[Federal Register: September 1, 1998 (Volume 63, Number 169)]
[Proposed Rules]
[Page 46403-46406]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01se98-15]

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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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[[Page 46403]]

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 319

[Docket No. 98-035-1]


Importation of Orchids in Growing Media

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend our regulations governing the
importation of plants and plant products to add orchids of the genus
Phalaenopsis to the list of plants that may be imported in an approved
growing medium subject to specified growing, inspection, and
certification requirements. We have assessed the pest risks associated
with the importation of Phalaenopsis spp. orchids established in
growing media and have determined that the degree of pest risk is no
greater than the pest risk associated with the importation of bare-
rooted Phalaenopsis spp. orchids, which may already be imported under
the regulations. This proposed rule would allow Phalaenopsis spp.
orchids established in growing media to be imported into the United
States under certain conditions.

DATES: Consideration will be given only to comments received on or
before November 2, 1998.

ADDRESSES: Please send an original and three copies of your comments to
Docket No. 98-035-1, Regulatory Analysis and Development, PPD, APHIS,
suite 3C03, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please
state that your comments refer to Docket No. 98-035-1. Comments
received may be inspected at USDA, room 1141, South Building, 14th
Street and Independence Avenue SW., Washington, DC, between 8 a.m. and
4:30 p.m., Monday through Friday, except holidays. Persons wishing to
inspect comments are requested to call ahead on (202) 690-2817 to
facilitate entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr. Peter M. Grosser, Senior Import
Specialist, Phytosanitary Issues Management Team, PPQ, APHIS, 4700
River Road Unit 140, Riverdale, MD 20737-1236; (301) 734-6799; fax
(301) 734-5786; e-mail: Peter.M.Grosser@usda.gov.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in 7 CFR part 319 prohibit or restrict the
importation into the United States of certain plants and plant products
to prevent the introduction of plant pests. The regulations contained
in ``Subpart--Nursery Stock, Plants, Roots, Bulbs, Seeds, and Other
Plant Products,'' Secs. 319.37 through 319.37-14 (referred to below as
the regulations) restrict, among other things, the importation of
living plants, plant parts, and seeds for propagation.
    Paragraph Sec. 319.37-8(a) of the regulations requires, with
certain exceptions, that plants offered for importation into the United
States be free of sand, soil, earth, and other growing media. This
requirement is intended to help prevent the introduction of plant pests
that might be present in the growing media; the exceptions to the
requirement take into account factors that mitigate that plant pest
risk. Those exceptions, which are found in paragraphs (b) through (e)
of Sec. 319.37-8, consider either the origin of the plants and growing
media (paragraph (b)), the nature of the growing media (paragraphs (c)
and (d)), or the use of a combination of growing conditions, approved
media, inspections, and other requirements (paragraph (e)).
    That combination approach found in Sec. 319.37-8(e) provides
conditions under which plants from nine listed genera may be imported
into the United States established in an approved growing medium. In
addition to specifying the types of plants that may be imported,
Sec. 319.37-8(e) also:
    <bullet> Specifies the types of growing media that may be used;
    <bullet> Requires plants to be grown in accordance with written
agreements between the Animal and Plant Health Inspection Service
(APHIS) and the plant protection service of the country where the
plants are grown and between the foreign plant protection service and
the grower;
    <bullet> Requires the plants to be rooted and grown in a greenhouse
that meets certain requirements for pest exclusion and that is used
only for plants being grown in compliance with Sec. 319.37-8(e);
    <bullet> Restricts the source of the seeds or parent plants used to
produce the plants, and requires grow-out or treatment of parent plants
imported into the exporting country from another country;
    <bullet> Specifies the sources of water that may be used on the
plants, the height of the benches on which the plants must be grown,
and the conditions under which the plants must be stored and packaged;
and
    <bullet> Requires that the plants be inspected in the greenhouse
and found free of evidence of plant pests no more than 30 days prior to
the exportation of the plants.
    A phytosanitary certificate issued by the plant protection service
of the country in which the plants were grown that declares that the
above conditions have been met must accompany the plants at the time of
importation. These conditions have been used successfully to mitigate
the risk of pest introduction associated with the importation into the
United States of approved plants established in growing media.
    In 1997, the Government of Taiwan requested that APHIS consider
amending the regulations to allow orchids of the genus Phalaenopsis--
commonly known as moth orchids--to be imported into the United States
under the provisions of Sec. 319.37-8(e). Taiwan is the largest
exporter of Phalaenopsis spp. orchids to the United States, exporting
most of them as bare-rooted plants under the provisions of Sec. 319.37-
8(a). Several other countries, notably Thailand and The Netherlands,
also export orchids, including Phalaenopsis spp. orchids, to the United
States. In its request, the Taiwanese Government specifically requested
that we allow Phalaenopsis spp. orchids to be imported into the United
States established in sphagnum moss, which is one of the approved
growing media listed in Sec. 319.37-8(e)(1).
    The regulations in Sec. 319.37-8(g) provide that a request such as
that made

[[Page 46404]]

by Taiwan to allow the importation of additional taxa of plants
established in growing media will be evaluated by APHIS using specific
pest risk evaluation standards. That analysis is conducted to determine
the plant pest risks associated with each requested plant article and
to determine whether or not APHIS will propose to allow the requested
plant article established in growing media to be imported into the
United States. The pest risk evaluation, the standards for which are
set forth in Sec. 319.37-8 (g)(1) through (g)(4), involves collecting
commodity information, cataloging quarantine pests, conducting
individual pest risk assessments, and determining an overall estimation
of risk based on a compilation of the component estimates.
    After receiving Taiwan's request to allow the importation of
Phalaenopsis spp. orchids established in growing media, APHIS conducted
the required pest risk analysis in accordance with the standards
described above. (The analysis is described in a qualitative, pathway-
initiated pest risk assessment titled ``Importation of Moth Orchid
(Phalaenopsis spp.) Seedlings from Taiwan in Growing Media into the
United States,'' copies of which are available through the person
listed under FOR FURTHER INFORMATION CONTACT.) The pest risk assessment
identified several arthropod pests (Planococcus minor, Spodoptera
litura, and Spodoptera sp.), mollusks (Acusta (Bradybaena) tourranensis
and Bradybaena sp.), and fungi (Colletotrichum phalaenopsidis,
Cylindrosporium phalaenopsidis, Phomopsis orchidophila, and Sphaerulina
phalaenopsidis) as the plant pests most likely to travel with the plant
and having the greatest potential for economic damage. However, the
pest risk assessment acknowledged that the risk presented by these
plant pests is consistent with any propagative epiphytic orchid
materials and pest associations. Further, it is important to note that
those plant pest risks were identified in the absence of the mitigative
effects of the requirements of Sec. 319.37-8(e), which are designed to
establish and maintain a pest-free production environment and ensure
the use of pest-free seeds or parent plants. Given that, the pest risk
assessment concluded that it is likely that the risk of Phalaenopsis
spp. orchids, or any other epiphytic orchid, grown in sphagnum moss (an
approved growing medium) under modern conditions (i.e., the conditions
required by Sec. 319.37-8(e)) is no greater than that posed by
epiphytic orchid material currently allowed entry as bare-rooted plants
or on other approved epiphytic growing media (tree fern slabs, coconut
husks, or coconut fiber).
    Based on the conclusions of the pest risk assessment, we have
determined that the importation of Phalaenopsis spp. orchids from any
country--not just Taiwan--under the conditions required by Sec. 319.37-
8(e) would pose no greater plant pest risk than is posed by the
importation of epiphytic orchid material currently allowed entry from
any country as bare-rooted plants under Sec. 319.37-8(a) or established
on other approved epiphytic growing media (tree fern slabs, coconut
husks, or coconut fiber) under Sec. 319.37-8(d). On the basis of that
determination, we are proposing to amend the regulations in
Sec. 319.37-8(e) by adding the genus Phalaenopsis to the list of genera
that may be imported established in approved growing media. This
proposed change would allow Phalaenopsis spp. orchids to be imported
into the United States established in approved growing media from any
country provided the orchids were produced, handled, and imported in
accordance with the requirements of Sec. 319.37-8(e) and are
accompanied at the time of importation by a phytosanitary certificate
issued by the plant protection service of the country in which the
plants were grown that declares that those requirements have been met.

Miscellaneous

    As part of this proposed rule, we are also proposing to renumber an
incorrect footnote reference in Sec. 319.37-8.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866.
The rule has been determined to be not significant for the purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget.
    In accordance with 5 U.S.C. 603, we have performed an Initial
Regulatory Flexibility Analysis, which is set out below, regarding the
impact of this proposed rule on small entities. Based on the
information we have, there is no basis to conclude that adoption of
this proposed rule would result in any significant economic impact on a
substantial number of small entities. However, we do not currently have
all of the data necessary for a comprehensive analysis of the effects
of this proposed rule on small entities. Therefore, we are inviting
comments on potential effects. In particular, we are interested in
determining the number and kind of small entities that may incur
benefits or costs from the implementation of this proposed rule.
    Under the Federal Plant Pest Act (7 U.S.C. 150aa-150jj) and the
Plant Quarantine Act (7 U.S.C. 151-165 and 167), the Secretary of
Agriculture is authorized to regulate the importation of plants and
plant products to prevent the introduction of injurious plant pests.
    This proposed rule would amend the regulations to add orchids of
the genus Phalaenopsis to the list of plants that may be imported in an
approved growing medium subject to specified growing, inspection, and
certification criteria. This proposal follows the completion of our
analysis of the pest risks associated with the importation of
Phalaenopsis spp. orchids established in growing media and our
determination that the degree of pest risk is no greater than the pest
risk associated with the importation of bare-rooted Phalaenopsis spp.
orchids. This proposed rule would allow Phalaenopsis spp. orchids
established in approved growing media to be imported into the United
States under certain conditions.
    Economic data on potted orchid plants in general is scarce, and
specific data on potted Phalaenopsis spp. orchids in particular is
virtually nonexistent. Nevertheless, certain conclusions and inferences
regarding the potential economic impact of the proposed rule are
possible.

Domestic Production

    The National Agricultural Statistics Service (NASS) of the U.S.
Department of Agriculture (USDA) publishes data on the value and
production of potted orchid plants in the United States. However, that
data is of limited usefulness for this analysis because it: (1) Shows
only aggregate data for all types of orchid plants, and does not offer
specific data for Phalaenopsis spp. orchids as a separate orchid type;
(2) is available only for the year 1996; (3) includes only the larger
producers, i.e., those with annual gross sales of $100,000 or more; and
(4) includes only producers in 36 States.
    The NASS data shows that there were 169 growers of potted orchid
plants in the United States in 1996. These 169 growers sold a combined
8.2 million potted orchids that year, with an equivalent wholesale
value of $42.7 million, for an average of $252,781 per grower. Of the
8.2 million potted orchids sold, 5.1 million (62 percent) were less
than 5 inches in diameter. The average wholesale price of pots less
than 5 inches in diameter was $3.90; the average wholesale price for
pots 5 inches or more in diameter was $7.30.

[[Page 46405]]

The 8.2 million pots were produced in a 6.3 million sq. ft. area, an
average of 36,982 sq. ft. for each of the 169 growers. Three States--
California, Florida, and Hawaii--accounted for 55 percent of the
growers and 92 percent of the pots sold in 1996. Florida alone
accounted for about 25 percent of the growers and about 50 percent of
the pots sold (USDA, NASS, ``Floriculture Crops, 1996 Summary''). The
American Orchid Society (AOS) does not collect statistical data on the
production of potted Phalaenopsis spp. orchids in the United States,
but it estimates that about half of all potted orchid plants produced
in the United States fall within that genus.

Imports and Exports

    The USDA's Foreign Agriculture Service (FAS) collects and publishes
data on U.S. imports and exports of orchid plants. The FAS data is also
of limited usefulness for the purposes of this analysis because it,
too, shows only aggregate data for all types of orchid plants without
separating out figures for separate orchid types such as Phalaenopsis.
    As noted in the background section of this proposed rule, most of
the Phalaenopsis spp. orchids currently imported into the United States
arrive as bare-rooted plants. We expect that complying with the
growing, inspection, and treatment requirements of Sec. 319.37-8(e)
would increase costs for orchid producers in exporting countries. In
addition, the cost of shipping orchids in growing media would be higher
than the cost of shipping bare-rooted plants. Therefore, it is
reasonable to expect that Phalaenopsis spp. orchids would be exported
to the United States established in growing media only if the higher
production and shipping costs were offset by the savings that would
accompany the elimination of the costs associated with shipping the
plants bare-rooted and then preparing them for sale after their arrival
(i.e., de-potting the plants in the country of origin for importation
purposes, then re-potting the plants in the United States for sale
purposes).
    The FAS data shows that the United States is a net importer of
orchid plants. In 1996, the United States imported 223 metric tons of
orchid plants worth $4.3 million; Taiwan, Thailand, and The Netherlands
together accounted for 93 percent of those imports. In 1997, 289 metric
tons of orchid plants worth $6.6 million were imported into the United
States, with almost 90 percent of those imports originating in either
Taiwan (171 metric tons), Thailand (49 metric tons), or The Netherlands
(33 metric tons). In comparison, the United States exported 52 metric
tons of orchid plants in 1996 and 112 metric tons of orchid plants in
1997. The value of the 1997 U.S. exports was $235,330.

Effects on Small Entities

    The Regulatory Flexibility Act requires that agencies consider the
economic impact of rule changes on small businesses, organizations, and
governmental jurisdictions. Those entities potentially affected by this
proposed rule are growers, retailers, and importers of Phalaenopsis
spp. orchids.
    Domestic orchid growers sell their plants primarily at wholesale to
general merchandise retailers (e.g., hardware or home improvement
stores) and to specialty retailers such as specialty florists and
landscapers. Domestic producers would be adversely affected if they
lose plant sales to cheaper foreign imports. Currently, Phalaenopsis
spp. orchids grown in Taiwan are sold in the United States at or below
the price of domestically produced Phalaenopsis spp. orchids, according
to the AOS. This proposed rule would likely enhance the competitive
positions of the countries currently exporting orchids to the United
States if, as discussed above, it serves to reduce the costs that are
incurred in preparing imported, bare-rooted Phalaenopsis spp. orchids
for sale in the United States.
    Domestic growers are already competing with imports of bare-rooted
Phalaenopsis spp. orchids, so the magnitude of any adverse economic
impact would depend on the extent to which they rely on potted
Phalaenopsis spp. orchids as a source of their overall revenue, the
extent to which their sales of potted Phalaenopsis spp. orchids are
displaced by imports, and the amount of any increase in the overall
level of orchid plant imports. Most orchid producers grow only orchids,
and many of those--especially the larger producers--grow only one type
of orchid. The number of producers who grow potted Phalaenopsis spp.
orchids exclusively, i.e., those who could be affected most by the rule
change, is unknown. However, many producers appear to be in that
category, since the AOS estimates that about half of all potted orchid
plants produced by U.S. growers are of the genus Phalaenopsis.
    The amount of lost sales would depend, in turn, on the price
differential between domestic and foreign plants and on the volume of
plant imports, both of which are unknown at this time. If the price
differential in favor of imports was not significant, it is conceivable
that some retailers would continue to purchase their plants from
domestic growers, especially if those growers provided superior service
or other non-price advantages. The volume of imports is significant
because it could be too small to satisfy the demand of all retailers,
leaving some with no other option but to purchase plants from domestic
growers.
    The availability of cheaper foreign imports would likely benefit
plant retailers and importers. Retailers would benefit because they
could pass the savings from lower wholesale prices on to their
customers, creating an environment that would lead to increased sales
volume and revenue. Importers would benefit from the income that the
increased business activity would produce.
    The number of commercial growers of potted Phalaenopsis spp.
orchids in the United States is unknown, but there are at least 300 to
400 producers who grow one or more of the various types of potted
orchid plants, since that is the number of growers who advertise their
products through the AOS. The number of retailers who sell potted
Phalaenopsis spp. orchids is also unknown, as is the number of
importers. Nevertheless, it is reasonable to assume that most of the
entities potentially affected by this proposed rule are small, at least
by U.S. Small Business Administration's (SBA) standards. This
assumption is based on composite data for providers of the same and
similar services in the United States. In 1992, the per-farm average
gross receipts for all 38,569 U.S. farms in Standard Industrial
Classification (SIC) 0181 (``Ornamental Floriculture and Nursery
Products,'' which includes potted orchid producers) was $174,431, well
below the SBA's small entity threshold of $0.5 million for those farms.
Similarly, the 1993 per-firm average gross receipts for all 9,867 U.S.
firms in SIC 5261 (``Retail Nurseries, Lawn and Garden Supply Stores,''
which includes plant retailers) was $688,898, well below the SBA's
small entity threshold of $5 million. In 1993, there were 3,877 U.S.
firms in SIC 5193 (``Flowers, Nursery Stock, and Florists' Supplies,''
which includes plant importers), and 98 percent of those firms had
fewer than 100 employees, the SBA's small entity threshold.

Alternatives Considered

    Two alternatives to this proposed rule were considered: (1) To make
no changes in the regulations and (2) to limit the scope of the
proposed rule to Phalaenopsis spp. orchids from Taiwan. We rejected the
first alternative--making no change in the regulations--after
determining that the degree of pest risk associated with the
importation of Phalaenopsis spp. orchids in growing

[[Page 46406]]

media under the conditions set forth in Sec. 319.37-8(e) is no greater
than the pest risk associated with the importation of bare-rooted
Phalaenopsis spp. orchids. Because there is no greater risk involved,
we have no plant pest-based rationale for rejecting the Taiwanese
request that we consider allowing the importation of Phalaenopsis spp.
orchids in growing media. Similarly, we rejected the second alternative
of limiting the scope of the proposal to Phalaenopsis spp. orchids from
Taiwan because our pest risk assessment indicated that Phalaenopsis
spp. orchids produced in accordance with the growing, inspection, and
certification requirements of the regulations could be safely imported
from any country, regardless of specific pest associations.

Executive Order 12988

    This proposed rule would allow the importation of Phalaenopsis
orchids established in growing media under certain conditions. If this
proposed rule is adopted, State and local laws and regulations
regarding Phalaenopsis orchids imported under this rule would be
preempted while the plants are in foreign commerce. Some nursery stock
articles are imported for immediate distribution and sale to the
consuming public, and would remain in foreign commerce until sold to
the ultimate consumer. The question of when foreign commerce ceases in
other cases must be addressed on a case-by-case basis. If this proposed
rule is adopted, no retroactive effect would be given to this rule, and
this rule would not require administrative proceedings before parties
may file suit in court challenging this rule.

Paperwork Reduction Act

    This proposed rule contains no new information collection or
recordkeeping requirements under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).

List of Subjects in 7 CFR Part 319

    Bees, Coffee, Cotton, Fruits, Honey, Imports, Incorporation by
reference, Nursery stock, Plant diseases and pests, Quarantine,
Reporting and recordkeeping requirements, Rice, Vegetables.

Accordingly, we are proposing to amend 7 CFR part 319 as follows:

PART 319--FOREIGN QUARANTINE NOTICES

    1. The authority citation for part 319 would continue to read as
follows:

    Authority: 7 U.S.C. 150dd, 150ee, 150ff, 151-167, 450, 2803, and
2809; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.2(c).

Sec. 319.37-8  [Amended]

    2. In Sec. 319.37-8, paragraph (e), the introductory text of the
paragraph would be amended by removing the footnote reference 11
immediately after the word ``Nidularium,'' and adding the footnote
reference 10 in its place, and by adding the word ``Phalaenopsis,''
immediately after the word ``Peperomia,''.

    Done in Washington, DC, this 25th day of August 1998.
Alfred S. Elder,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 98-23406 Filed 8-31-98; 8:45 am]
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