone or other means of communication; and

4. Add authority for research and promotion programs, including paid advertising, for fresh Florida citrus.

The Agricultural Marketing Service (AMS) also proposed to make such changes to the order as may be necessary, if any of the proposed changes are adopted, so that all of the order's provisions conform to the effectuated amendments. AMS proposed replacing the word “he” in the second sentence of § 905.22(a)(2) with “he and she”, and replacing the word “his” in the last sentence of § 905.22(b)(2) with the words “his or her” to conform to other proposed changes to that section.

Upon the basis of evidence introduced at the hearing and the record thereof, the Administrator of AMS on December 19, 2008, filed with the Hearing Clerk, U.S. Department of Agriculture (USDA), a Recommended Decision and Opportunity to File Written Exceptions thereto by January 23, 2009. None were filed.

Small Business Considerations

Pursuant to the requirements set forth in the Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA), AMS has considered the economic impact of this action 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 so that small businesses will not be unduly or disproportionately burdened. Marketing orders and amendments thereto are unique in that they are normally brought about through group action of essentially small entities for their own benefit.

Small agricultural service firms, which include handlers regulated under the order, have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $7,000,000. Small agricultural producers have been defined as those with annual receipts of less than $750,000.

There are approximately 48 handlers of fresh citrus subject to regulation under the order and approximately 7,700 producers of fresh citrus in the regulated area. Information provided at the hearing indicates that over 90 percent of the handlers would be considered small agricultural service firms. Hearing testimony also suggests that the majority of producers would also be considered small entities according to the SBA's definition.

The order regulates the handling of fresh citrus grown in the state of Florida. Total bearing citrus acreage has declined from a peak of approximately 800,000 acres in 1996-97 to about 550,000 acres in 2006-07, largely due to hurricane damage and the removal of diseased citrus trees. Approximately 7.236 million tons of citrus were produced in Florida during the 2006-07 season—a decline of approximately 6 million tons compared to the 1996-97 season. According to evidence provided at the hearing, approximately 10 percent of Florida citrus is used in the fresh market, while the remainder is used in the production of processed juice products. Generally, 40 percent of Florida's fresh citrus is shipped to export markets, including the Pacific Rim countries, Europe, and Canada.

Under the order, outgoing quality regulations are established for fresh citrus shipments, and statistical information is collected. Program activities administered by the committee are designed to support large and small citrus producers and handlers. The 18-member committee is comprised of both producer and handler representatives from the production area, as well as a public member. Committee meetings where regulatory recommendations and other decisions are made are open to the public. All members are able to participate in committee deliberations, and each committee member has an equal vote. Others in attendance at meetings are also allowed to express their views.

After discussions within the citrus industry, the committee considered developing its own research and marketing promotion programs focusing on fresh Florida citrus. An amendment study subcommittee was formed to explore this idea and other possible order revisions. The subcommittee developed a list of proposed amendments to the order, which was then presented to the committee and shared with other industry organizations. The proposed amendments were also posted on the committee's Web site for review by the Florida citrus industry at large.

The committee met to review and discuss the subcommittee's proposals at its meeting on May 29, 2007. At that time, the committee voted unanimously to support the four proposed amendments that were forwarded to AMS.

The proposed amendments are intended to provide the committee and the industry with additional flexibility in administering the order and producing and marketing fresh Florida citrus. Record evidence indicates that the proposals are intended to benefit all producers and handlers under the order, regardless of size.

All producer and handler witnesses supported the proposed amendments at the hearing. Some witnesses commented on the implications of implementing specific marketing, research, and development programs. In that context, witnesses stated that they expected the benefits to producers and handlers to outweigh any potential costs.

A description of the proposed amendments and their anticipated economic impact on small and large entities is discussed below.

Proposal 1—Cooperative Representation

Proposal 1 would amend the order by reducing the required number of cooperative producer and cooperative handler seats on the committee from three each to two each.

At the time the order was promulgated, there were numerous cooperative entities in the industry. The committee's original structure was designed to afford proportional representation for cooperative producers and handlers on the committee. The shrinking number of cooperatives entities, especially cooperative marketing entities, over time has prompted the committee to evaluate the appropriateness of the current committee structure. The committee believes that reducing the number of required cooperative seats on the committee would better reflect the current composition of the industry. The reduction would ensure that the interests of all large and small producers and handlers, whether independent or members of cooperatives, are represented appropriately during committee deliberations. Adoption of the proposed amendment would have no economic impact on producers or handlers of any size.

Proposal 2—Substitute Alternates

Proposal 2 would amend the order by allowing members who are unable to attend committee meetings to designate available alternates to represent them if their own alternates are also unavailable in order to achieve a quorum. If members are unable to designate substitute alternates, the committee could designate substitutes at the meeting if necessary to secure a quorum. Substitute alternates would be required to represent the same group affiliation (producer or handler) as the absent members and alternates. Under current order provisions, only a member's respective alternate may represent the member if the member is unable to attend a meeting. There is no provision for a situation in which both the member and his or her alternate are unavailable for a meeting. In the past, meetings have been cancelled at the last minute because attendance was insufficient to meet quorum requirements.

If implemented, the proposed amendment would allow alternates not otherwise representing absent members to represent other members at committee meetings in order to secure a quorum. This would help ensure that quorum requirements could be met and that committee business could be addressed in a timely manner. This amendment would have no adverse economic impact on producers or handlers of any size.

Proposal Number 3—Telephone Meetings

Proposal 3 would amend the order by adding authority to conduct committee meetings by telephone or other means of communication. Currently, the committee is limited to meeting in person, with provision for emergency voting by telephone. This amendment would give the committee greater flexibility in scheduling meetings and would be consistent with current practices in other citrus industry settings.

Witnesses stated that using modern communication technology would allow the committee to respond more quickly to urgent industry needs and would provide greater access to meetings by members and other industry participants. Greater meeting flexibility would make it easier for the committee to hold additional meetings where there is a need for lengthier discussion and consensus building. The quorum and voting requirements specified for assembled meetings would also apply to meetings held via telephone or teleconference. The votes of members participating by telephone or other means of communication would be confirmed in writing. Faxes and e-mails would be considered acceptable forms of written vote confirmation by the committee.

This amendment is expected to benefit producers and handlers of all sizes by improving committee efficiencies, encouraging greater participation in industry deliberations and is not expected to result in any significant increased costs to producers or handlers.

Proposal Number 4—Research and Promotion

Proposal 4 would amend the order by adding authority to establish research and promotion programs. If this authority was implemented, the committee would be able to address the specific needs of the Florida fresh citrus industry by recommending, conducting, and funding research projects and promotional programs, including paid advertising, that focus on the production, handling, and marketing of fresh citrus.

Witnesses testified that the committee's assessment rate would increase to cover the costs of any newly authorized research and promotion projects, and that there may be an offset by decreases in payments by the industry to fund projects through other entities. Any increased assessment costs would be based on the volume of fresh citrus shipped by each handler. Therefore, any increased costs would be applied proportionately to all handlers.

Witnesses testified that the benefits expected to accrue to producers and handlers following implementation of this amendment would outweigh the costs. Witnesses advocated the establishment of production research programs that would assist with the development of new varieties and post-harvest handling methods to improve the marketability of fresh Florida citrus. Witnesses expect that marketing programs specific to fresh citrus would increase consumer demand and sales, which would in turn increase returns to producers and handlers. There was unanimous support for this proposal from witnesses at the hearing.

Interested persons were invited to present evidence at the hearing on the probable regulatory and informational impact of the proposed amendments to the order on small entities. The record evidence is that implementation of the proposals to reallocate membership seats, authorize the use of substitute alternates, and authorize use of modern communication technology at meetings would have little or no impact on producers and handlers. Adding authority to conduct research and promotion programs would result in additional costs being imposed on handlers once implemented. Evidence provided at the hearing shows that committee expenses, and therefore handler assessments, would increase with the implementation of the proposal to authorize research and promotion programs. However, the record indicates that there may be an offset by decreases in payments to other industry entities now conducting research. Improved production and marketing strategies developed under the authorized programs would be expected to outweigh any additional costs to the Florida fresh citrus industry. In addition, any increased costs would be proportional to a handler's size and would not unduly or disproportionately impact small entities.

USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. These amendments are intended to improve the operation and administration of the order and to assist in the marketing of fresh Florida citrus.

Paperwork Reduction Act

Information collection requirements for Part 905 are currently approved by the Office of Management and Budget (OMB), under OMB Number 0581-0189—“Generic OMB Fruit Crops.” No changes in these requirements are anticipated as a result of this proceeding. Should any such changes become necessary, they would be submitted to OMB for approval.

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 Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

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.

Civil Justice Reform

The amendments to Marketing Agreement No. 84 and Marketing Order No. 905 proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this proposal.

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. A 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.

Findings and Conclusions

The findings and conclusions, rulings, and general findings and determinations included in the Recommended Decision set forth in the December 24, 2008, issue of the Federal Register are hereby approved and adopted.

Marketing Agreement and Order

Annexed hereto and made a part hereof is the document entitled “Order Amending the Order Regulating the Handling of Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida.” This document has been decided upon as the detailed and appropriate means of effectuating the foregoing findings and conclusions.

It is hereby ordered, that this entire decision be published in the Federal Register.

Referendum Order

It is hereby directed that a referendum be conducted in accordance with the procedure for the conduct of referenda (7 CFR part 900.400-407) to determine whether the annexed order amending the order regulating the handling of oranges, grapefruit, tangerines, and tangelos grown in Florida is approved or favored by producers, as defined under the terms of the order, who during the representative period where engaged in the production of citrus in the production area.

The representative period for the conduct of such referendum is hereby determined to be August 1, 2007, though July 31, 2008.

The agents of the Secretary to conduct such referendum are hereby designated to be Christian Nissen and Doris Jamieson, Southeast Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; Telephone: [phone], Fax: [phone], or E-mail: [e-mail] or [e-mail], respectively.

List of Subjects in 7 CFR Part 905

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

Dated: April 6, 2009.

Robert C. Keeney,

Acting Associate Administrator.

Order Amending the Order Regulating the Handling of Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida ^[1]

Findings and Determinations

The findings and determinations hereinafter set forth are supplementary to the findings and determinations that were previously made in connection with the issuance of the marketing order; and all said previous findings and determinations are hereby ratified and affirmed, except insofar as such findings and determinations may be in conflict with the findings and determinations set forth herein.

(a) Findings and Determinations Upon the Basis of the Hearing Record.

Pursuant to the provisions of the Agricultural marketing Agreement Act of 1937, as amended (7 U.S.C. 601-612), and the applicable rules of practice and procedure effective thereunder (7 CFR part 900), a public hearing was held upon proposed further amendment of Marketing Agreement No. 84 and Marketing Order No. 905, regulating the handling of oranges, grapefruit, tangerines, and tangelos grown in Florida.

Upon the basis of the record, it is found that:

(1) The marketing agreement and order, as amended, and as hereby proposed to be further amended, and all of the terms and conditions thereof, would tend to effectuate the declared policy of the Act;

(2) The marketing agreement and order, as amended, and as hereby proposed to be further amended, regulate the handling of oranges, grapefruit, tangerines, and tangelos grown in the production area in the same manner as, and are applicable only to, persons in the respective classes of commercial and industrial activity specified in the marketing agreement and order upon which a hearing has been held;

(3) The marketing agreement and order, as amended, and as hereby proposed to be further amended, are limited in their application to the smallest regional production area that is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

(4) The marketing agreement and order, as amended, and as hereby proposed to be further amended, prescribe, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of oranges, grapefruit, tangerines, and tangelos grown in the production area; and

(5) All handling of oranges, grapefruit, tangerines, and tangelos grown in the production area as defined in the marketing agreement and order is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

Order Relative to Handling

It is therefore ordered, That on and after the effective date hereof, all handling of oranges, grapefruit, tangerines, and tangelos grown in Florida shall be in conformity to, and in compliance with, the terms and conditions of the said order as hereby proposed to be amended as follows:

The provisions of the proposed marketing agreement and order amending the order contained in the Recommended Decision issued by the Administrator on December 19, 2008, and published in the Federal Register on December 24, 2008, will be and are the terms and provisions of this order amending the order and are set forth in full herein.

PART 905—ORANGES, GRAPEFRUIT, TANGERINES, AND TANGELOS GROWN IN FLORIDA

1. The authority citation for 7 CFR part 905 continues to read as follows:

Authority: 7 U.S.C. 601-674.

2. Amend § 905.22 by revising paragraphs (a)(2) and (b)(2) to read as follows:

§ 905.22

Nominations.

(a) * * *

(1) * * *

(2) Each nominee shall be a producer in the district from which he or she is nominated. In voting for nominees, each producer shall be entitled to cast one vote for each nominee in each of the districts in which he or she is a producer. At least two of the nominees and their alternates so nominated shall be affiliated with a bona fide cooperative marketing organization.

(b) * * *

(1) * * *

(2) Nomination of at least two members and their alternates shall be made by bona fide cooperative marketing organizations which are handlers. Nominations for not more than six members and their alternates shall be made by handlers who are not so affiliated. In voting for nominees, each handler or his or her authorized representative shall be entitled to cast one vote, which shall be weighted by the volume of fruit by such handler during the then current fiscal period.

3. Revise § 905.23 to read as follows:

§ 905.23

Selection.

(a) From the nominations made pursuant to § 905.22(a) or from other qualified persons, the Secretary shall select one member and one alternate member to represent District 2 and two members and two alternate members each to represent Districts 1, 3, 4, and 5 or such other number of members and alternate members from each district as may be prescribed pursuant to § 905.14. At least two such members and their alternates shall be affiliated with bona fide cooperative marketing organizations.

(b) From the nominations made pursuant to § 905.22 (b) or from other qualified persons, the Secretary shall select at least two members and their alternates to represent bona fide cooperative marketing organizations which are handlers, and the remaining members and their alternates to represent handlers who are not so affiliated.

4. In § 905.29, redesignate paragraph (b) as paragraph (c), and add a new paragraph (b) to read as follows:

§ 905.29

Inability of members to serve.

* * * * *

(b) If both a member and his or her respective alternate are unable to attend a committee meeting, such member may designate another alternate to act in his or her place in order to obtain a quorum: Provided, That such alternate member represents the same group affiliation as the absent member. If the member is unable to designate such an alternate, the committee members present may designate such alternate.

* * * * *

5. Revise paragraph (c) of § 905.34 to read as follows:

§ 905.34

Procedure of committees.

* * * * *

(c) The committee may provide for meeting by telephone, telegraph, or other means of communication, and any vote cast at such a meeting shall be promptly confirmed in writing: Provided, That if any assembled meeting is held, all votes shall be cast in person.

* * * * *

6. Add a new § 905.54 to read as follows:

§ 905.54

Marketing, research and development.

The committee may, with the approval of the Secretary, establish, or provide for the establishment of, projects including production research, marketing research and development projects, and marketing promotion including paid advertising, designed to assist, improve, or promote the marketing, distribution, and consumption or efficient production of fruit. The expenses of such projects shall be paid by funds collected pursuant to § 905.41. Upon conclusion of each project, but at least annually, the committee shall summarize the program status and accomplishments to its members and the Secretary. A similar report to the committee shall be required of any contracting party on any project carried out under this section. Also, for each project, the contracting party shall be required to maintain records of money received and expenditures, and such shall be available to the committee and the Secretary.

Footnotes

1.  This order shall not become effective unless and until the requirements of § 900.14 of the rules of practice and procedure governing proceedings to formulate marketing agreements and marketing orders have been met.