Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; Recommended Decision and Opportunity To File Written Exceptions to Proposed Amendments to Marketing Agreement 84 and Order No. 905, 79028-79035 [E8-30670]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 73, Number 248 (Wednesday, December 24, 2008)]
[Proposed Rules]
[Pages 79028-79035]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30670]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. AO-85-A10; AMS-FV-07-0132; FV08-905-1]


Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; 
Recommended Decision and Opportunity To File Written Exceptions to 
Proposed Amendments to Marketing Agreement 84 and Order No. 905

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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SUMMARY: This is a recommended decision regarding proposed 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. Four amendments were proposed by the Citrus 
Administrative Committee (committee), which is responsible for local 
administration of the order. These proposed amendments would modify 
committee representation by cooperative entities, allow substitute 
alternates to temporarily represent absent members at committee 
meetings, authorize the committee to conduct meetings by telephone or 
other means of communication, and authorize the committee to conduct 
research and promotion programs, including paid advertising, for fresh 
Florida citrus. The proposals are intended to improve the operation and 
administration of the order. This recommended decision invites written 
exceptions on the proposed amendments.

DATES: Written exceptions must be filed by January 23, 2009.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1081-S, Washington, DC 20250-9200, 
Fax: (202) 720-9776 or via the Internet at https://www.regulations.gov. 
All comments should reference the docket number and the date and page 
number of this issue of the Federal Register. Comments will be made 
available for public inspection in the Office of the Hearing Clerk 
during regular business hours, or can be viewed at: https://
www.regulations.gov.

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: (503) 326-
2724, Fax: (503) 326-7440, or E-mail: Melissa.Schmaedick@usda.gov; or 
Laurel May, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, 
Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-
8938, or E-mail: Laurel.May@usda.gov.
    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: (202) 720-2491, Fax: (202) 
720-8938, E-mail: Jay.Guerber@usda.gov.

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).
    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

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed amendments to 
Marketing Agreement No. 84 and Order 905 regulating the handling of 
oranges, grapefruit, tangerines, and tangelos grown in Florida, and the 
opportunity to file written exceptions thereto. Copies of this decision 
can be obtained from Melissa Schmaedick, whose address is listed above.
    This recommended decision is issued 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 proposed amendments are based on the record of a public hearing 
held February 12, 2008, in Winter Haven, Florida. Notice of this 
hearing was published in the Federal Register on January 29, 2008 (73 
FR 5130). The notice of hearing contained four proposals submitted by 
the committee.
    The proposed amendments were recommended by the committee following 
deliberations at a public meeting on May 29, 2007, and were submitted 
to the Agricultural Marketing Service (AMS) on August 16, 2007. After 
reviewing the recommendation and other information submitted by the 
committee, AMS determined to proceed with the formal rulemaking process 
and schedule the matter for hearing.
    The committee's proposed amendments to the order 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 Department of Agriculture (USDA) 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.
    Eight industry witnesses testified at the hearing. The witnesses 
represented citrus producers and handlers in the production area, as 
well as the committee, and they all supported the recommended changes. 
The witnesses emphasized the need to modernize committee representation 
and administration as well as equip the industry with additional tools 
to address the specific research and promotion needs of fresh Florida 
citrus.

[[Page 79029]]

    Witnesses offered testimony supporting the recommendation to reduce 
required committee representation from three each to two each for 
producers and handlers affiliated with cooperative marketing 
organizations. According to testimony, this would better reflect the 
current composition of the fresh Florida citrus industry.
    Witnesses testified in support of allowing substitute alternates to 
temporarily serve at committee meetings when both a member and his or 
her alternate are unable to attend. This would facilitate attaining a 
quorum and prevent delays in committee decision making.
    Witnesses also advocated adding authority to conduct committee 
meetings via telephone or other means of communication technology. Such 
authority would improve committee efficiencies and encourage greater 
participation by members throughout the production area.
    Finally, witness testimony supported adding authority to conduct 
research and promotion activities. This would enable the committee to 
sponsor programs specific to the needs of the fresh citrus industry.
    At the conclusion of the hearing, the Administrative Law Judge 
established a deadline of March 31, 2008, for interested persons to 
file proposed findings and conclusions or written arguments and briefs 
based on the evidence received at the hearing. No briefs were filed.

Material Issues

    The material issues presented on the record of hearing are as 
follows:
    (1) Whether to amend the order by reducing the number of required 
cooperative producer and handler seats on the committee from three each 
to two each;
    (2) Whether to amend the order to authorize substitute alternates 
to temporarily represent absent members and alternates to meet quorum 
requirements at committee meetings;
    (3) Whether to amend the order to authorize the committee to 
conduct meetings via telephone or other means of communication 
technology; and
    (4) Whether to amend the order by authorizing the committee to 
establish and conduct research and production activities, including 
paid advertising.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the record thereof.

Material Issue Number 1--Cooperative Representation

    Sections 905.22, Nominations, and 905.23, Selection, of the order 
should be amended to reduce the required number of committee seats held 
by producers and handlers affiliated with cooperative marketing 
organizations from three each to two each.
    The committee is comprised of 18 members, of whom nine are 
producers, eight are handlers, and one is a non-industry public member. 
The current committee structure allocates the nine producer seats 
between four producer districts and requires that at least three 
producer members represent cooperatives. The order's provisions also 
require that at least three of the eight handler members represent 
cooperatives. Witnesses testified that this membership allocation was 
appropriate in the past, but no longer appropriately reflects the 
industry's composition. Therefore, witnesses supported reducing the 
required number of committee producer and handler seats held by 
cooperative representatives from three each to two each to better 
reflect the composition of the modern Florida fresh citrus industry.
    Witnesses described various types of fresh citrus cooperatives that 
exist to serve members: Producer, marketing and ``full service'' 
cooperatives. Producer cooperatives provide production services to 
members. Marketing cooperatives market and ship members' fruit. Full 
service cooperatives offer production, harvest, packing, and marketing 
services for members.
    Witnesses explained that there were numerous citrus cooperatives at 
the time the order was promulgated, and the committee's original 
structure was designed to accurately represent the interests of 
cooperative organizations during committee deliberations. However, over 
time, the number of cooperative organizations within the industry has 
declined. Today there are fewer cooperatives, and those that remain 
handle a smaller proportion of the industry's total shipments.
    For example, according to witnesses, there were twenty marketing 
cooperatives during the 1998-99 fiscal period, and they shipped 
approximately 33 percent of Florida's fresh citrus. By 2006-07, only 
ten marketing cooperatives, shipping approximately 22 percent of the 
fresh citrus, remained. Witnesses explained that while there has been a 
consolidation of fresh citrus shippers throughout the industry, the 
consolidation has been relatively greatest among cooperative marketing 
entities. According to witnesses, the numbers of producer cooperatives 
and full service cooperatives have declined also. Witnesses testified 
that there was broad support from cooperative organizations for the 
proposed amendment.
    Record evidence supports reducing the number of required 
cooperative seats on the committee. This amendment would restructure 
the committee so that proportionately fewer members would be required 
to represent cooperative organizations, reflective of current industry 
composition.
    Citing recent changes in industry makeup, witnesses stated that 
they would like to include additional language under this proposal that 
would allow them to review industry composition every three years and 
recommend appropriate adjustments to committee apportionment with 
respect to cooperative affiliation through informal rulemaking. 
However, the committee did not provide proposed order language for a 
modification to Proposal 1 at the hearing when requested and the matter 
was not pursued. Therefore, Proposal 1 is being considered by USDA as 
it was written in the Notice of Hearing for this rulemaking.
    No testimony opposing the proposed amendment was given at the 
hearing. For the reasons stated above, it is recommended that 
Sec. Sec.  905.22, Nomination, and 905.23, Selection, be amended to 
reduce the required number of committee seats held by producers and 
handlers affiliated with cooperative marketing organizations from three 
to two as proposed in Proposal 1.

Material Issue Number 2--Substitute Alternates

    Section 905.29 of the order should be amended to provide that 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. Further, it should be 
provided that any such alternate member represent 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.
    As originally published in the Federal Register notice of hearing 
(73 FR 513; January 29, 2008), this proposed amendment specified that 
in addition to representing the same group affiliation (producer or 
handler) a substitute alternate should be from the same district as the 
absent member and

[[Page 79030]]

alternate. However, the committee proposed a modification at the 
hearing so that a substitute alternate did not have to be from the same 
district. Witnesses explained that substitutes with the same group 
affiliation would adequately represent the views of absent members. 
There was no testimony in opposition to this modification. Further, as 
provided in Sec.  905.114 of the regulations issued under the order, 
one producer district is currently allocated only one member seat and 
one alternate member seat on the committee. In this case, if a 
substitute alternate could only be drawn from the absent member's 
district there would be no pool from which to designate a temporary 
alternate.
    As mentioned under Material Issue Number 1, the committee is 
comprised 18 members, and each member has an alternate that serves in 
the member's stead if the member is absent. The order specifies that 
ten committee members constitute a quorum. For most committee actions, 
ten concurring votes, including five producer votes, are required for 
approval. There is no provision for a situation in which neither a 
member nor that member's alternate are available to attend meetings.
    Witnesses explained that travel distance and scheduling conflicts 
occasionally prevent committee members and their alternates from 
attending meetings. Witnesses testified that these unexpected absences 
have led to meeting cancellations in the past because quorum 
requirements could not be met. According to witness testimony, 
cancelled meetings mean delays in conducting committee business and are 
costly in terms of travel time and expense.
    The committee proposed that Sec.  905.29 be amended to allow 
available alternates to temporarily represent absent members if the 
members and their respective alternates are unable to attend a meeting. 
Witnesses explained that all alternates have the necessary background 
to be able to serve on short notice if necessary. According to the 
record, all members and alternates receive meeting agendas and 
background information about upcoming meeting topics prior to the 
meetings. The committee also posts this information on its website. 
Additionally, many alternates have served previously as members or 
alternates and are knowledgeable about the issues that come before the 
committee. According to witnesses, a number of alternate producer and 
handler members reside in the two areas where meetings are most often 
held, and could be contacted on short notice if necessary to obtain a 
quorum. Witnesses testified that allowing substitute alternates to 
serve at meetings would ensure that quorum requirements can be met and 
that committee business is conducted in a timely manner.
    Finally, witnesses testified that members should be allowed to 
select their own substitutes whenever possible because the members 
would be able to select substitutes who they feel would best represent 
their views during meeting deliberations and voting. However, witnesses 
acknowledged that in some cases members might be unable to designate 
substitutes prior to a meeting. In those situations, the committee 
should be authorized to designate substitutes with the same group 
affiliation at the meeting if necessary to meet quorum requirements.
    No testimony or evidence opposing this proposal was provided at the 
hearing. For the reasons stated above, it is recommended that Sec.  
905.29, Inability of members to serve, be amended, as modified at the 
hearing, to specify that if neither a member nor his or her respective 
alternate is able to attend a committee meeting, the member may 
designate another alternate of the same affiliation (producer or 
handler) to represent him or her at the meeting. Further, the committee 
may designate an alternate to substitute for an absent member if the 
member is unable to designate a substitute alternate prior to the 
meeting.

Material Issue Number 3--Telephone Meetings

    Section 905.34, Procedure of committees, should be amended to 
authorize the committee to conduct committee meetings by telephone and 
other means of communication.
    Under the order, the committee is authorized to make 
recommendations regarding the administration of its programs to the 
Secretary. Ten members of the committee constitute a quorum, and ten 
concurring votes, including those of five producers, are required for 
approval of most committee actions. Currently, Sec.  905.34 of the 
order authorizes the committee to cast votes by telephone in emergency 
situations. The committee is required to fully explain any proposition 
presented for telephone votes to each member or alternate acting for a 
member. The order requires all votes cast by phone to be confirmed in 
writing and specifies that two dissenting votes will prevent the 
adoption of a proposition voted upon by telephone.
    The committee proposed that the order be amended to authorize the 
committee to conduct any of its meetings by telephone or other means of 
communication. According to the record, holding regular business 
meetings via teleconference or videoconference has become common 
practice within other citrus industry organizations, and witnesses 
supported the proposal to authorize the committee to conduct its 
meetings using modern technology as well. Witnesses at the hearing 
testified that using the authorized telephone voting authority during 
past emergencies has worked well for the committee, and believe that 
similar benefits would derive from the authority to conduct business 
meetings through alternative means of communication.
    According to the witnesses, authority to conduct business meetings 
via telephone or other means of communication would allow the committee 
to respond more quickly to urgent matters. Meetings could be scheduled 
on a timelier basis because the need for participants to plan for long-
distance travel would be reduced. Witnesses testified that holding 
business meetings by telephone or other means of communication would 
also be expected to improve committee efficiency, save members travel 
time and expense, encourage greater industry participation, make 
meetings more accessible to people with disabilities, promote openness 
of meeting proceedings, and allow the industry to build consensus 
through continuing discussions on certain topics. Proponents pointed 
out that new communications technologies, such as videoconferencing and 
web conferencing, continue to be developed, and that it is the 
committee's intent that all such communication methods be included in 
the scope of this proposal.
    Witnesses stated that if the proposal authorizing the committee to 
conduct research and promotion programs as discussed under Material 
Issue Number 4 below is adopted, the committee and its subcommittees 
would be likely to hold many more meetings as the new programs are 
developed. Witnesses believe that this increased meeting frequency 
could be handled most efficiently through the use of telephone or other 
communications technologies. Additionally, witnesses believe that more 
people would be encouraged to participate in the development of the new 
programs.
    The hearing record shows that the committee intends to continue 
holding assembled meetings to deliberate matters such as its annual 
budget of expenses. Witnesses stated that the committee's intent would 
be to reserve

[[Page 79031]]

most controversial discussions for assembled meetings. However, 
proponents recognized that some emergency situations could involve 
controversial issues and decisions regarding those issues might have to 
be made during telephone meetings.
    Currently, the order requires that all votes cast during an 
assembled meeting be cast in person and that votes cast by telephone be 
confirmed in writing. Under the proposed amendment, votes cast at 
meetings held via telephone or other means of communication would 
continue to require written confirmation. Witnesses stated that, in 
addition to current written confirmation, facsimiles and emails would 
be considered acceptable forms of written confirmation of a member's 
vote.
    Witnesses anticipated that if this proposal were implemented, 
situations could arise where some members participate in assembled 
meetings by telephone or other means of communication. In situations 
where part of the meeting members are assembled and part of the meeting 
members join via communications technology, votes cast by those members 
not physically present at the assembled meeting location would not be 
considered as cast in person.
    Finally, if the proposed amendment is adopted, the same quorum and 
voting requirements specified for assembled committee meetings would 
apply to meetings held by any other means.
    No testimony opposing this proposal was presented at the hearing. 
For the reasons stated above, it is recommended that Sec.  905.34, 
Procedure of committees, be amended to provide that the committee may 
conduct meetings via telephone or any other means of communication in 
addition to assembled meetings. Moreover, it is recommended that some 
members may participate in assembled meetings via telephone or other 
means of communication provided that any votes cast at assembled 
meetings other than in person be confirmed in writing.

Material Issue Number 4--Research and Promotion

    A new Sec.  905.54, providing authority to establish and conduct 
research and promotion programs, including paid advertising, should be 
added to the order.
    The Act lists under 5 U.S.C. 608c(I) specific commodities for which 
paid advertising may be conducted under marketing order programs. 
Citrus is included in that list.
    Currently, the order does not provide authority for the committee 
to recommend or conduct research or promotion projects. This proposed 
amendment would authorize the committee to recommend, conduct, and fund 
approved production research and market research and promotion 
programs, including paid advertising, to address the specific needs of 
fresh citrus growers and handlers.
    The Florida citrus industry as a whole conducts a number of 
research and promotion programs. Some of the citrus production and 
marketing problems addressed through these programs are shared by all 
segments of the industry. But many challenges are unique to the fresh 
citrus industry. Currently, research and promotion for fresh citrus is 
encapsulated within the programs of the larger industry, which has a 
processing orientation since approximately 90 percent of all Florida 
citrus produced is used for processing. The fresh citrus industry 
believes that research and promotion programs established under the 
order might better address their unique needs and that the committee 
should be authorized to recommend and conduct such programs.
    Witnesses identified issues facing the fresh citrus industry and 
described how authority to conduct research and promotional programs 
would help them address those issues specifically. Witnesses testified 
that research to improve fresh citrus production and handling practices 
could benefit the industry by reducing the incidence and spread of 
bacterial canker.
    The record shows that there has been a decline in fresh Florida 
citrus production in recent years. According to evidence presented at 
the hearing, bearing acreage of Florida grapefruit has decreased by 
more than 50 percent of the 1996-97 total of 139,200 acres. 
Consequently, grapefruit production has mirrored the loss of acreage, 
with drops from the previous 5-year average of 69 percent in 2004-05 
and 53 percent in 2005-06, due to hurricane damage. At the time of the 
hearing, witnesses expected that there would be a further drop in 
production of approximately 10 percent between the 2006-07 and 2007-08 
crops due to disease. Similar declines were described for Florida 
orange production. Bearing acreage has trended downward from a total of 
609,200 acres in 1996-97 to 475,900 acres in 2006-07. Yields also 
declined in the same period, from 18.05 tons per acre to 12.20 tons per 
acre. Total production during the same ten seasons decreased from 
10,980,000 tons to 5,805,000 tons. According to witnesses, some of that 
loss is attributable to hurricane damage, but much is also due to 
removal of diseased trees. Data was also presented at the hearing to 
show that bearing acreage of Florida tangerines and tangelos has 
declined from 40,000 acres in 1997-98 to 21,000 acres in 2006-07. Total 
utilized tangerine and tangelo production for that span of years 
decreased from 375,000 tons to 275,000 tons.
    In 1997-98, 43 percent of Florida grapefruit, 4.5 percent of 
Florida oranges, and 54 percent of Florida tangerines were utilized in 
the fresh market. By comparison, fresh utilization for those crops in 
2006-07 was 40 percent of grapefruit, 5 percent of oranges, and 60 
percent of tangerines and tangelos. Although the percentage of the 
crops utilized for fresh market has not changed considerably over that 
time period, the decreases in total production make less fruit 
available for fresh market utilization. According to witnesses, packing 
houses are not packing at full capacity because there is a shortage of 
fruit acceptable for the fresh market. As described above, some of the 
shortage may be due to losses from hurricane damage. But much may be 
attributed to diseases. Production research is needed to develop 
disease resistant citrus varieties and better disease management 
strategies to improve fresh citrus yields and increase returns to 
producers and handlers.
    According to witness testimony, competition in the global market 
means that fresh Florida citrus must meet market demands for 
cosmetically acceptable fruit. One witness suggested that production 
research focused on improved windbreak systems could reduce cosmetic 
scarring as well as the spread of bacterial canker. Witnesses also 
mentioned the need for development of new varieties of fruit that would 
be not only disease resistant, but easier to peel and seedless, in 
response to consumer demands.
    Witnesses testified that Florida's share of U.S. fresh citrus sales 
has declined in recent years. Evidence provided at the hearing shows 
that Florida's share of fresh U.S. grapefruit shipments is down from 72 
percent in 1997-98 to 64 percent in 2006-07. Florida's share of U.S. 
tangerine and tangelo shipments has decreased from 72 percent in 1997-
98 to 65 percent in 2006-07. Percentages for fresh Florida orange 
shipments have remained fairly consistent over the same 10-year period, 
generally around 20 percent of the U.S. total. Witnesses believe there 
is a need for the fresh Florida citrus industry to sponsor consumer 
research and market development programs that would revitalize that 
sector.
    Witnesses advocated providing the industry with necessary tools to

[[Page 79032]]

strengthen grower returns and enhance demand while elevating consumer 
awareness and appreciation of fresh Florida citrus.
    Addition of the authority to conduct research and promotion 
programs would merely authorize the committee to recommend such 
programs and, following USDA approval, to plan and conduct such 
activities. As mentioned above, research and promotion programs for the 
broader Florida citrus industry is currently conducted through the 
Florida Department of Citrus and other industry organizations. Funding 
for those programs comes from fees collected by those entities. 
Witnesses at the hearing testified that projects addressing the 
specific needs of the fresh industry would shift to the committee. 
Funding for the committee's projects would come from the collection of 
assessments from handlers of fresh Florida citrus, as authorized under 
the order with funding for other projects to remain with the other 
entities. Therefore, witnesses believed that total costs to handlers 
would not be significantly different from their current total industry 
assessments.
    Supporters of the proposed amendment emphasized that stakeholders 
in the fresh citrus industry should be the ones to determine which 
programs would best meet the industry's needs. One witness representing 
the committee said that if the proposed amendment is adopted, the 
committee would likely establish two varietal subcommittees for 
oranges/specialty crops and grapefruit to consider and recommend 
research and promotion projects to benefit the different types of fresh 
citrus grown in the production area. For example, most of Florida's 
fresh grapefruit shipments are to export markets, while only a limited 
percentage of fresh oranges and tangerines are exported. Market 
development projects could be planned that would enhance the marketing 
of each different crop. The varietal subcommittees would help ensure 
that the market differences between the varieties are recognized and 
addressed in any research and promotion programs that might be 
established as a result of this additional authority.
    According to witness testimony, many Florida citrus producers and 
handlers grow and/or ship more than one type of citrus, such as oranges 
and tangerines. Most also provide fruit for both the processing and 
fresh markets. Witnesses offering testimony at the hearing represented 
this group of diversified Florida citrus producers and handlers. Each 
was supportive of this proposal and testified that the Florida citrus 
industry as a whole was supportive of the committee's efforts to 
undertake responsibility for fresh citrus research and promotion 
programs.
    The committee's proposal included provision language that would 
require the committee to report on the status and accomplishments of 
its research and promotion programs annually. Similarly, contracting 
parties working on such projects with the committee would be required 
to file and maintain complete project reports and make them available 
to the committee.
    No testimony opposing this proposal was provided at the hearing. 
For the reasons stated above, it is recommended that a new Sec.  905.54 
be added to the order to provide authority to establish and conduct 
production research projects, marketing research and development 
projects, and marketing promotion programs, including paid advertising, 
to enhance the production and marketing of fresh Florida citrus. 
Additionally, the section should require that the committee provide 
annual project status reports to its members and to USDA, Moreover, 
contractors should be required to file and maintain project reports and 
records and make them available to the committee and USDA.

Conforming Changes

    AMS also proposed to make such changes as may be necessary to the 
order to conform to any amendment that may result from the hearing. 
Amendments to Sec.  905.22 Nominations, as described under Material 
Issue 1, would replace the word ``he'' in the first sentence of 
paragraph (a)(2) to ``he or she.'' As conforming changes in Sec.  
905.22, AMS recommends replacing the word ``he'' in the second sentence 
of paragraph (a)(2) with ``he and she'', and replacing the word ``his'' 
in the last sentence of paragraph (b)(2) with the words ``his or her.''

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

[[Page 79033]]

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 grower 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. 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 emails 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

[[Page 79034]]

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.
    Committee meetings regarding these proposals, as well as the 
hearing date and location, were widely publicized throughout the citrus 
industry, and all interested persons were invited to attend the 
meetings and the hearing and to participate in committee deliberations 
on all issues. All committee meetings and the hearing were public 
forums and all entities, both large and small, were able to express 
views on these issues. Finally, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    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.

Paperwork Reduction Act

    Current information collection requirements for Part 905 are 
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.

Civil Justice Reform

    The amendments to 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 Sates 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.

Rulings on Briefs of Interested Persons

    Briefs and proposed findings and conclusions based on the record 
evidence were solicited in this proceeding. No briefs were filed.

General Findings

    The findings hereinafter set forth are supplementary to the 
findings and determinations which were previously made in connection 
with the issuance of the marketing agreement and 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.
    (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, regulates the handling of fresh citrus 
grown in the production area (Florida) in the same manner as, and is 
applicable only to, persons in the respective classes of commercial and 
industrial activity specified in the marketing order upon which a 
hearing has been held;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, is limited in its application to the 
smallest regional production area which 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, prescribes, 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 fresh citrus grown in the production area; 
and
    (5) All handling of fresh citrus 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.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
these proposed changes have already been widely publicized and the 
committee and industry would like to avail themselves of the 
opportunity to implement the changes as soon as possible. All written 
exceptions timely received will be considered and a grower referendum 
will be conducted before any of these proposals are implemented.

List of Subjects in 7 CFR Part 905

    Grapefruit, Marketing agreements, Oranges, Reporting and 
recordkeeping requirements, Tangelos, Tangerines.

    For the reasons set forth in the preamble, 7 CFR Part 905 is 
proposed to be amended as follows:

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


Sec.  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

[[Page 79035]]

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 Sec.  905.23 to read as follows:


Sec.  905.23  Selection.

    (a) From the nominations made pursuant to Sec.  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 Sec.  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 Sec.  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 Sec.  905.29, redesignate paragraph (b) as paragraph (c), and 
add a new paragraph (b) to read as follows:


Sec.  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 Sec.  905.34 to read as follows:


Sec.  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 Sec.  905.54 to read as follows:


Sec.  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 Sec.  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.

    Dated: December 19, 2008.
James E. Link,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-30670 Filed 12-23-08; 8:45 am]
BILLING CODE 3410-02-P