[Federal Register Volume 61, Number 163 (Wednesday, August 21, 1996)]
[Rules and Regulations]
[Pages 43141-43144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21210]
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DEPARTMENT OF AGRICULTURE
7 CFR Parts 911 and 944
[Docket No. FV96-911-2FR]
Limes Grown in Florida and Imported Limes; Change in Regulatory
Period
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule; suspension.
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SUMMARY: This rule suspends the regulatory period currently prescribed
under the lime marketing order and the lime import regulations. The
marketing order regulates the handling of limes grown in Florida and is
administered locally by the Florida Lime Administrative Committee
(committee). By temporarily reducing the regulatory period and its
associated costs, this rule should decrease industry expenses and allow
the committee to evaluate its impact. The changes in import
requirements are necessary under section 8e of the Agricultural
Marketing Agreement Act of 1937.
EFFECTIVE DATES: June 1, 1997, through December 31, 1997.
FOR FURTHER INFORMATION CONTACT: Aleck Jonas, Southeast Marketing Field
Office, Marketing Order Administration Branch, F&V, AMS, USDA, P.O. Box
2276, Winter Haven, Florida 33883; telephone: (941) 299-4770, Fax:
(941) 299-5169; or Caroline Thorpe, Marketing Order Administration
Branch, F&V, AMS, USDA, room
[[Page 43142]]
2522-S, P.O. Box 96456, Washington, DC 20090-6456: telephone: (202)
720-8139, Fax: (202) 720-5698. Small businesses may request information
on compliance with this regulation by contacting: Jay Guerber,
Marketing Order Administration Branch, Fruit and Vegetable Division,
AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-6456;
telephone (202) 720-2491; Fax: (202) 720-5698.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Agreement and Marketing Order No. 911 (7 CFR Part 911), as amended,
regulating the handling of limes, hereinafter referred to as the
``order.'' This 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.''
This final rule is also issued under section 8e of the Act, which
provides that whenever certain specified commodities, including limes,
are regulated under a Federal marketing order, imports of these
commodities into the United States are prohibited unless they meet the
same or comparable grade, size, quality, or maturity requirements as
those in effect for the domestically produced commodities.
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This final 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. A 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 date of the entry of the ruling.
There are no administrative procedures which must be exhausted
prior to any judicial challenge to the provisions of import regulations
issued under section 8e of the Act.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has
considered the economic impact of this final rule on small entities.
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 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. Import regulations issued under
the Act are based on those established under Federal marketing orders.
There are approximately 10 handlers subject to regulation under the
order and about 115 producers of Florida limes. There are approximately
35 importers of limes. Small agricultural service firms, which include
lime handlers and importers, have been defined by the Small Business
Administration (13 CFR 121.601) as those whose annual receipts are less
than $5,000,000, and small agricultural producers are defined as those
whose annual receipts are less than $500,000. A majority of these
handlers, producers, and importers may be classified as small entities.
This rule changes the regulatory period by suspending both the
domestic and import regulations from June 1, 1997 through December 31,
1997. By temporarily reducing the regulatory period and its associated
costs, this rule should provide a decrease in industry expenses. Both
large and small growers, handlers and importers should benefit from the
reduced costs of no regulations, such as no inspection fees during the
deregulated period.
In addition, small handlers usually use block inspection. Under
block inspection, the fruit is packed and palletized, and then
inspection is requested. The handler must wait for an available
Federal-State inspector to inspect and certify the limes prior to
shipment. Larger facilities use continuous inspection because their
volume of fruit justifies the constant presence of an inspector. By
relaxing regulations for this seven month period, small handlers will
benefit by being able to ship fruit without the delay of waiting for an
inspector. Small and large handlers should both benefit from the
reduction in inspection costs and committee expenses from fewer
meetings and less compliance monitoring. Therefore, the AMS has
determined that this action will not have a significant economic impact
on a substantial number of small entities.
Section 911.48 of the lime marketing order provides authority to
issue regulations establishing specific pack, container, grade and size
requirements. These requirements are specified under Sections 911.311,
911.329 and 911.344. Section 911.51 requires inspection and
certification that these requirements are met. Currently, there is no
regulatory period stated in the order, and these regulations are
applied on a continuous year-round basis.
This rule changes the regulatory period by suspending both the
domestic and import regulations from June 1, 1997 through December 31,
1997. The committee met on December 13, 1995, and in a vote of six in
favor and four opposed, recommended a change in the regulatory period.
There is general agreement in the industry for the need to reduce
costs and increase grower returns under current market conditions. The
committee made this recommendation to decrease industry expenses by
reducing the regulatory period and its associated costs. Prior to
Hurricane Andrew, there were approximately 6,500 producing acres of
limes in the production area. Currently, there are approximately 1,500
acres of producing lime trees in the production area. Growers are
expending approximately $2,500 per acre to plant new groves and replant
lost ones. They are also spending approximately $1,500 per acre per
year to maintaining new groves of young trees which will not produce
fruit in commercially significant volumes for several years, thus,
giving no return for their investments.
During the 1991-1992 season, prior to Hurricane Andrew, assessments
were collected on 1,682,677 bushels. In the 1993-1994 and the 1994-1995
seasons, after the storm, assessments were collected on 228,455 bushels
and 283,977 bushels respectively. Lost income from reduced volume and
the costs of replanting and maintaining groves, with no immediate
monetary return, has caused the industry to seek cost saving measures.
Historically, the June 1 through December 31 period is a time when
fruit is plentiful, prices are low, and the overall quality of the crop
is good for both domestic and imported supplies. The committee
maintains that under these abundant and good quality fruit
[[Page 43143]]
conditions, competition and market demand will keep quality standards
high.
Conversely, during the time period January 1 through May 31, past
seasons have shown that for both domestic and imported fruit, skins are
thicker, the juice content is lower and supplies of fruit are limited.
Because the temptation to ship poor quality is greater under these high
demand and low supply conditions, the committee believes regulations
are necessary to prevent poor quality fruit from entering and damaging
the lime market. Therefore, the committee believes that for the period
June 1, 1997 through December 31, 1997, pack, container, grade and size
regulations can be suspended. Competition under good quality and high
supply conditions should protect the consumer from poor quality fruit
entering market during the deregulated period. The application of
regulations from January 1 through May 31 will insure uniform quality
throughout the year. The committee will evaluate the impact of this
action on the market at the end of the suspension.
Growers, handlers and importers should benefit from the reduced
costs of no regulations, such as no inspection fees during the
deregulated period. Committee expenses should also be reduced by
requiring fewer meetings and less compliance monitoring. Reporting
requirements are not affected by this change, and handler reports will
continue to be collected during the period of suspension.
Several alternatives to this action were discussed by the
committee. One alternative was to leave the regulations in place year-
round. This alternative was rejected by the committee because the need
to take some action was considered necessary under current market
conditions. It was argued that when these regulations were put in
place, the quality of both the domestic and imported lime supply varied
greatly. Over the years, improved agricultural practices have produced
a more consistent, high quality lime supply. This is particularly true
during the June through December time period.
Another alternative raised was to terminate the marketing order.
Although seriously considered, committee members rejected the idea
under arguments that during the January through May time period when
supplies are reduced and juice content of all limes is lower, poor
quality fruit could enter the market. Consumer dissatisfaction with
poor quality limes could lead to product rejection and substitution
with lemons, causing lost market share.
This rule represents a compromise of the alternatives considered.
The committee believes that this change will provide the consumer with
quality fruit throughout the year, while reducing industry costs.
Section 8e of the Act provides that when certain domestically
produced commodities, including limes, are regulated under a Federal
marketing order, imports of that commodity must meet the same or
comparable grade, size, quality, and maturity requirements. Since this
rule changes the regulatory period under the domestic handling
regulations, a corresponding change to the import regulations must also
be implemented.
Minimum grade and size requirements for limes imported into the
United States are currently in effect under Section 944.209 [7 CFR
944.209]. This rule will result in relaxed import requirements because
the lime import regulations will not be in effect during the period
June 1, 1997, through December 31, 1997. This should reduce costs to
importers.
Mexico is the largest exporter of limes to the United States.
During the 1994-95 season, Mexico exported 6,075,685 bushels to the
United States, while all other sources shipped a combined total of
201,053 bushels during the same time period. The majority of Mexican
imports enter the United States between June 1 and December 31, the
deregulated period covered in this rule.
A proposed rule concerning this action was published in the May 8,
1996, Federal Register (61 FR 20754), with a 30-day comment period
ending June 7, 1996. The comment period was extended to July 8, 1996,
through a notice published in the June 26, 1996, Federal Register (61
FR 33047). Eight comments were received. Three comments recommended
modifications to the proposed rule, and five comments opposed the
proposed rule.
The three comments requesting modification to the proposed rule
were submitted by the committee administrator, Gail Knodel, on behalf
of the committee. The first comment requested that the proposed rule be
modified from a permanent change to a one year trial basis. On April
17, 1996, this recommendation was passed by the committee on a majority
vote of seven in support, none against and one abstention. The
committee modified its original position because it believes that it is
important that this change be thoroughly evaluated before making the
suspension on a permanent basis. At the end of the trial year, the
committee will evaluate the impact of this action on the industry and
determine if continuation is justified.
The second committee comment requested an extension of the comment
period. This request was made due to the complexity of the proposed
rule and the potential impact of the proposed changes to the industry.
A reopening of the comment period was granted by the Department and
published in the June 26, 1996, Federal Register (61 FR 33047).
The third committee comment was a request to make the effective
date of the rule June 1, 1997. Because the extension of the comment
period would delay the effective date of a final rule, making it
impossible to begin the period of deregulation effective June 1, 1996,
the committee voted to postpone the effective date to allow for a
continuous period of deregulation from June 1 to December 31. The
committee believes that this will be beneficial for handlers. The
committee also believes that this will allow for a more accurate
analysis of the impact of the suspension. The recommendation to change
the effective date to June 1, 1997, was made by unanimous vote of the
committee. This rule has been modified to reflect the committee's
recommendations.
The five opposing comments were submitted by Steve Biondo, grower;
Gregory P. Nelson, president of Bernard Egan & Company, grower/
importer; Barney W. Rutzke, president of Barney W. Rutzke, Inc.,
grower/handler; Tina Marie Rutzke, operations manager of Florida Brands
Inc., grower/handler; and the fifth was jointly submitted by Herbert
Yamamura, president of LIMECO, Inc., grower/handler; Joe Guggino,
registered agent for Primo Groves, Inc., grower; Richard Takeshita,
grower; Edna Batho, grower; Elizabeth Harrill, grower; Robert Yamamura,
grower; Donald Strock, grower; and April Yamamura, grower.
All of the opposing comments expressed concerns that loss of
regulation and the associated quality standards will result in poor
quality limes on the market and consumer dissatisfaction. Ms. Rutzke
states that the loss of regulations will lead to consumer rejection of
limes and the substitution of lemons, causing a loss of overall market
share. Both the comment of Mr. Rutzke and the jointly signed comment
expressed concerns that low quality imported limes will be dumped on
the domestic market.
The committee, upon further discussion, shared these concerns, and
therefore recommended that the proposed rule be modified from a
permanent change to a one year trial basis. The committee believes that
there
[[Page 43144]]
is an adequate supply of high quality limes to meet consumer demands
during the requested deregulation period. However, the committee also
believes that a test of the deregulation period will determine if
consumer demand will keep quality high or result in substitution of
lemons and loss of market share.
Four of the opposing comments allege that the proposed rule was
passed by a committee with unqualified members seated, and therefore
the proposal should not have been acted on by the Department.
Commenters claim that, when the original recommendation was made on
December 13, 1995, some members were serving in positions that they
were not qualified to hold. However, since that time, a new committee
has been seated. At its organizational meeting on April 17, 1996, the
newly elected members of the committee took up the discussion of the
suspension. The new committee voted to recommend that the proposed rule
be modified from a permanent change to a one year trial basis.
Consequently, the changes provided for in this rule were affirmed by
the current committee with a majority vote of seven in support, none
opposed, and one abstention.
The jointly signed comment disagreed with the proposed rule's
contention that, historically, the June 1 through December 31 period is
a time when fruit prices are low, and the overall quality of the crop
is good. They argued that prices in June, September, October, November
and December often have differed from year to year, between low to
moderately high, and that lime prices in 1993 and 1994 remained
moderate during the months of July and August.
In terms of quality, they state that during the June through
December time period, quality is not considered high quality. For
example, they state there is a relatively large amount of stylar-end
breakdown, which is a weakening of the rind at the fruit's blossom end
which deteriorates over time. In its deliberations of this rule, the
committee considered the availability of quality fruit during the
proposed period of suspension. The proposed rule noted that
historically prices are low, and the overall quality of the crop is
good, indicating a trend and general view of the time period. This does
not mean to imply that fluctuations do not occur during various months
within the period or from year to year. However, during the period from
June to December, juice content improves, fruit matures, and the
overall quality of limes is better. The committee plans to review the
effects of the suspension on the market, and base further action on its
analysis.
After thoroughly analyzing the comments received and other
available information, the Department has concluded that this final
rule is appropriate.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this final rule.
After consideration of all relevant matter presented, including the
information and recommendations submitted by the committee and other
available information, it is hereby found that the provisions of the
regulations to be suspended, as hereinafter set forth, no longer tend
to effectuate the declared policy of the Act.
List of Subjects
7 CFR Part 911
Limes, Marketing agreements, Reporting and recordkeeping
requirements.
7 CFR Part 944
Avocados, Food grades and standards, Grapefruit, Grapes, Imports,
Kiwifruit, Limes, Olives, Oranges.
For the reasons set forth in the preamble, 7 CFR parts 911 and 944
are amended as follows:
1. The authority citation for 7 CFR parts 911 and 944 continues to
read as follows:
Authority: 7 U.S.C. 601-674.
PART 911--LIMES GROWN IN FLORIDA
Secs. 911.311, 911.329, 911.344 [Amended]
2. Effective June 1, 1997, through December 31, 1997,
Secs. 911.311, 911.329, and 911.344 are suspended.
PART 944--FRUITS; IMPORT REGULATIONS
Sec. 944.209 [Amended]
3. Effective June 1, 1997, through December 31, 1997, Sec. 944.209
is suspended.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-21210 Filed 8-20-96; 8:45 am]
BILLING CODE 3410-02-P
