Oranges, Grapefruit, Tangerines, and Pummelos Grown in Florida; Increased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule implements a recommendation from the Citrus Administrative Committee (Committee) to increase the assessment rate established for the 2023-2024 and subsequent fiscal periods from $0.015 to $0.02 per 4/5 -bushel carton or equivalent for Florida citrus handled under the marketing order. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Effective August 21, 2024.

FOR FURTHER INFORMATION CONTACT:

Jennie M. Varela, Marketing Specialist, or Christian D. Nissen, Branch Chief, Southeast Region Branch, Market Development Division, Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, or Email: Jennie.Varela@usda.gov or Christian.Nissen@usda.gov.

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: (202) 720-8085, or Email: Richard.Lower@usda.gov.

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 Order No. 905 as amended (7 CFR part 905), regulating the handling of oranges, grapefruit, tangerines, and pummelos grown in Florida. Part 905 (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 growers and handlers of fresh citrus operating within the area of production, and one public member.

The Agricultural Marketing Service (AMS) is issuing this rule in conformance with Executive Orders 12866, 13563, and 14094. 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. Executive Order 14094 reaffirms, supplements, and updates Executive Order 12866 and further directs agencies to solicit and consider input from a wide range of affected and interested parties through a variety of means. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review.

This 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 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 rule has been reviewed under Executive Order 12988—Civil Justice Reform. Under the Order now in effect, Florida 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 fruit for the 2023-2024 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 8c(15)(A) of the Act (7 U.S.C. 608c(15)(A)), any handler subject to an order may file with the U.S. 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 rule increases the assessment rate for Florida citrus handled under the Order from $0.015 per 4/5 -bushel carton or equivalent, the rate that was initially established for the 2018-2019 and subsequent fiscal periods, to $0.02 per 4/5 -bushel carton or equivalent for the 2023-2024 and subsequent fiscal periods.

Sections 905.40 and 905.41 authorize 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 are familiar with the Committee's needs and with the costs of 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 2018-2019 and subsequent fiscal periods, the Committee recommended, and AMS approved, an assessment rate of $0.015 per 4/5 -bushel carton or equivalent of citrus. That rate continues in effect from fiscal period to fiscal period until modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other information available to AMS. This rule increases the assessment rate from $0.015 to $0.02 per 4/5 -bushel carton or equivalent of citrus for the 2023-2024 and subsequent fiscal periods.

The Committee met on August 8, 2023, and recommended 2023-2024 fiscal period expenditures of $124,624 and an assessment rate of $0.02 per 4/5 -bushel carton or equivalent of citrus handled for the 2023-2024 and subsequent fiscal periods. In comparison, last period's budgeted expenditures were $122,680. The increased assessment rate of $0.02 is $0.005 higher than the rate currently in effect. The Committee recommended increasing the assessment rate to better align assessment revenue with budgeted expenses. The Committee projects handler receipts of approximately 6,700,000 4/5 -bushel cartons or equivalent of citrus for the 2023-2024 fiscal period, which is higher than the 4,764,544 cartons handled in the 2022-2023 fiscal period.

The total expenditures recommended by the Committee for the 2023-2024 fiscal period are approximately $124,624. The major budgeted expenditures include $99,624 for management; $10,000 for auditing; and $5,000 for data from the Division of Fruits and Vegetables. By comparison, budgeted expenditures for these activities in the 2022-2023 fiscal period were $97,680; $10,000; and $5,000, respectively.

At the current assessment rate of $0.015, the expected 6,700,000 4/5 -bushel cartons or equivalent of assessable Florida citrus would generate $100,500 in assessment revenue (6,700,000 cartons multiplied by $0.015 assessment rate), short of the Committee's anticipated expenditures of $124,624 for the 2023-2024 fiscal period. By increasing the assessment rate by $0.005 to $0.02, assessment income will generate $134,000 (6,700,000 cartons multiplied by $0.02 assessment rate) for the 2023-2024 fiscal period. This amount should be appropriate to ensure that the Committee has sufficient revenue to fully fund its recommended 2023-2024 fiscal period budgeted expenditures.

The Committee derived the recommended assessment rate by considering anticipated expenses, an estimated 6,700,000 4/5 -bushel cartons or equivalent of assessable Florida citrus, and the amount of funds available in reserve. Income derived from handler assessments ($134,000) will be adequate to cover budgeted expenses ($124,624). Funds available in the reserve (currently about $165,000) are expected to be kept within the maximum permitted by the Order (approximately two fiscal periods' expenses as authorized in § 905.42).

The assessment rate will 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 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 AMS. Committee meetings are open to the public and interested persons may express their views at these meetings. AMS will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2023-2024 budget, and those for subsequent fiscal periods, will be reviewed and, as appropriate, approved by AMS.

Final 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 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 14 handlers of Florida citrus who are subject to regulation under the Order and approximately 500 citrus producers in the regulated area. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural growers as those having annual receipts of no more than $4,000,000 for orange producers (NAICS code 111310, Orange Groves) or $4,250,000 for other citrus producers (NAICS code 111320, Citrus (except Orange) Groves), and small agricultural service firms, including handlers, are defined as those whose annual receipts are less than $34,000,000 (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).

According to data from the National Agricultural Statistics Service (NASS), the weighted average packing house door equivalent price for fresh Florida oranges for the 2022-2023 season was approximately $10.54 per carton with total shipments of around 3,224,000 cartons. Based on this information, the majority of orange handlers have average annual receipts of significantly less than $34,000,000 ($10.54 multiplied by 3,224,000 cartons equals $33,980,960, divided by 14 handlers equals $2,427,211 per handler). The weighted average packing house door price for other Florida citrus for the 2022-2023 season was $19.12 per carton with total shipments of 2,804,000 cartons. Based on this information, the majority of other citrus handlers have average annual receipts of significantly less than $34,000,000 ($19.12 multiplied by 2,804,000 cartons equals $53,612,480, divided by 14 handlers equals $3,829,463 per handler).

In addition, based on the NASS data, the weighted average orange grower price for the 2022-2023 season was estimated at $9.45 per carton of fresh oranges. Based on grower price, shipment data, and the total number of Florida orange growers, the average annual grower revenue is well below $4,000,000 ($9.45 multiplied by 3,224,000 cartons equals $30,466,800, divided by 500 growers equals $60,934 per grower). The weighted average other citrus grower price for the 2022-2023 season was estimated at $16.28 per carton of fresh citrus. Based on grower price, shipment data, and the total number of Florida citrus growers, the average annual grower revenue is well below $4,250,000 ($16.28 multiplied by 2,804,000 cartons equals $45,649,120, divided by 500 growers equals $91,298 per grower). Thus, the majority of Florida citrus handlers and growers may be classified as small entities.

This rule increases the assessment rate for the 2023-2024 and subsequent fiscal periods from $0.015 to $0.02 per 4/5 -bushel carton or equivalent of citrus. The Committee recommended 2023-2024 expenditures of $124,624 and an assessment rate of $0.02 per 4/5 -bushel carton. The increased assessment rate of $0.02 is $0.005 more than the previous rate. The quantity of assessable Florida citrus for the 2023-2024 season is estimated at 6,700,000 4/5 -bushel cartons or equivalent. Thus, the $0.02 rate should provide $134,000 in assessment income (6,700,000 cartons multiplied by $0.02 assessment rate). Income derived from handler assessments should be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2023-2024 fiscal period include $99,624 for management; $10,000 for auditing; and $5,000 for data from the Division of Fruits and Vegetables. Budgeted expenses for these same items in the 2022-2023 fiscal period were $97,680; $10,000; and $5,000, respectively.

The Committee recommended increasing the assessment rate to cover anticipated expenses for the 2023-2024 fiscal period. Shipments for the 2023-2024 season are projected to be 6,700,000 4/5 -bushel cartons or equivalent, about 2 million more than estimated for the previous period. At the current assessment rate of $0.015, assessment income would equal $100,500 (6,700,000 cartons multiplied by $0.015 assessment rate), an amount below the Committee's anticipated expenditures of $124,624 for the 2023-2024 fiscal period. By increasing the assessment rate by $0.005, assessment income will be approximately $134,000 (6,700,000 cartons multiplied by $0.02 assessment rate). This amount should provide sufficient funds to meet anticipated expenses for the 2023-2024 fiscal period.

Prior to arriving at this budget and assessment rate, the Committee considered maintaining the current assessment rate of $0.015. However, the Committee would need to further draw down reserves to meet its expenses. The Committee had to use some of its reserves in the 2022-2023 fiscal period after a hurricane damaged the crop, and Committee members did not want to utilize additional funds from reserves to meet 2023-2024 expenses. Consequently, the alternative of maintaining the current assessment rate was rejected.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates the average grower price for the 2023-2024 season should be approximately $11.00 per 4/5 -bushel carton or equivalent of citrus. Therefore, the estimated assessment revenue for the 2023-2024 crop year as a percentage of total grower revenue should be about 0.18 percent ($0.02 divided by $11.00 multiplied by 100).

This action increases 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, these costs are expected to be offset by the benefits derived by the operations of the Order.

The Committee's meetings are widely publicized throughout the Florida citrus industry and all interested persons are invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the August 8, 2023, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons were invited to submit comments on the proposed rulemaking, including the regulatory 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 will be necessary as a result of this rule. Should any changes become necessary, they would be submitted to OMB for approval.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large Florida citrus 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 rule.

A proposed rulemaking concerning this action was published in the Federal Register on February 1, 2024 (89 FR 6440). Copies of the proposed rulemaking were also mailed or sent via email to all Florida citrus handlers. The proposal was also made available through the internet by AMS and the Office of the Federal Register. A 30-day comment period ending March 4, 2024, was provided for interested persons to respond to the proposal.

AMS received a total of nine comments during the comment period. Five comments supported the revised assessment rate, two comments opposed the rate, one did not take a position on the proposal, and one did not address the merits of the rule.

Several comments in support of the increased rate included statements that the rate change could be beneficial in accounting for the effects of citrus greening and hurricane damage. Another commenter stated the industry's current situation calls for the decision to use additional funds. One commenter noted that the proposal seemed reasonable as the budgeted expenses are higher than the Committee's revenue.

The two comments opposed to the rule both focused on the potential increase to the price of citrus. One expressed concern that this change would have a negative impact on the larger economies for citrus and citrus products, namely juice, candy, and raw fruit. This commenter also mentioned potential negative impacts on Native American producers.

In previous seasons, the Committee has used reserves to cover some of the shortfalls in administering the program. In their discussion of the budget for the 2023-2024 season, the Committee determined it was in their best interest to make a minor increase to the rate rather than draw down on financial reserves further. The Committee also made this decision as they determined the benefits of the Order outweigh the small increase in the assessment rate.

In addition, this action only applies to the handling of fresh Florida citrus. According to NASS, the fresh segment makes up only about 16 percent of Florida's citrus production. The price of fresh citrus is usually higher than that of fruit being sent to processing. This action, therefore, only applies to a smaller, higher value segment of the industry and should not impact the price of juice or any other processed citrus product.

Regarding the overall concern about the increase in the price of citrus, the Committee made its recommendation with the awareness that the additional cost to handlers may be passed on to growers and consumers. However, this rule only increases the assessment rate by $0.005 per a 4/5 -bushel carton, accounting for an estimated $33,500 increase in assessments for the entire fresh industry. Further, as noted in the final regulatory flexibility analysis, the total assessment rate is equivalent to about 0.18 of a percent of the grower price, and if compared to the anticipated price received by handlers, the percentage would be even smaller. Given these numbers, this change is not expected to result in a significant increase in cost for growers, handlers, or consumers.

One of the commenters in opposition to the rule also suggested there may be an impact on the Seminole Tribe of Florida as they have historically owned citrus groves. The comment stated increasing regulations and adding costs like assessments are potentially limiting factors to Native participation in the industry. AMS spoke with the Committee directly, which had recently contacted the Tribe as a part of its routine outreach. The Tribe confirmed they are completely out of the citrus business and that they did not have concerns with this rulemaking or its potential to limit participation in the industry. AMS therefore determined the assessment rate change will not have an impact on Tribes in the production area. Accordingly, AMS made no changes to the rule based on the comments received.

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.

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 rule is consistent with and will effectuate the purposes of the Act.

List of Subjects in 7 CFR Part 905

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

For the reasons set forth in the preamble, the Agricultural Marketing Service amends 7 CFR part 905 as follows:

PART 905—ORANGES, GRAPEFRUIT, TANGERINES, AND PUMMELOS 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. Section 905.235 is revised to read as follows: