[Federal Register Volume 69, Number 229 (Tuesday, November 30, 2004)]
[Rules and Regulations]
[Pages 69748-69774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26336]



[[Page 69747]]

-----------------------------------------------------------------------

Part IV





Department of Agriculture





-----------------------------------------------------------------------



Animal and Plant Health Inspection Service



-----------------------------------------------------------------------



7 CFR Part 319



Mexican Avocado Import Program; Final Rule

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / 
Rules and Regulations

[[Page 69748]]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 319

[Docket No. 03-022-5]
RIN 0579-AB81


Mexican Avocado Import Program

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: We are amending the regulations governing the importation of 
fruits and vegetables to expand the number of States in which fresh 
Hass avocado fruit grown in approved orchards in approved 
municipalities in Michoacan, Mexico, may be distributed. We are also 
allowing the distribution of the avocados during all months of the 
year. For the first 2 years following the effective date of this rule, 
those avocados may be distributed in all States except California, 
Florida, and Hawaii; after 2 years, the avocados may be distributed in 
all States. We are taking this action in response to a request from the 
Government of Mexico and based on our finding that the phytosanitary 
measures described in this final rule will reduce the risk of 
introducing plant pests associated with Mexican Hass avocados into the 
United States.

DATES: Effective Date: January 31, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Karen Bedigian, Import Specialist, 
Phytosanitary Issues Management Team, PPQ, APHIS, 4700 River Road Unit 
140, Riverdale, MD 20737-1236; (301) 734-6799.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in ``Subpart--Fruits and Vegetables'' (7 CFR 319.56 
through 319.56-8) prohibit or restrict the importation of fruits and 
vegetables into the United States from certain parts of the world to 
prevent the introduction and dissemination of plant pests, including 
fruit flies, that are new to or not widely distributed within the 
United States.
    The regulations in 7 CFR 319.56-2ff (referred to below as the 
regulations) have provided for the importation of fresh Hass avocado 
fruit grown in approved orchards in approved municipalities in 
Michoacan, Mexico, into specified areas of the United States, subject 
to certain conditions. Those conditions, which include pest surveys and 
pest risk-reducing cultural practices, packinghouse procedures, 
inspection and shipping procedures, and restrictions on the time of 
year (October 15 through April 15) that shipments may enter the United 
States, are designed to reduce the risk of pest introduction. Further, 
the regulations have limited the distribution of the avocados to 31 
northeastern and north central States (Colorado, Connecticut, Delaware, 
Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, 
Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New 
Hampshire, New Jersey, New York, North Dakota, Ohio, Pennsylvania, 
Rhode Island, South Dakota, Utah, Vermont, Virginia, West Virginia, 
Wisconsin, and Wyoming) and the District of Columbia.
    In November 2000, the Government of Mexico requested that the 
Animal and Plant Health Inspection Service (APHIS) amend the 
regulations to allow Hass avocados to be imported year round into all 
50 States. We did not act on Mexico's request at the time because we 
did not have documentation available to support Mexico's position that 
such importations would not present a risk of introducing plant pests 
into certain States.
    As part of our evaluation of Mexico's request, we prepared a draft 
pest risk assessment (PRA), titled ``Importation of `Hass' Avocado 
Fruit (Persea americana) from Mexico'' (June 2003), to evaluate the 
importation of fruit to the entire United States throughout the year. 
The draft PRA contained two components: (1) A risk assessment component 
that identifies quarantine pests that are likely to follow the Mexican 
Hass avocado import pathway, and (2) a risk management component that 
evaluates the ability of the selected phytosanitary measures to 
mitigate the risk posed by those quarantine pests.
    The first component revealed that the quarantine pests of concern 
remained the same as those identified in previous risk assessments. 
After eliminating non-quarantine and non-pathway pests from the list, 
eight pests of quarantine significance that follow the pathway remain: 
Three fruit flies (Ceratitis capitata, Anastrepha ludens, A. striata), 
three seed weevils (Conotrachelus aguacatae, C. perseae, and Heilipus 
lauri), one stem weevil (Copturus aguacatae), and one seed moth 
(Stenoma catenifer).
    The second component of the draft PRA evaluated the selected 
phytosanitary measures to mitigate the risk posed by the eight 
identified pests. This component concluded that imports of Mexican 
avocados subject to those phytosanitary requirements will result in the 
following:
    <bullet> Fewer than 387 infested avocados will enter the United 
States each year, estimated with 95 percent confidence.
    <bullet> Fewer than 49 avocados infested with stem weevil, seed 
weevils, and seed moth will enter avocado producing areas each year, 
estimated with 95 percent confidence.
    <bullet> Fewer than 208 avocados infested with fruit flies will 
enter fruit fly susceptible areas each year, estimated with 95 percent 
confidence.
    <bullet> Fewer than 3 avocados infested with stem weevil, seed 
weevils and seed moth will be discarded in avocado producing areas each 
year, estimated with 95 percent confidence.
    <bullet> Fewer than 11 avocados infested with fruit flies will be 
discarded in fruit fly susceptible areas each year, estimated with 95 
percent confidence.
    <bullet> There is an overall low likelihood of pest introduction.
    <bullet> Based on the statistical models we have used to estimate 
sampling efficacy, it is slightly more likely that zero infested 
avocados will enter the United States than one infested avocado; 
however, we cannot rule out the possibility that some may enter the 
country.
    Only those avocados discarded in susceptible areas pose a risk of 
establishment of the pests in the United States. In the PRA, the risk 
associated with the importation of commercial shipments of avocados is 
compared to the risks associated with infested avocados smuggled into 
the United States. During the 17-year period from 1985 to 2002, an 
average of 30 avocados each year (specific variety or cultivar not 
recorded) infested with pathway pests were intercepted in baggage and 
cargo and denied entry into the United States. Studies of port 
efficiency, when searching for prohibited materials, indicate that 
inspectors detect approximately 10 to 20 percent of what actually 
arrives. That suggests that the number of prohibited avocados (i.e., 
smuggled or inadvertently imported non-program avocados) entering the 
United States would average 150 to 300 per year.
    While we state above that fewer than 387 infested avocados will 
enter the United States each year, estimated with 95 percent 
confidence, this number is based on statistical models. An examination 
of over 10 million program fruit has not revealed any pests in 6 years 
of fruit cutting and inspection and, also based on statistical models, 
we determined that it is slightly more likely that zero infested 
avocados will enter the United States than one infested

[[Page 69749]]

avocado. Prohibited transport of avocados in baggage and cargo poses a 
substantially greater risk of introducing the above pests into the 
United States than commercial imports of Hass avocados from Mexico.
    Additionally, the 6 years' worth of data from the avocado import 
program gives us confidence that the systems approach currently in 
place provides adequate safeguards against avocado pests. The systems 
approach mitigations include annual pest field surveys; orchard 
certification; and packinghouse, packaging, and shipping requirements. 
The efficacy of the systems approach depends on multiple measures. 
Those measures are backed up by an inspection system that, when a pest 
is detected, shuts down the imports from an affected area, depending on 
the pest, until corrective actions are taken. An examination of over 10 
million fruit has not revealed any pests in 6 years of fruit cutting 
and inspection.
    On May 24, 2004, we published in the Federal Register (69 FR 29466-
29477, Docket No. 03-022-3) a proposal to expand the number of States 
in which fresh Hass avocado fruit grown in approved orchards in 
approved municipalities in Michoacan, Mexico, may be distributed. We 
also proposed to allow the distribution of the avocados during all 
months of the year and to make other changes in the regulations, such 
as removing restrictions on the ports through which the avocados may 
enter the United States and the corridor through which the avocados 
must transit the United States. We proposed this action in response to 
a request from the Government of Mexico and based on our finding that 
the phytosanitary measures described in this final rule will reduce the 
risk of introducing plant pests associated with Mexican Hass avocados 
into the United States.
    We solicited comments concerning our proposal for 60 days ending 
July 23, 2004. We received 17,022 comments by that date (including 
11,000 form letters, both for and against the proposed rule). They were 
from producers, exporters, researchers, members of Congress, and 
representatives of State and foreign governments. They are discussed 
below by topic.
    After the comment period for the proposed rule closed on July 23, 
2004, we updated the risk assessment \1\ based on comments that we 
received. The updated risk assessment incorporates suggested changes to 
the May 2004 version of the risk assessment that accompanied the 
proposed rule and reflects new information received in public comments. 
These changes include the following:
---------------------------------------------------------------------------

    \1\ The updated risk assessment may be viewed on the Internet at 
http://www.aphis.usda.gov/ppq/avocados and may be obtained from the 
person listed under FOR FURTHER INFORMATION CONTACT.
---------------------------------------------------------------------------

    <bullet> A 47-State scenario was added in which the risk is 
calculated for all States excluding California, Florida, and Hawaii.
    <bullet> Uncertainty was added to the estimate for sensitivity of 
inspection in the model. The estimate of 50 percent was replaced with a 
uniform distribution from 17.9 percent to 83.5 percent.
    <bullet> The estimate for the number of avocados imported was 
changed for consistency with the economic analysis prepared for the 
proposed rule.
    <bullet> Statistics including mean, mode, and standard deviation 
were reported for all model output distributions.
    Our new conclusions, based on the recalculations discussed above in 
the second bullet, are as follows:
    In the 50-State scenario, the risk assessment model results 
present, with 95 percent confidence, the following estimates:
    <bullet> Fewer than 442 infested avocados will enter the entire 
United States each year;
    <bullet> Fewer than 54 avocados infested with stem weevil, seed 
weevils, and seed moth will enter avocado producing areas each year;
    <bullet> Fewer than 238 avocados infested with fruit flies will 
enter fruit fly susceptible areas each year;
    <bullet> Fewer than three avocados infested with stem weevil, seed 
weevils, and seed moth will be discarded in avocado producing areas 
each year;
    <bullet> Fewer than 12 avocados infested with fruit flies will be 
discarded in fruit fly susceptible areas each year.
    Under the 50-State scenario, there is an overall low likelihood of 
pest introduction.
    In the 47-State scenario (excluding California, Florida, and 
Hawaii), the risk assessment model results present, with 95 percent 
confidence, the following estimates:
    <bullet> Fewer than 393 infested avocados will enter the 47 States 
each year;
    <bullet> Fewer than seven avocados infested with stem weevil, seed 
weevils, and seed moth will enter avocado producing areas outside of 
California, Florida, and Hawaii each year;
    <bullet> Fewer than 98 avocados infested with fruit flies will 
enter fruit fly susceptible areas outside of California, Florida, and 
Hawaii each year;
    <bullet> Fewer than one avocado infested with stem weevil, seed 
weevils, and seed moth will be discarded in avocado producing areas 
outside of California, Florida, and Hawaii each year;
    <bullet> Fewer than five avocados infested with fruit flies will be 
discarded in fruit fly susceptible areas outside of California, 
Florida, and Hawaii each year; and
    Under the 47-State scenario, there is an overall low likelihood of 
pest introduction.
    Even if some infested avocados entered the country, the likelihood 
of pest establishment and spread would require that: (1) The infested 
avocados must be in close proximity to host material; (2) the pests 
must find mates; (3) the pests must successfully avoid predation; (4) 
the adult pests must find host material; and (5) the climatological and 
microenvironmental conditions must be suitable. These factors 
substantially reduce the likelihood of establishment. The degree of 
pest risk reduction attributable to each of the factors has not been 
quantified. People generally consume the fruit they purchase and 
dispose of the waste material in a manner (such as in plastic bags that 
are landfilled or incinerated) that precludes the release of pests into 
the environment.
    In the preceding bullet points, the reader may note that the 
estimated numbers of potentially infested fruit are in some cases 
different than the similar bullet points presented in the proposed 
rule. These differences are attributable to adjustments made in the 
updated risk assessment to the 95th percentile estimates for ``N'' 
(number of Hass avocados imported from Mexico per year) and ``P1'' 
(proportion of avocados infested). P1 was revised upwards because the 
detection sensitivity range 17.9 to 83.5 was used. P1 is the same for 
the 47 and 50 State scenarios. N was revised downward based on the 
revised economic analysis.
    Based on comments that we received on the proposed rule, and taking 
into account the findings of the updated risk assessment, this final 
rule includes several provisions that differ from the proposed rule. 
Specifically:
    <bullet> We proposed to allow the avocados to be distributed in all 
50 States, but solicited comments on the possibility of delaying the 
distribution of the avocados in California, Florida, and Hawaii for 1 
year. In this final rule, we have adopted a delay in the distribution 
of the avocados in California, Florida, and Hawaii for a period of 2 
years based on the comments that we received. After that 2-year period, 
the avocados may be distributed in all 50 States. The effective dates 
for importing fruit into all 50 States are built into the final rule, 
which precludes the need for APHIS to initiate further rulemaking in 
order to expand the area into which the fruit may be

[[Page 69750]]

imported. If it is determined that the requirements of the export 
program are not being observed routinely or uniformly, APHIS will be 
able to act quickly to suspend the effective dates or even the entire 
program, if warranted. The export program provides for the detection of 
infested fruit at any point in the pathway, with that detection leading 
to the rejection of the shipment containing the infested fruit and the 
removal of the grove or municipality that produced the fruit from the 
export program until it is determined by APHIS and the Mexican NPPO 
that the grove or municipality may be readmitted to the program. Thus, 
the detection of infested fruit will not, by itself, result in the 
suspension of all or part of the export program. To determine whether 
the requirements of the export program are being observed routinely or 
uniformly and to ensure that the distribution restrictions of this rule 
are being observed, APHIS personnel will be involved in monitoring 
activities in both the United States and Mexico.
    <bullet> To reflect our proposal to allow the avocados to be 
distributed in all 50 States, we proposed to remove the requirement in 
Sec.  319.56-2ff(c)(3)(vii) that all boxes or crates of avocados be 
clearly marked with, among other things, the statement ``Not for 
distribution in AL, AK, AZ, AR, CA, FL, GA, HI, LA, MS, NV, NM, NC, OK, 
OR, SC, TN, TX, WA, Puerto Rico, and all other U.S. Territories.'' In 
this final rule, we have retained that marking requirement, specific to 
California, Florida, and Hawaii, for the term of the 2-year delay in 
distribution to those States.
    <bullet> To reflect our proposal to allow the avocados to be 
distributed in all 50 States, we proposed to remove the provisions in 
Sec.  319.56-2ff(f), which limited the ports of entry through which the 
avocados may be imported, and Sec.  319.56-2ff(g), which described the 
areas of the United States that avocados moving by truck or rail car 
may transit while en route to approved States. In this final rule, we 
continue to prohibit the movement of the avocados into or through 
California, Florida, and Hawaii for the term of the 2-year delay in 
distribution to those States.
    <bullet> To reflect our proposal to allow the avocados to be 
distributed in all 50 States, we proposed to remove the provisions in 
Sec.  319.56-2ff(j) that required any boxes used to repackage the 
avocados in the United States to bear the same information that is 
required to be displayed on the original boxes in which the fruit was 
packed in Mexico. In this final rule, we have retained those 
repackaging requirements due to the 2-year delay in distribution to 
California, Florida, and Hawaii.
    <bullet> We proposed to add a requirement for the avocados to be 
packed in insect-proof cartons, loaded in insect-proof containers, or 
covered with insect-proof mesh or plastic tarpaulin prior to leaving 
the packinghouse. This proposed requirement was intended to replace the 
requirement in Sec.  319.56-2ff (c)(3)(viii) that, prior to leaving the 
packinghouse, the truck or container transporting the avocados must be 
secured by Sanidad Vegetal with a seal that will be broken when the 
truck or container is opened. In this final rule, we retain the 
requirement for seals and will not require the insect-proofing measures 
we had proposed.
    Although our adoption of a 2-year delay in distribution to 
California, Florida, and Hawaii has led us to retain, at least in part, 
the box marking, port of entry, and repackaging provisions discussed 
above that we had proposed to remove, we have decided to follow through 
with the removal of another measure related to limited distribution, 
i.e., compliance agreements. The compliance agreement provisions that 
were located in Sec.  319.56-2ff(k) were intended to ensure that 
distributors and handlers of the avocados were familiar with the 
distribution restrictions and other requirements of the regulations. 
Given that the distribution restrictions established in this final rule 
cover only three States, and only for a limited time, we believe that 
the time, costs, and logistical difficulties involved in initiating 
compliance agreements with all distributers and handlers of imported 
Mexican Hass avocados in 47 States would outweigh the benefits that may 
be gained by retaining the compliance agreement requirement. The fruit 
stickering, box marking, and repackaging requirements of the 
regulations will serve to ensure that the avocado's origin can be 
determined, and the latter two requirements will ensure that the 
limited distribution statement is present on all boxes of fruit. During 
the 2-year delay, we will focus our efforts on education and outreach 
so that distributors and handlers will be made aware of product origin 
indicators and penalties for violation of regulations. We will be able 
to concentrate our enforcement efforts more readily since the avocados 
will be prohibited in only three States during the 2-year delay, and 
will continue to take action and seek penalties for violations of the 
regulations under the Plant Protection Act.

Determination by the Secretary

    Under section 412(a) of the Plant Protection Act, the Secretary of 
Agriculture may prohibit or restrict the importation and entry of any 
plant or plant product if the Secretary determines that the prohibition 
or restriction is necessary to prevent the introduction into the United 
States or the dissemination within the United States of a plant pest or 
noxious weed.
    The Secretary has determined that it is not necessary to prohibit 
the importation of Hass avocados from Mexico subject to the 
phytosanitary requirements described in this final rule in order to 
prevent the introduction into the United States or the dissemination 
within the United States of a plant pest or noxious weed. This 
determination is based on the findings of the risk assessment referred 
to earlier in this document, and the Secretary's judgment that the 
application of the measures required under Sec.  319.56-2ff would 
prevent the introduction or dissemination of plant pests into the 
United States.
    Based on the Secretary's determination, and in response to the 
Mexican Government's request, we are amending the regulations to expand 
the number of States (plus the District of Columbia) in which fresh 
Hass avocado fruit grown in approved orchards in approved 
municipalities in Michoacan, Mexico, may be distributed and to allow 
the distribution of the Hass avocados during all months of the year.

Comments

    Comment: The U.S. Department of Agriculture's (USDA's) Mexican 
avocado import program has never before operated during warm summer 
months when pest population levels in Mexico are at their peak and 
susceptible crops are in full production in the United States. The 
proposed rule would allow avocados from Mexico to be imported during 
all months of the year, across all States, including those currently 
excluded under the existing rule. By increasing the timeframe to all 
months, the proposed rule includes the time period when pest insects 
are most active and sexually mature, in highly favorable environments 
for infestation on avocados and other host plants.
    Response: The goal of the program continues to be the exclusion of 
any quarantine pests that could become established in the United 
States. Under the modified systems approach semiannual surveys, rather 
than annual, will be conducted at the municipality and orchard level. 
Municipalities must be free of Ceratitis capitata,

[[Page 69751]]

Conotrachelus aguacatae, C. perseae, Heilipus lauri, and Stenoma 
catenifer before they can be certified to export avocados to the United 
States. In addition, orchards must be certified free of Copturus 
aguacatae. Trapping is conducted in orchards for Anastrepha spp. fruit 
flies. Both the regulations and the workplan specify what mitigation 
measures must be taken when a pathway pest is detected in a certified 
orchard or municipality. The time periods selected for the surveys were 
based on the biology of the pests. Additionally, fruit cutting will be 
conducted in the orchard, packinghouses, and at the port of entry. 
Since the expansion of Mexican avocado imports in 1997, none of these 
pests have been intercepted during inspections of fruit at 
packinghouses or upon inspection at the U.S. border ports. Further, the 
limited distribution plan that we will implement would delay the 
importation of Hass avocados from the Mexico State of Michoacan into 
the commercial avocado producing States of California, Florida, and 
Hawaii for 2 years from the effective date of this final rule. This 
restriction will provide APHIS an opportunity to further substantiate 
the effectiveness of the mitigation measures under the expanded 
program.
    Comment: USDA has ignored the fact that stem weevils continue to be 
found in alarming numbers in the Mexican production areas and that 
these insects can easily migrate from backyard orchards to commercial 
groves.
    Response: Registered orchards and all contiguous orchards and 
property are surveyed for the stem weevil, Copturus aguacatae and must 
be found free of the pest. If Copturus aguacatae is detected in an 
orchard requesting certification, eradication must be completed prior 
to the orchard receiving certification to export avocados to the United 
States. If the stem weevil is found in an orchard or property 
contiguous to a certified orchard, eradication measures will be ordered 
for that orchard or property. Surveys for the stem weevil will commence 
in the registered orchard contiguous to the area where the detection 
was found on a weekly basis until eradication of the stem weevil in the 
contiguous orchard has been completed. Since 1997, the stem weevil has 
been detected in 7 orchards that applied for certification. 
Certification was denied due to the presence of the stem weevil. Since 
the expansion of Mexican avocado imports in 1997, no stem weevils have 
been intercepted during inspections of fruit at packinghouses or upon 
inspection at the U.S. border ports.
    Comment: USDA has mistakenly decided that other thrips-related 
insects pose no threat because they are not associated with avocado 
fruit; this is demonstrably false and inconsistent with research done 
by prominent entomologists. Every year a significant percentage of the 
California avocado crop is either downgraded to Grade 2 fruit, for 
which growers receive a lot less money, or is culled or thrown out due 
to thrips damage. Thrips-damaged fruit is unattractive and cannot be 
sold in grocery stores. Why would the USDA allow Mexican fruit known to 
be infested with thrips to be imported into avocado producing areas?
    Response: The risk analysis does not list any thrips as pests that 
would follow the pathway. There are 16 thrips listed in the Appendix A 
pest list. Of the 16 which occur in Mexico, 5 occur in the United 
States. All 16 pests are associated with a plant part other than 
avocado fruit, or in rotting fruit on the ground. For example, research 
(e.g., Hoddle, 2002; Yee et al., 2003, cited in the risk assessment) 
has demonstrated that Scirtothrips perseae, lays eggs in small, 
immature fruits and tender leaves, and does not feed on or lay eggs in 
mature fruit, and is, therefore, unlikely to be imported with the 
fruit. APHIS considers Scirtothrips perseae as probably representative 
of other pest thrips species. Mitigation of these pests in rotting 
fruit is addressed in the workplan and regulation. Avocado fruit that 
has fallen from the trees must be removed from the orchard within 7 
days and may not be included in field boxes of fruit to be packed for 
export. In addition, damaged fruit must be culled at the packinghouse. 
Although Frankliniella bruneri is listed as having been intercepted in 
avocados at the U.S. border, the interception was made in fruit found 
in baggage, not in a commercial shipment imported under the program. 
Since the expansion of Mexican avocado imports in 1997, no thrips have 
been intercepted in program fruit during inspections at packinghouses 
or upon inspection at the U.S. border ports.
    Comment: The USDA import program has grown exponentially since 
1997, from approximately 3,700 to over 53,000 certified acres, 
stretching USDA resources and increasing the probability of human 
error. Believing a screening system can be set up to catch all infested 
fruit at the border is not realistic. Control at the source with 
identification and traceability through the entire chain is required.
    Response: APHIS' role under the operational workplan provided by 
the regulations is to provide management and monitoring of the 
activities specified in the workplan, e.g., trapping, surveying, and 
packinghouse inspections. While APHIS personnel do not necessarily 
conduct these activities themselves, they do monitor Mexican officials' 
compliance with workplan specifications. The staffing level of APHIS 
personnel is sufficient to ensure that APHIS meets its requirements 
under the workplan and that other signatories are in compliance with 
the regulations. The lack of pest detections in the orchard, 
packinghouse, and border inspection since the program began in 1997 is 
evidence that the regulations and workplan are being complied with.
    In addition, as more orchards have applied for certification, it 
does take longer for inspectors to perform the initial inspection 
before the first shipping date of October 15. The inspectors have had 
to start inspections earlier before that date each year to finish 
inspecting all of the orchards. Nevertheless, all orchards must be 
inspected using the same workplan criteria, as the records show. APHIS 
keeps lists of all the orchards inspected by name.
    Comment: USDA should test the proposed expansion regulations under 
actual production and distribution conditions over a 2-year period at a 
minimum before allowing shipments into California, Florida, and Hawaii.
    Response: As noted previously, APHIS has decided, based on the 
comments we received on the issue, to implement a limited distribution 
plan that would delay the importation of Hass avocados from the Mexico 
State of Michoacan into the commercial avocado producing States of 
California, Florida, and Hawaii for 2 years from the effective date of 
this final rule. This restriction will provide APHIS an opportunity to 
further substantiate the effectiveness of the mitigation measures under 
the expanded program.
    As stated in the economic analysis, the volume of Mexican Hass 
avocado exported to the United States is expected to substantially 
increase. In addition, some of the commenters stated that they believed 
the expansion of this program could not be effectively managed. The 
data collected during the first 2 years of the expanded program will 
provide confirmation of the effectiveness of the mitigation measures 
and management of the Mexican Hass avocado export program. Some of 
those data will cover production and distribution periods not 
previously covered by the current regulation.
    Comment: USDA has never allowed untreated fruit to be imported from 
a

[[Page 69752]]

region where quarantine pests are present into a region of the United 
States where the same crop is produced.
    Response: We disagree with the commenter's characterization of the 
proposed action and statement that USDA has never allowed untreated 
fruit to be imported from a region where quarantine pests are present 
into a region of the United States where the same crop is produced. In 
the case of tomatoes from France, for example, we allow the entry of 
tomatoes from France under certain conditions. The tomatoes must be 
produced under a systems approach to mitigate the pest risk of 
Ceratitis capitata, which is a quarantine pest for the United States. 
The systems approach includes trapping for Mediterranean fruit fly, the 
tomatoes must be greenhouse grown, and the tomatoes must be safeguarded 
from harvest to arrival in the United States. In addition, a 
phytosanitary certificate is required. While phytosanitary treatment is 
not an option to mitigate the fruit fly risk, the mitigation measures 
applied to this commodity are equivalent to a pesticide treatment. 
Similarly, under the Mexican avocado import program, Hass avocados are 
subject to a systems approach to mitigating pest risk that produces 
results similar to those achieved through treatment measures.
    Comment: California growers have been unable to gain access to the 
avocado market in Mexico since 1998. Rather than assisting U.S. growers 
in dismantling false trade barriers erected by Mexico, USDA has 
diligently worked with Mexican officials to open up the U.S. avocado 
market to Mexican avocados.
    Response: APHIS officials are aware that U.S. avocado producers 
would like further access to Mexican markets. Initially, APHIS 
officials requested market access for U.S. avocados only to Mexicali 
and Tijuana and successfully opened these markets. Thereafter, APHIS 
requested market access to the five northern Mexican States along the 
border with the United States and more recently informed Mexico that 
our avocado producers are interested in access to all of Mexico. In 
response to APHIS' request, Mexican plant health officials began a pest 
risk assessment for the importation of U.S. avocados to additional 
Mexican markets. This process is similar to the pest risk assessment 
process APHIS conducted prior to publishing the proposed rule to allow 
Mexican avocados further access to our markets. USDA has continually 
pursued the issue of expanded market access for U.S. avocados with 
Mexico, however the next stage of the process cannot take place until 
Mexico completes its risk assessment.
    Comment: Mexican avocado growers have the ability to use pesticides 
on their crops that American growers are prohibited from using. 
American growers are at a disadvantage if they were ever faced with a 
pest infestation, as USDA does not have a method of dealing with an 
infestation that has occurred other than imposing an economically 
devastating quarantine. Additionally, there are concerns about human 
health issues that might arise as a result of pesticide residues.
    Response: Considering the conclusions of the risk assessment and 
given the fact that there have been no interceptions of pests in 
commercial shipments of Hass avocados from Mexico, we do not believe 
that a pest infestation will occur under the expanded program. USDA and 
its State counterparts, however, have a variety of options for dealing 
with pest outbreaks that may occur in this country. The response in any 
particular instance depends largely on the specific circumstances of 
the outbreak.
    In addition, while the United States does not have direct control 
over pesticides that are used on food commodities such as avocados in 
other countries, there are regulations in the United States concerning 
the importation of food to ensure that commodities do not enter the 
United States containing illegal pesticide residues. Because DDT is a 
pesticide that is banned in the United States, even if it were used on 
food commodities in foreign countries, the current regulations 
concerning the importation of food into the United States prevent the 
entry of products treated with it.
    Through section 408 of the Federal Food, Drug, and Cosmetic Act, 
the Environmental Protection Agency (EPA) has the authority to 
establish, change, or cancel tolerances for food commodities. These 
tolerances are the maximum levels of pesticide residues that have been 
determined, through comprehensive safety evaluations, to be safe for 
human consumption. Tolerances apply to both food commodities that are 
grown in the United States and food commodities that are grown and 
imported into the United States from foreign countries. While EPA has 
no authority in a foreign country, the tolerance levels are enforced 
once the commodity enters the United States. Chemicals such as DDT that 
are banned in the United States do not have tolerances on food 
commodities.
    Federal government food inspectors are responsible for monitoring 
food commodities that enter the United States to confirm that tolerance 
levels are not exceeded and that residues of pesticide chemicals that 
are banned in the United States are not present on the commodities. 
Tolerance levels for all chemicals that are acceptable for use on 
avocados may be found in EPA's regulations in 40 CFR 180.101 
through180.2020. Tolerance information can also be obtained at http://www.epa.gov/pesticides/food/viewtols.htm.
    Comment: If USDA expands the Mexican Hass avocado import program as 
proposed, it should ensure that compensation is available for U.S. 
growers in avocado producing areas should a pest infestation occur.
    Response: The Plant Protection Act provides that the Secretary may 
pay compensation to any person for economic losses incurred by the 
person as a result of action taken by the Secretary under the 
extraordinary emergency authority provided in section 415 of the Act (7 
U.S.C. 7715). The determination of an extraordinary emergency would 
depend on the circumstances of an infestation on a case-by-case basis 
and APHIS cannot regulate on this issue at this time since infestation 
has not occurred. Any decision as to the need to declare an 
extraordinary emergency and, if declared, to pay compensation, rests 
with the Secretary.
    Comment: USDA should set up an insurance or indemnification program 
to compensate domestic avocado growers for any damage incurred as a 
result of any pest infestation that may occur as a result of the 
proposed expansion.
    Response: APHIS does not have the authority to establish such a 
program under the Plant Protection Act.
    Comment: Growers in Mexico should have to pay for the quarantine 
insurance for the avocado growers in the United States. While it could 
be argued that all of the previous infestations were the result of 
illegal importation, it is inevitable that legal importation will 
eventually create a domestic quarantine. Requiring the Mexican 
producers to pay for the quarantine insurance would level the economic 
costs. Paying for insurance would also encourage Mexico to rid other 
areas of applicable pests.
    Response: APHIS has no authority to require foreign producers to 
pay quarantine insurance for domestic producers.
    Comment: Mexican avocados should not be imported into the United 
States because of the prevalence of stem weevils, seed weevils, fruit 
flies, thrips, and persea mites in Mexico.

[[Page 69753]]

    Response: APHIS has assessed the risk and determined that there is 
low likelihood of introducing quarantine pests such as stem weevils, 
seed weevils, seed moth, and fruit flies. Nine mites are identified in 
the pest list in Appendix A of the risk assessment. Of the nine mites, 
eight are also present in the United States so those species are not 
considered to be quarantine pests. Only one mite, Brevipalpus 
australis, occurs in Mexico but not in the United States. All the 
identified mites are associated with a plant part other than the 
avocado fruit, or in rotting fruit on the ground and, therefore, are 
not likely to follow the pathway. Since the expansion of Mexican 
avocado imports in 1997, mites have not been intercepted during 
inspections at packinghouses or upon inspection at the U.S. border 
ports.
    The risk analysis does not list any thrips as pests that would 
follow the pathway. There are 16 thrips listed in the Appendix A pest 
list. Of the 16 that occur in Mexico, 5 also occur in the United 
States. All 16 pests are associated with a plant part other than 
avocado fruit, or in rotting fruit on the ground. For example, research 
(e.g., Hoddle, 2002; Yee et al., 2003, cited in the risk assessment) 
has demonstrated that Scirtothrips perseae lays eggs in small, immature 
fruits and tender leaves, and does not feed on or lay eggs in mature 
fruit, and is, therefore, unlikely to be imported with the fruit. APHIS 
considers Scirtothrips perseae as probably representative of other pest 
thrips species. Mitigation of these pests in rotting fruit is addressed 
in the workplan and the regulations. Avocado fruit that has fallen from 
the trees must be removed from the orchard within 7 days and may not be 
included in field boxes of fruit to be packed for export. In addition, 
damaged fruit must be culled at the packinghouse. Although 
Frankliniella bruneri is listed as having been intercepted in avocados 
at the U.S. border, the interception was made in fruit found in 
baggage, not in a commercial shipment imported under the program. Since 
the expansion of Mexican avocado imports in 1997, no thrips have been 
intercepted in program fruit during inspections at packinghouses or 
upon inspection at the U.S. border ports.
    Comment: I am opposed to the expansion of the Mexican avocado 
program into avocado-producing States due to a pest infestation that 
resulted in a quarantine in San Diego County and other counties in 
California in 2002 and 2003 (the Valley Center infestation). The 
quarantine caused financial losses for which we were not compensated.
    Response: The Valley Center infestation in California stemmed from 
unknown origins and not from commercially imported Hass avocados from 
Mexico which were prohibited from entering California at the time.
    Comment: The avocado expansion will jeopardize not only domestic 
avocado production, but all U.S. agricultural products susceptible to 
pests found in Mexico.
    Response: With the exception of fruit flies, the pathway pests 
identified in the risk assessment are avocado specific, thus we expect 
that the commenter is referring to fruit flies in speaking of ``pests 
found in Mexico'' that would affect other U.S. agricultural products. 
The risk assessment identified three fruit flies capable of following 
the pathway. Ceratitis capitata can infest avocado (Liquido et 
al.,1998) and is a quarantine pathway pest. The species is under 
official control in Mexico and is found only on the Mexico-Guatemala 
border (APHIS, 1999). Municipalities participating in the program must 
be certified free from Ceratitis capitata.
    Hass avocados are considered poor hosts for the other two fruit 
flies, Anastrepha ludens and Anastrepha striata, thus those pests are 
unlikely to follow the pathway. Anastrepha ludens, Anastrepha striata, 
and Ceratitis capitata have not been intercepted in any of the more 
than 10 million avocados cut during the course of the program.
    The risk assessment further identifies the conditions that would be 
necessary for fruit flies to be introduced in the United States. Even 
if an infested avocado were to arrive at a region with host material, 
several additional conditions are required for pest establishment: (1) 
The pest must survive in the avocado during transportation and storage; 
(2) the infested avocado must be discarded in close proximity to host 
material; (3) the pest must find a mate; (4) the pest must successfully 
avoid predation and other threats; (5) the adult pest must find 
appropriate host material; (6) suitable climatological and 
microenvironmental conditions must exist; and (7) they must escape 
detection and subsequent eradication measures.
    Comment: Mexican agricultural field workers are not reliable enough 
to consistently follow procedures necessary for pest-free exports from 
Mexico. In contrast, American avocado growers go through an abundance 
of measures to monitor for disease and to contain outbreaks from 
spreading to our neighbor growers.
    Response: The commenter provided no information to support his 
contention regarding the reliability of Mexican field workers. Avocados 
are a commercially important crop in Mexico, and Mexico's continued 
ability to export avocados to markets such as the United States and 
Japan is dependent on its ability to meet the phytosanitary standards 
of those importing nations. It has been our experience that avocado 
producers in Mexico are fully capable of meeting the requirement of the 
regulations and anticipate that they will continue to do so.
    Comment: Eighty-five different Thysanoptera species of thrips have 
been found in Mexican avocados and 24 different mite pest species, 
pertaining to eight distinct families, have been found in Mexican 
avocado plantings. More research should be done into these pests and 
the damage they could incur should they reach an American avocado farm.
    Response: In the latest risk assessment update, the list of 
quarantine pest thrips has been updated. Mites and thrips are not 
likely to be in the commercial import pathway because they are not 
generally associated with mature fruit or remain on mature, harvested 
fruit. None have been intercepted by APHIS with program Hass avocados 
from Mexico. The risk assessment does not list any thrips as pests that 
would follow the pathway. There are 16 thrips listed in the risk 
assessment's Appendix A pest list as occurring in Mexico; of those, 5 
also occur in the United States. All 16 pests are associated with a 
plant part other than avocado fruit, or in rotting fruit on the ground. 
For example, research (e.g., Hoddle, 2002; Yee et al., 2003, cited in 
the risk assessment) has demonstrated that Scirtothrips perseae lays 
eggs in small, immature fruits and tender leaves, and does not feed on 
or lay eggs in mature fruit, and is, therefore, unlikely to be imported 
with the fruit. APHIS considers Scirtothrips perseae as probably 
representative of other pest thrips species. Mitigation of these pests 
in rotting fruit is addressed in the workplan and the regulations. 
Avocado fruit that has fallen from the trees must be removed from the 
orchard within 7 days and may not be included in field boxes of fruit 
to be packed for export. In addition, damaged fruit must be culled at 
the packinghouse. Although Frankliniella bruneri is listed as having 
been intercepted in avocados at the U.S. border, the interception was 
made in fruit found in baggage, not a commercial shipment imported 
under the program. Since the expansion of Mexican avocado imports in 
1997, no thrips have been intercepted during inspections at 
packinghouses or upon inspection at the U.S. border ports.

[[Page 69754]]

    Nine mites are identified in the pest list in Appendix A of the 
risk assessment. Of the nine mites, eight are also present in the 
United States. Only one mite, Brevipalpus australis, occurs only in 
Mexico. All the identified mites are associated with a plant part other 
than avocado fruit, or in rotting fruit on the ground and, therefore, 
not likely to follow the pathway. Since the expansion of Mexican 
avocado imports in 1997, mites have not been intercepted in program 
fruit during inspections at packinghouses or upon inspection at the 
U.S. border ports.
    Comment: The study that served as underlying research for the APHIS 
risk assessment did not test Hass susceptibility to Mexican fruit fly 
at all maturity levels during all-year weather conditions such as 
temperature and humidity. Mexican fruit fly does reproduce in Hass 
avocado, certainly so in harvested fruit. Fruit still on the tree but 
ready to drop is a very probable host. A study should be performed by 
APHIS experts, or by Agricultural Research Service (ARS) experts on 
subtropical fruit pests, and Hass avocado host susceptibility should be 
studied at all potential stages of the Hass avocado during its 
marketing season, i.e., from just barely mature to very mature on-tree 
Hass fruit, as well as fresh, naturally dropped from tree Hass fruit, 
since the fruit could be harvested just before they drop.
    Response: The host studies conducted by Aluja et al. for Anastrepha 
species and Hass avocados in Mexico \2\ did test Hass susceptibility to 
Mexican fruit fly at all maturity levels during all-year weather 
conditions such as the temperature and humidity that occurs during the 
summer months of June, August, and September. The study considered 
fruits of a range of sizes that were commercially mature, and mature 
fruit attached to the tree as well as off the tree. The study concluded 
that this fruit was not considered to be a host for Mexican fruit fly 
under any of these conditions.
---------------------------------------------------------------------------

    \2\ Aluja, M., Diaz-Fleisher, F., and J. Arredondo. 2004. Non-
host status of Persea americana ``Hass'' to Anastrepha ludens, 
Anastrepha obliqua, Anastrepha serpentina, and Anastrepha striata 
(Diptera: Tephritidae) in Mexico. Journal of Economic Entomology, 
volume 97, issue 2, April 2004.
---------------------------------------------------------------------------

    The Aluja et al. study was subjected to rigorous peer review prior 
to its publication and was likewise reviewed by USDA fruit fly experts 
in ARS and APHIS. The input from ARS follows the tradition and 
guidelines of peer review. The ARS experts offered their own 
interpretation of the scope and applicability of the findings. This 
information suggested that we should update our risk assessment, and we 
considered the ARS input in preparing our updates and changing our 
classification of the host status of Hass avocados. We fully intend to 
continue to seek and incorporate ARS expertise and guidance in our risk 
analysis products.
    Comment: Paragraph (e)(1) of proposed Sec.  319.56-2ff provides 
that if Heilipus lauri, Conotrachelus aguacatae, C. perseae, or Stenoma 
catenifer are detected during the semiannual pest surveys, orchard 
surveys, packinghouse inspections, or other monitoring or inspection 
activity in the municipality, the municipality where the pest is found 
will be suspended until APHIS and the Mexican NPPO agree that the 
eradication measures taken have been effective and the risk of the pest 
in the municipality has been eliminated. In order to harmonize 
phytosanitary measures between Mexico and the United States, and given 
that preclearance programs for exports from the United States to Mexico 
do not in any case suspend the export program for a whole county when 
there is a single detection of a quarantine pest, we request that the 
suspension provided for in paragraph (e)(1) be applied to only the 
grove involved, and not the entire municipality.
    Response: Under the regulations, as well as in the proposed rule 
and its final rule, area freedom for Heilipus lauri, Conotrachelus 
aguacatae, C. perseae, and Stenoma catenifer is defined at the 
municipality level. Mexico has requested that we adjust this to the 
orchard level. Such an adjustment would require a change to the 
regulations, and we believe that the public should have the opportunity 
to comment on that change and its underlying basis. Therefore, APHIS 
will take this suggestion under advisement and review whether a pest 
risk analysis must be conducted to address the requested change, if the 
change would provide an equivalent measure of phytosanitary security, 
and whether or not to initiate the rulemaking that would be required to 
make the requested change.
    Comment: Different sensitivities in inspection have not been taken 
into account in the risk assessment.
    Response: The commenter is suggesting that the sensitivity of fruit 
cutting may be different for the eight pathway pests. The estimate for 
the sensitivity of fruit cutting used in the May 2004 risk assessment 
is 50 percent (i.e., an infested fruit would be identified 50 percent 
of the time). Our use of a point value (50 percent) in the quantitative 
model did not include uncertainty about the estimate. APHIS had used 
the average sensitivity of starfruit and grapefruit ([35 percent + 80 
percent] / 2 = 57.5 percent) and rounded down to 50 percent. For 
simplicity we used a point value, confident that this number is a 
reasonable minimum and that the actual value is probably higher.
    For our updated (August 2004) risk analysis, data were reanalyzed 
to determine the effect of variation in the sensitivity parameter on 
the model output. We replaced the 50 percent point estimate with a 
uniform distribution from 17.9 to 83.5 percent. When we used the entire 
range given in Gould (1995, table 3, as cited in the risk assessment) 
of 17.9 percent to 83.5 percent, there was very little change in the 
results. Gould (1995) reported that the sensitivity of detection by 
experienced inspectors of six types of fruit (not including avocado) 
infested with third instar Caribbean fruit fly (Anastrepha suspensa) 
larvae ranged from 17.9 percent for green guavas to 83.5 percent for 
carambolas. In order to account for uncertainty, a uniform distribution 
was used in the analysis presented in Appendix D of the updated risk 
assessment.
    The sensitivity of detection could vary somewhat among pathway 
pests. All of them can damage the fruit pulp when present in the fruit; 
however, the stem weevil (Copturus aguacatae) produces tunnels that are 
usually restricted to a small portion of the fruit close to the 
peduncle. Stem weevil larvae rarely migrate into the fruit, but when 
they do, they are usually localized to the area of the fruit near the 
peduncle (APHIS, 1997; Gudino Juarez and Garcia Guzman, 1990, cited in 
the risk assessment). Inspectors are specifically instructed and 
trained to examine the peduncle end of the fruit for stem weevil larvae 
(APHIS, 1997, cited in the risk assessment). Because of this training 
and because the location of stem weevil larvae is highly predictable 
and usually quite localized, APHIS has determined that the sensitivity 
of detection for stem weevils and other internal avocado pests could 
reasonably be considered to be close to the 50 percent point in the 
17.9 to 83.5 percent range.
    Comment: In the proposed rule, USDA points to the fact that no 
pests of concern have been found in commercial shipments of Mexican 
avocados since the program began. This fact may be true, but the 
Department's reliance on it is misplaced; the dynamic nature of the 
program ensures that the systems approach will not operate in the same

[[Page 69755]]

fashion from one year to the next, and possibility of human error 
increases as the program grows in size. The importance of analyzing 
human reliability factors in the estimation of risk is undisputed. 
Nonetheless, USDA's consideration of human error in the operation of 
its systems approach for Mexican avocados has, to date, been 
inconsequential. The omission of the characterization of failure modes 
and human reliability in the Department's risk assessment is a fatal 
flaw that U.S. avocado growers cannot accept.
    Response: While there will be additional acres under certification 
in Michoacan as well as additional avocado imports, the systems 
approach can be adapted to deal with these increasing requirements. 
Additional staff or additional layers of mitigations may be added to 
deal with issues that arise. APHIS meets yearly to negotiate a work 
plan with Mexican plant health authorities and address issues that 
arose in the previous year's operation. We are confident that adequate 
resources will be available to ensure that the systems approach will 
continue to be effective.
    While past experience is not a perfect guide to future performance, 
there is no reason to believe that we will not be able to rely on the 
effectiveness of the systems approach under conditions that may exist 
in the future. Additionally, there is also no reason to believe that 
the systems approach will remain the same while demand for program 
resources increases. The systems approach is a dynamic process that is, 
and will continue to be, modified to address changes and future needs.
    Comment: Given the very high long-term costs to California avocado 
producers (and the State of California) of a pest introduction from 
Mexican imports, why are all of the pest risk assessments on page 4 of 
the analysis presented at a 95 rather than a 99 percent level of 
confidence? I am sure that producers want a high level of confidence 
that risks are very low or nonexistent.
    Response: The risk assessment's Appendix D was modified to include 
graphic representations of all percentile results for all of the model 
outputs. Both the 95th percentile and the 99th percentile results are 
included in the table of results in the body of the document and in 
Appendix D. The 95th percentile results are as relevant as the 99th 
percentile.
    Comment: I have a problem reconciling the first and last pest risk 
conclusions on page 4 of the proposed rule. The statement that ``fewer 
than 387 infested avocados will enter the United States each year, 
estimated with 95 confidence'' must be based on a different 
distribution than the statement that ``it is slightly more likely that 
zero infested avocados will enter the United States than one infested 
avocado,'' or the distribution has to have a large standard error on 
the high side.
    Response: The number of infested avocados entering the United 
States is not a point value but is represented by a probability 
distribution. A probability distribution presents the range of values a 
parameter can assume (x-axis), plotted against the relative likelihood 
of assuming those values (y-axis). The probability distribution for the 
number of infested avocados entering the United States is presented in 
Appendix D, page 104. The figure indicates that the value with the 
highest relative likelihood (the most likely value) is zero, and the 
mean of the distribution is 122.6.
    A cumulative probability distribution presents the range of values 
a parameter can assume (x-axis), plotted against the likelihood of 
assuming those values or less (y-axis). The cumulative probability 
distribution for the number of infested avocados entering the United 
States is presented in Appendix D, page 104. The 95th percentile value 
for the number of infested avocados entering the United States is 387. 
The 95th percentile of a parameter is the value in the data set for 
which 95 percent of the values are below it and 5 percent are above. 
The distribution for the number of infested avocados entering the 
United States is skewed to the left, and has a tail to the right.
    The most likely value or mode is the value that occurs most often 
in a set of values. In a histogram and a result distribution, it is the 
center value in the class or bar with the highest probability. In this 
case, the most likely value is zero.
    Comment: The statement in the APHIS risk assessment comparing the 
probability of entry of zero versus one infested avocado is not at all 
useful. A more relevant comparison of probabilities is between zero and 
one or more infested avocados entering the United States. In addition, 
a description of the statistical distributions (i.e., mean and 
variance) that these statements are based on would help the reader to 
better understand the nature of the risks.
    Response: Appendix D has been modified to include mean and standard 
deviations for all model output results. The mode of the distribution 
is zero; therefore, zero infested avocados entering the United States 
is more probable than one.
    Comment: The consideration on behalf of the USDA to import foreign 
fruit motivates foreign growers to purposely smuggle and introduce 
insects into U.S. growing areas so as to overcome the opposition to 
import, such as was suggested in the Valley Center Mexican fruit fly 
infestation which cost growers millions.
    Response: While the origin of the Valley Center outbreak has not 
been determined, we have no information to suggest it was the result of 
an intentional introduction of pests as the commenter contends.
    Comment: The public must be informed about where the transportation 
of avocados is prohibited and where it is not. The public must also be 
informed that they are prohibited from personally transporting avocados 
into the United States, even if commercial (inspected) avocados are 
permitted. Public education is even more critical within the avocado 
growing and producing States of Florida, California, and Hawaii. How 
does the USDA propose to educate the public about this proposal? If 
there is a trial period, how does the USDA plan to inform the public in 
Florida, California, and Hawaii that commercially produced Mexican 
avocados are still prohibited into those States? The public will not 
see a difference between these two scenarios and it is not discussed 
within the proposal. I fully expect to see serious increases in 
inadvertent movement of fruit from Mexico.
    Response: The general public will be notified of the change in the 
Mexican avocado program and its specific restrictions through this 
rulemaking process and through Agency outreach and the media by way of 
press releases, fact sheets, publications, and other materials that 
help explain APHIS programs. The Agency's outreach efforts are 
coordinated with those of the States in order to extend their coverage. 
Federal inspection officers at ports of entry will continue to inspect 
members of the public returning to the United States and will seize any 
agricultural items, including avocados, that are prohibited from 
entering the country.
    Comment: In light of the ARS conclusion that Hass avocados are a 
very poor host for Anastrepha fruit flies, it would seem logical for 
APHIS to at least lower some of the very costly elements of the systems 
approach in Michoacan that are targeted at Anastrepha spp. fruit flies. 
Yet, instead of decreasing the requirements aimed at fruit flies in 
Michoacan, APHIS has left the requirements for fruit fly trapping 
completely intact. This means that when Anastrepha spp. flies are 
found, a list of unnecessary regulatory actions must take place, 
including the needless application of pesticides.

[[Page 69756]]

    Considering the consensus that the Hass avocado is a very poor 
pathway for Anastrepha spp. fruit flies, it would seem logical to 
replace the current restrictions requiring the need for a full fruit 
fly trapping program with a fruit fly monitoring program. Additionally, 
in light of the proposal to remove the specific details of the seed and 
stem pest surveys from the regulation and insert them into the 
phytosanitary work plan, it would also make sense to remove the 
specific language referring to this fruit fly monitoring activity from 
the regulation and, for the sake of consistency, insert it into the 
phytosanitary work plan as well. This way, as the discussion on the 
host status of the Hass avocado continues to evolve, there will be no 
need to go through the rulemaking process to make adjustments to this 
section of the regulation in the future.
    Response: Removing the details for fruit fly trapping was not 
considered at the time the proposed rule was published and, therefore, 
we will not remove those details in the final rule. We will, however, 
consider this issue for future rulemaking.
    Comment: USDA should ensure that the surveys and detection 
trappings in Mexico occur during all 12 months of the year to ensure 
that monitoring for all potential pests is sufficient for all the 
listed pests and occurs during all the potential detection periods 
(instead of the proposed semiannual surveys).
    Response: The semiannual municipality and orchard surveys are 
required for initial certification and to maintain certification later 
on. There is year-round trapping for fruit flies, which is performed in 
support of a separate APHIS program, and packinghouse and border 
inspections will occur on a continual basis. Other pests of concern are 
surveyed at specific times of the year based on the biology of those 
species. The regulations provide for the suspension of an orchard or 
municipality from the program at any time as a result of the detection 
of specified pests during the semiannual pest surveys, orchard surveys, 
packinghouse inspections, or other monitoring or inspection activity.
    Comment: We disagree with the APHIS proposal to replace the 
requirement to seal each consignment moving from the packing shed to 
the border with a new requirement for the avocados to be packed in 
insect-proof boxes, loaded in insect-proof containers, or covered with 
insect-proof mesh or plastic tarpaulin prior to leaving the packing 
shed so that in the very infrequent occurrence of a shipment being 
stopped for inspection by Mexican authorities, fruit flies or 
hitchhiking pests will not enter. It is not logical to add those 
requirements for the following reasons:
    <bullet> Refrigerated containers do not attract fruit flies or 
other subtropical pests. In fact the opposite is true. Refrigerated 
containers present a very inhospitable environment for tropical and 
subtropical arthropods. Additionally, such conveyances do not provide 
an adequate environment for insect activity such as oviposition.
    <bullet> If the Hass avocado is not a host to the fruit flies that 
occur only in rather small numbers in Michoacan, then fruit fly-
proofing the shipment is completely unnecessary.
    <bullet> Actual fruit fly host materials such as mangos, citrus, 
tomatoes, and peppers, which are routinely shipped from Mexico to the 
United States, are not subject to such a requirement, nor is it 
necessary.
    <bullet> Fruit fly/insect proof requirements on commodities such as 
tomatoes from Israel or citrus from Spain are in place because the 
fruit is often subject to long periods of exposure to the environment 
while awaiting shipment to the United States at seaports or airports. 
One hundred percent of the Hass avocado shipments destined to the 
United States from Mexico are safeguarded in insect-proof warehouses 
prior to being sealed in insect-proof, refrigerated trailers.
    Based upon this reasoning, we believe that the current sealing 
requirement is adequate and should remain in place.
    Response: After careful consideration of the comments, APHIS has 
decided to retain the provisions regarding sealing of containers. In 
the proposed rule, we stated that our reason for changing from sealing 
of containers to pest proof boxes, for safeguarding purposes, was 
because some containers had been arriving at the port of entry with 
broken seals. Seals could and were being broken by Mexican authorities, 
to inspect containers for contraband. When the containers were 
inspected by Mexican authorities, we were concerned that the shipment 
could be exposed to possible infestation.
    Upon further investigation, APHIS found that Mexico has effectively 
addressed the issue of shipments arriving with broken seals. If a seal 
is broken by a Mexican official, that official is to provide a specific 
document stating that he/she has broken the seal. If the documentation 
is not provided, U.S. inspectors use various methods to determine if 
the shipment had been tampered with.
    Data collected at the border reflects that Mexico has taken steps 
to adequately address the broken seal issue. The number of shipments 
that arrived at the ports of entry with broken safeguarding seals 
decreased considerably, from 690 shipments in the 2002/2003 season to 
231 in the 2003/2004 season. Of the 231 shipments arriving with a 
broken seal during that last season, more than 86 percent had 
documentation from the Mexican official who broke the seal. In 
addition, the data show that none of the shipments arriving with broken 
seals were compromised or infested with pests. As the commenter noted, 
refrigerated containers present a very inhospitable environment for 
tropical and subtropical arthropods and such conveyances do not provide 
an adequate environment for insect activity such as oviposition. We 
agree with the commenter as our data supports this statement.
    Based on the above, we will continue to require sealing of shipping 
containers at the packinghouse to safeguard each consignment as it 
transits Mexico to the United States. This will not affect the results 
or conclusions of the risk assessment. As long as sufficient measures 
remain in place to safeguard the avocados during transit to the United 
States, the conclusion of the risk assessment that likelihood of 
introduction of quarantine pests is low will remain the same. 
Therefore, this final rule does not require the avocados to be packed 
in insect-proof cartons, loaded in insect-proof containers, or covered 
with insect-proof mesh or plastic tarpaulin prior to leaving the 
packinghouse.
    Comment: Five years ago, the USDA representatives presented a plan, 
called the ``systems approach to pest risk mitigation.'' The plan was 
evaluated by two models, using the Monte Carlo modeling engine. The 
first model, that of no import restrictions, was compared to the second 
model, that of the systems approach. Had the evaluation established a 
model for the current environment at the time, that of a complete ban 
on Mexican avocado imports, the systems approach could never have 
generated acceptable numbers in the modeling engine. Model 1, no 
restrictions, indicates a likelihood of infestation by the seed weevil 
in an average of 95 years, seed moth in 355 years, and the fruit fly in 
72 years. Model 2, the systems approach, indicates a likelihood of 
infestation by the seed weevil or fruit fly in 10,000 years, and by the 
stem weevil in 11,000 years. In reality, a complete ban on Mexican 
avocado imports into California in the current environment has led to 
two Mexican fruit fly infestations in the last 5 years.

[[Page 69757]]

Infestations by persea mite, thrips, and other pests have also occurred 
within the last 12 years.
    Response: Contrary to the commenter's conclusion that prior 
infestations in California were the result of APHIS policy, there is no 
evidence linking any infestations with commercial Hass avocados from 
Mexico imported under the program regardless of a model used to predict 
risk. The current APHIS risk assessment based its predictive model on 
detection samples for the quarantine pests of concern. The samples were 
program fruits cut during orchard certification surveys, packinghouse 
inspections, and at the border. This produced a sample of over 10 
million fruit taken over 6 years of the import program. The results of 
the model are presented as expected numbers of infested avocados 
entering the United States annually.
    Comment: The fruit fly study does not address susceptibility of 
late season avocado to infestation. From my own grove operation, I have 
noted the following late season fruit quality characteristics which 
could influence fruit susceptibility to insect infestation:
    <bullet> Fruit oil content is higher than early season fruit;
    <bullet> Seed tap root pushes through bottom of avocado giving easy 
access to fruit interior;
    <bullet> Fruits start ripening on the tree; and
    <bullet> Handling time window shortens; mature fruit ripen quicker.
    The fruit fly is not the only insect pest of concern. How does late 
season avocado fruit impact the occurrence of stem and seed weevils? 
What other late season Mexican insect pests must the industry be 
concerned with? USDA has failed to account for the possibility of the 
harvest of mature, ripe avocados that could harbor fruit fly eggs and 
larvae.
    Response: The Aluja et al. fruit fly study included avocados tested 
on the tree at maturity levels from low to high percentage dry matter, 
indicating early and late season fruit. ARS reviewed the study and 
concluded that commercial Hass avocados are a very poor host for 
Mexican fruit fly and did not single out any maturity stage on the tree 
as particularly vulnerable. APHIS has concluded, based partly on the 
ARS findings, that there is a low likelihood of Anastrepha species of 
fruit flies being in program fruit. APHIS recognizes that other 
internal quarantine pests analyzed in the risk assessment may be 
present in mature fruit, but that systems approach measures maintain 
the low likelihood of their introduction in program fruit, which has 
been validated by the fruit sampling that has been conducted over 6 
years of the program.
    Stem weevils are found in all varieties of avocados and can be 
especially abundant in trees not managed under the program. Stem 
weevils can be detected both by visual examination of cut fruit and by 
the highly visible exudates the larvae leave on tree branches. Orchards 
will be surveyed semiannually for stem weevil, and if weevils or weevil 
signs are found, certification is denied or suspended. Additionally, if 
stem weevil larvae are found in fruit cut at the packinghouse or at the 
border, the regulations require the removal of the originating orchard 
from the program immediately and avocado exports from that orchard will 
be suspended until APHIS and the Mexican NPPO agree that the pest 
eradication measures taken have been effective and that the pest risk 
within that orchard has been eliminated.
    Additionally, and as previously stated, USDA considers mature, 
commercial Hass avocados to be a very poor pathway for thrips. Several 
research studies (e.g., Hoddle, 2002; Yee et al., 2003, cited in the 
PRA) have demonstrated that Scirtothrips perseae, the avocado thrips 
(which APHIS considers as probably representative of other pest thrips 
species) lays eggs in small, immature fruits and tender leaves, and 
does not feed on or lay eggs in mature fruit, and is, therefore, 
unlikely to be imported with the fruit. This is supported by the fact 
that there have been no thrips interceptions by APHIS on commercial 
Hass avocados from Mexico since the program began.
    Comment: In order to provide time to reconcile critical issues on 
safe agricultural import practices and create parity in U.S./Mexican 
trade policy, there should be no expansion of Mexican avocado imports 
beyond the 31 currently approved States for a period of 7 years. During 
that time, U.S. avocado producers should have unrestricted access to 
designated Mexican markets with allowances for comparable levels of 
export (tonnage). Also during the 7-year period, the USDA should:
    <bullet> Conduct a comprehensive research program on U.S. avocado 
farms to document existing exotic pest and disease problems;
    <bullet> Monitor U.S. avocado farms to measure the increase or 
decrease to U.S. avocado production and costs from exotic pests; and
    <bullet> In conjunction with the California and Florida avocado 
commissions, verify Mexico's compliance with and support of the U.S. 
avocado export program.
    After this 7-year period, USDA may consider easing restrictions 
subject to the following conditions:
    <bullet> U.S. avocado farms experience no significant additional 
impacts due to exotic pests or expanded quarantines;
    <bullet> U.S. avocado exports to Mexico have reached a comparable 
equilibrium measured in tonnage and price with Mexican avocado exports 
to the United States; and
    <bullet> No new research or data demonstrate greater future risk 
from exotic pests or diseases from expanding Mexican avocado imports 
into additional U.S. States.
    Assuming these conditions have been met, USDA may propose to allow 
further Mexican exports to U.S. States other than California and 
Florida and the States which directly border California.
    Response: APHIS has no authority under the Plant Protection Act to 
prohibit or restrict the entry of an article merely to create parity in 
trade between the United States and another nation. Further, as a 
signatory to the International Plant Protection Convention, the United 
States has agreed not to prescribe or adopt phytosanitary measures 
concerning the importation of plants, plant products, and other 
regulated articles unless such measures are made necessary by 
phytosanitary considerations and are technically justified. Based on 
the conclusions of the APHIS risk assessment, we do not believe that 
there is a technical justification for the 7-year delay or other 
measures suggested by the commenter. We have, however, implemented a 2-
year delay for imports into and distribution within California, 
Florida, and Hawaii in response to other comments we received on the 
proposed rule. This restriction will provide APHIS an opportunity to 
further substantiate the effectiveness of the mitigation measures under 
the expanded program.
    Comment: USDA's proposed rule on the Mexican Hass avocado import 
program includes several proposed changes to the protocol under which 
the program operates. For example, the Department has proposed 
conducting semiannual, rather than annual, pest surveys at the 
municipality and orchard levels. We support the idea of semiannual 
surveys during the wet and dry seasons. It is appropriate, too, to 
leave the details of how and when surveys will be conducted to the 
annual work plan developed by Mexico's national plant protection 
organization and APHIS. In our view, it is imperative, however, that 
areas with wild or backyard avocado trees continue to be included in 
pest surveys conducted at the municipality level. These areas represent 
the greatest

[[Page 69758]]

potential source of infestation or reinfestation of export orchards.
    Response: The proposed rule did not include a proposal to eliminate 
the surveying of areas with wild or backyard avocado trees during 
municipality surveying. The proposal was to eliminate specific language 
on the surveys from the regulations because this information would be 
included in the workplan. Areas with wild or backyard avocado trees 
will continue to be surveyed.
    Comment: The regulations in Sec.  319.56-2ff (c)(2)(iii) state that 
``avocado fruit that has fallen from the trees must be removed every 7 
days and may not be included in field boxes of fruit to be packed for 
export.'' I request and strongly recommend this permissive ``may'' be 
strengthened to a mandatory ``must'' or ``shall.''
    Response: The phrase ``may not be included'' does not contain a 
``permissive'' element as the commenter suggests. As written, the text 
of Sec.  319.56-2ff (c)(2)(iii) serves as clear prohibition on the 
inclusion of fallen fruit in field boxes of fruit to be packed for 
export.
    Comment: Serious program infirmities must be addressed before 
expansion can occur: There are no standardized procedures, training, or 
oversight for fruit cutting; fruit cutting techniques are ineffective 
at detecting the eggs, first instar, and second instar larvae of fruit 
flies or the stem weevil, rendering USDA's risk probabilities 
unreliable; improper pest survey timing has underrepresented pest 
population levels; fruit fly trapping methodology and servicing are 
flawed; fruit fly response and treatment procedures are inadequate. The 
inspection process is not sufficient. USDA inspectors may simply drop 
an avocado into a slicer and check for a mature worm rather than using 
a loupe (a portable microscope lense). The larvae for almost every pest 
are not visible to the naked eye. Additionally, the Department of 
Homeland Security (DHS) is now doing port inspections that focus more 
on drugs, guns, etc., than plant pests.
    Response: Regarding training and oversight for fruit cutting, 
inspectors are trained to detect pathway pests based on the biology of 
the pest and what signs or symptoms of infestation to look for. They 
have hand lenses that they may use, if they need them, to complete an 
inspection. Pest damage, rot, and most stages of each of the internal 
pests are visible to the trained inspector. APHIS is aware that there 
is a possibility that a pest may escape detection and has accounted for 
this uncertainty in the current risk assessment. Fruit cutting is only 
one of the multiple measures of the systems approach that mitigates 
pest risk.
    Survey timing: Under the modified systems approach, semiannual 
surveys will be conducted at the municipality and orchard level. 
Municipalities must be free of Ceratitis capitata, Conotrachelus 
aguacatae, C. perseae, Heilipus lauri, and Stenoma catenifer before 
they can be certified to export avocados to the United States. In 
addition, orchards must be certified free of Copturus aguacatae. 
Trapping is conducted in orchards for Anastrepha spp. fruit flies. Both 
the regulations and the workplan specify what mitigation measures must 
be taken when a pathway pest is detected in a certified orchard. The 
time periods selected for the surveys were based on the biology of the 
pests. Additionally, the fruit cutting will be conducted in the 
orchard, packinghouses, and at the port of entry. Since the expansion 
of Mexican avocado imports in 1997, none of these pests have been 
intercepted during inspections of fruit at packinghouses or upon 
inspection at the U.S. border ports.
    Fruit fly trapping is modeled after other APHIS programs for 
consistency, and the actions are based on the biology of the pests and 
fruit fly detections.
    Comment: Because of insufficient analysis, USDA should subject its 
risk assessment to rigorous, external peer review, to incorporate the 
best science available and to establish a more credible research base 
for its decision to allow imports to particular States. Serious program 
deficiencies must be addressed before Mexico is allowed to expand 
exports to additional States. For example, there are no standardized 
procedures, training, or oversight for fruit cutting during pest 
inspections. Fruit cutting techniques are ineffective at detecting the 
eggs and larvae of fruit flies or the stem weevil, thus rendering 
USDA's risk probabilities unreliable. Additionally, improper pest 
survey timing has underrepresented pest population levels; fruit fly 
trapping methodology and servicing are flawed; and fruit fly response 
and treatment procedures are inadequate. I urgently request that this 
program be suspended for further study by independent experts in the 
field and in consultation with the industry because the scientific 
basis for allowing Mexican fruit into the United States was based on a 
joint USDA-Mexico study for one growing season in Mexico. This study is 
a very small basis upon which to overthrow 80 years of exclusion and 
contains much that is controversial and open to question.
    Response: The APHIS risk assessment has been made available for 
public review twice. First, we made the draft risk assessment available 
for public comment for a total of 90 days through a notice of 
availability published in the Federal Register on June 16, 2003 (68 FR 
35619, Docket No. 03-022-1), and a subsequent extension of the comment 
period (68 FR 48595-48596, Docket No. 03-022-2, published August 14, 
2003). An updated version of the risk assessment was also made 
available for public comment for an additional 60 days as part of our 
May 2004 proposed rule. We received numerous comments regarding the 
risk assessment in both instances, including comments from professional 
risk analysts, private risk consultants, and university and government 
scientists, and updates have been made to the risk assessment to 
address those comments. Further, the fruit fly study (Aluja et al. 
2004) noted by the commenter that is cited in the risk assessment was 
subjected to rigorous peer review prior to its publication in the 
Journal of Economic Entomology and was likewise reviewed by USDA fruit 
fly experts in ARS and APHIS. The input that APHIS received from ARS 
follows the tradition and guidelines of peer review. The ARS experts 
offered their own interpretation of the scope and applicability of the 
findings. This information suggested that we should update our risk 
assessment, and we considered the ARS input in preparing our updates 
and changing our classification of the host status of Hass avocados. We 
believe that these documents do, in fact, provide a credible research 
base for our decisionmaking with regard to the expansion of the Mexican 
avocado export program to additional States and the Secretary's 
determination is based on the findings of the risk assessment and her 
judgment that the application of the measures required under Sec.  
319.56-2ff would prevent the introduction or dissemination of plant 
pests into the United States, thus we do not believe that the program 
suspension recommended by the commenter is appropriate.
    The specific issues raised by the commenter regarding fruit 
cutting, pest surveys, inspection, and fruit fly trapping are addressed 
in the response to the previous comment.
    Comment: In the proposed rule, APHIS states that even if an 
infested avocado were to arrive in an area of the United States where 
host material was present, several additional conditions are required 
for pest establishment (i.e., the pests survive during transportation 
and storage; the infested avocados must

[[Page 69759]]

be discarded in close proximity to host material; the pests must find 
mates; the pests must successfully avoid predation; the adult pests 
must find host material; the climatological and microenvironmental 
conditions must be suitable; and they must escape detection and 
subsequent eradication measures). APHIS admits that information that 
would allow quantifying these conditions is not currently available. 
Without that information, how can the Secretary conclude that it is not 
necessary to restrict Mexican avocados for phytosanitary reasons?
    Response: As stated in the proposed rule and in this document, the 
Secretary's determination is based on the findings of the risk 
assessment and her judgment that the application of the measures 
required under Sec.  319.56-2ff would prevent the introduction or 
dissemination of plant pests into the United States. The risk 
assessment contains both quantitative and qualitative elements, and our 
final expression of a likelihood of introduction is a descriptive 
statement. The results of the quantitative analysis do not equate to 
likelihood of establishment. Rather, they express the likelihood of an 
infested avocado being discarded in a suitable location; establishment 
and spread would require the additional steps noted by the commenter, 
which substantially reduce the likelihood of establishment. People 
generally consume the fruit they purchase and dispose of the waste 
material in a manner (such as in plastic bags that are landfilled or 
incinerated \3\) that precludes the release of pests into the 
environment. For these reasons, our final expression of a likelihood of 
introduction is a descriptive statement. These factors, in combination 
with the results of the quantitative analyses, led APHIS to conclude 
that the likelihood of establishment of infested avocados through the 
commercial pathway of Hass avocados imported from the State of 
Michoacan and produced using the systems approach is low.
---------------------------------------------------------------------------

    \3\ Citations pertaining to disposal patterns can be found on 
pages 9 and 36 of ``Importation of Avocado Fruit (Persea americana 
Mill. var. ``Hass'') from Mexico: A Risk Assessment,'' September 17, 
2004.
---------------------------------------------------------------------------

    Comment: Much is made in the risk assessment of the maximum 
likelihood estimate of the number of infested avocados imported in any 
year being zero. However, a more interesting statistic, from the point 
of view of the agricultural industry, is the probability of no infested 
avocados being imported in any year. From this one can calculate the 
probability of importation of infested fruit over a period more 
meaningful to agriculture. For tree crop agriculture, 20 years or more 
is a meaningful planning horizon, and the formula p20 = 1-(pi )20 where 
p20 = the probability that 1 or more infested fruit will be introduced 
during a 20 year period and pi = the probability of no infested 
avocados being imported (assuming pi for i = 1 to 20 are independent) 
in any year. This p20 can be adjusted for the likelihood that any 
imported infested fruit will result in establishment of the pest in a 
producing area, as presented in the text. From this estimate of the 
probability of establishment of the pest, multiplied by the cost of 
eradication plus losses to growers, one can calculate the expected cost 
of allowing the importation of Mexican avocados. This calculation has 
much more meaning to the industry than the mere statement that the 
probability of infestation from imported avocados (in any one year) is 
``low.''
    Response: The risk assessment was prepared to assist APHIS in 
evaluating Mexico's request to expand the scope of the existing Hass 
avocado import program. As such, its purpose was to analyze the risks 
of expanding the Mexican Hass avocado import program to authorize 
imports throughout the United States year-round. Although the method 
presented by the commenter for estimating the likelihood of no infested 
avocados being imported in any year could produce useful information 
from the point of view of the agricultural industry, it does not appear 
that the endpoint sought by the commenter--i.e., the ``expected cost of 
allowing the importation of Mexican avocados''--could be achieved in a 
meaningful way. Two of the factors that would be considered in the 
calculation proposed by the commenter--the cost of eradication plus 
losses to growers--could vary enormously, depending on the nature and 
scope of the pest outbreak to be eradicated and the effects the 
particular pest might have on production, so the final estimates would 
necessarily be very broad in their range.
    Comment: With respect to the risk assessment, USDA has ignored the 
directive of the Congressional Appropriations Committee, which stated 
``The Committee directs APHIS to include independent, third party 
scientists in the development of any PRA for Mexican avocados prior to 
the publication of any PRA in the Federal Register.'' Further, USDA 
ignored fundamental disagreements between its own scientists regarding 
the conclusions drawn by the underlying research data, and has not 
released that research data, thus not allowing time for independent 
review before the risk assessment was issued. Finally, the USDA has 
assigned only a minimum crew of 11 men to survey and monitor an 
increase of Mexican avocado acreage from 3,700 acres in 1997 to over 
53,000 certified acres.
    Response: On June 16, 2003, APHIS published a notice in the Federal 
Register to inform the public of the availability of a new draft PRA 
that was prepared in response to the Mexican Government's request that 
the avocado import program be expanded to include all 50 States for the 
entire year. In accordance with the Committees' direction to include 
independent, third party scientists in the development of PRAs for the 
avocado program, APHIS scientists consulted with independent subject 
matter experts from a variety of accredited academic institutions 
during the development of the draft PRA. These institutions included, 
among others, Florida A&M University, the University of Florida, and 
the Institute of Ecology in Veracruz, Mexico. APHIS scientists also 
consulted with ARS researchers from various locations, including Hawaii 
and Texas. APHIS extended the original comment period on the PRA for an 
additional 30 days and accepted public comments on the assessment until 
September 15, 2003. The public comment period served as an additional 
opportunity for all members of the public, including independent 
researchers and members of academia, to evaluate the draft PRA. After 
reviewing all the comments, we determined that it was appropriate to 
move ahead with a proposed rule. We reported our action to the 
Committee prior to publishing the proposed rule.
    As noted above, APHIS solicited the opinion of ARS scientists 
regarding the fruit fly research presented in Aluja et al. (2004) and 
worked with those scientists to understand the similarities and 
differences between our Agencies' interpretations of the conclusions 
drawn in the study. The APHIS position was to initially agree with Dr. 
Aluja's findings that commercially packed Hass avocados are not a host 
of Mexican fruit flies. ARS took a slightly more conservative position 
that those avocados are a very poor host of the Mexican fruit fly. The 
difference in the categorization of the Hass avocado's host status did 
not effect the level of risk in the APHIS risk assessment. APHIS did, 
in the final analysis, change its categorization of the Hass avocado 
host status based on ARS's conclusions. Changing our conclusions on the 
host status made it then necessary to calculate the pest risk for fruit 
fly in our risk assessment. After performing these calculations, we 
found the likelihood of

[[Page 69760]]

fruit fly infestation through commercial shipments of Hass avocado from 
Mexico to be very low. The pest risk did not change as a result of 
labeling the fruit fly as a poor host rather than a non-host.
    The Aluja et al. research used in the APHIS risk assessment was 
published in the Journal of Economic Entomology in April 2004. Because 
the proposed rule was published on July 23, 2004, and was open for 
public comment for 60 days, we believe that the research was available 
to the general public with ample time for examination. Because the 
Aluja et al. study had already been accepted for publication in 2003, 
it was unavailable for distribution during the June-September 2003 
comment period for the draft PRA.
    Finally, as previously stated, APHIS' role under the operational 
workplan provided by the regulations is to provide management and 
monitoring of the activities specified in the workplan, e.g., trapping, 
surveying, and packinghouse inspections. While APHIS personnel do not 
necessarily conduct these activities themselves, they do monitor 
Mexican officials' compliance with workplan specifications. The 
staffing level of APHIS personnel is sufficient to ensure that APHIS 
meets its requirements under the workplan and that other signatories 
are in compliance with the regulations. The lack of pest detections in 
the orchard, packinghouse, and border inspection since the program 
began in 1997 is evidence that the regulations and workplan are being 
complied with.
    In addition, as more orchards have applied for certification, it 
does take longer for inspectors to perform the initial inspection 
before the first shipping date of October 15. The inspectors have had 
to start inspections earlier before that date each year to finish 
inspecting all of the orchards. Additional inspectors would be hired to 
inspect the increased acreage within the required time-frame. If the 
inspection does not occur within that timeframe, the orchards would not 
be certified. All orchards must be inspected using the same work plan 
criteria, as the records show. APHIS keeps lists of all the orchards 
inspected by name.
    Comment: Limiting Mexican fruit to colder climates makes sense. 
Maybe Mexican fruit could be allowed only if it were packaged and 
processed in a frozen type of product.
    Response: Some types of processed avocado products are allowed into 
the United States and can go to all States. Whether or not the 
processed product is allowed in depends on whether the processing 
mitigates any pest risk. Frozen avocados are allowed entry if they meet 
these requirements:
    <bullet> An import permit is required,
    <bullet> The seeds must be removed; and
    <bullet> The avocados must be at or below 20 [deg]F at the time of 
arrival at the port of entry. If the temperature of the avocados is 
higher than specified, the avocados will be required to meet the import 
requirements of fresh avocados.
    As we discussed in the proposed rule and in this final rule, we do 
not believe it is necessary to limit the importation of Mexican 
avocados to cooler climates because of the mitigations in place and the 
findings in our risk assessment.
    Comment: Cultural practices used by Mexican avocado growers, 
including unsanitary Mexican growing conditions in which human waste is 
used, could cause illness in U.S. consumers.
    Response: APHIS has no information to suggest that human waste is 
used in avocado production in Mexico. Even if it were used in some 
cases, the fact that avocados are a tree fruit make it unlikely that 
avocados on the tree would be contaminated as a result.
    Comment: Regarding this proposal to establish limitations on the 
entry of Hass avocados into States with commercial production of 
avocados in the United States, we believe that the scientific support 
contained in the Aluja et al. study, which documents the scientific 
evidence showing that the Hass avocado is not a host for Anastrepha 
spp. fruit flies, together with there having been no detections of 
quarantine pests throughout 7 years of exporting, ensures an adequate 
level of plant health protection for the United States, including the 
avocado-producing areas.
    The above is also supported by the risk assessment prepared by USDA 
in which the probabilistic analysis, based on the information from cut 
fruit exported to the United States, establishes that the annual number 
of fruits infested by quarantine pests imported into the United States 
is zero.
    Response: To provide APHIS an opportunity to further substantiate 
the effectiveness of the mitigation measures under the expanded program 
as discussed in our risk assessment on pages 4, 10, and 11, APHIS has 
decided to delay for 2 years the implementation of the importation of 
Hass avocados from Mexico into all 50 States. Rather, APHIS will allow 
for the immediate importation of those avocados into all States except 
for California, Florida, and Hawaii, which are avocado producing 
States, to monitor the program and gather efficacy data under 
production conditions during all months of the year. While APHIS has 
concluded in the risk assessment that there is low likelihood of 
introduction of fruit flies based on the findings of the Aluja et al. 
study, as well as the conclusion of ARS that commercial program Hass 
avocados are a ``very poor host'' of Mexican fruit fly and our own 
analysis of detections based on over 10 million fruit sampled over 6 
years of the import program, we believe the delay will offer the 
opportunity to further substantiate these findings. In the risk 
assessment, APHIS was asked to determine the likelihood of introduction 
of quarantine pests of concern in program Hass avocados from Mexico. 
Based on the above evidence presented in the risk assessment, a finding 
of ``non-host'' for Anastrepha spp. fruit flies was not necessary for 
APHIS to draw the conclusion of low likelihood of introduction. During 
the near future, however, APHIS plans to work with Mexico, ARS, and 
independent researchers in the scientific community to form a consensus 
on the host status issue of the Hass avocado and Anastrepha spp. fruit 
flies.
    Comment: To protect our avocado-growing States from inadvertent 
transmission of infested fruit, buffer zones of additional States is a 
must. There is ample clientele for Mexico to sell, promote, and educate 
outside our vulnerable areas. Mexican producers' insistence to sell 
fruit in California and other growing areas shows proof of their intent 
to destroy their competitors by causing pest infestations in an area 
that would not have the tools to deal with the infestation because of 
government regulations.
    Response: APHIS has determined that the likelihood of introduction 
of quarantine pests of concern would not be significantly reduced by 
buffer States any more than just prohibiting movement into or through 
California, Florida, and Hawaii for 2 years for the following reasons:
    1. The likely buffer States, which would be Alabama, Arizona, 
Georgia, Nevada, and Oregon, do not produce avocados or have special 
quarantine regulations against avocados moving through their States or 
moving into the prohibited States, but California and Florida do have 
adequate quarantine regulations against certain agricultural products 
moving within them. Since Hawaii is an island, it would not need 
``buffer States.''
    2. The avocado-growing area of Florida is confined to the southern 
half of the peninsula, therefore the State's northern counties serve as 
buffers to the producing counties. The avocado-growing areas of 
California are more extensive, but they are either bordered

[[Page 69761]]

by the Pacific Ocean on the west, large expanses of mainly desert 
counties of California or desert areas of Nevada and Arizona to the 
east, a wide expanse of non-avocado-growing counties to the north, and 
Mexico to the south.
    Comment: I strongly oppose any provisions that would allow Mexican 
Hass avocados to enter Florida until at least 1 year's worth of 
monitoring data, both within Mexico and shipments to other States, has 
been collected to demonstrate that the shipments are free of plant 
pests of quarantine significance. Scientific data should be provided 
that proves that the Mexican Hass variety of avocados is, under all 
environmental conditions, resistant to all fruit flies known to be 
established in Mexico. There is concern that environmental conditions 
may cause the avocado to ripen prematurely while still on the tree and 
therefore making it susceptible to fruit flies. I would also like to 
receive information regarding the Mediterranean fruit fly trapping 
program that is being utilized in Hass avocado production areas in 
Mexico.
    Response: As previously stated, APHIS is implementing a 2-year 
delay on the importation of Hass avocados from Mexico into California, 
Florida, and Hawaii. Additionally, in their review of the Aluja et al. 
fruit fly research, ARS noted that there were some larvae that 
developed in a few infested fruit, that the conditions enabling the 
larvae to develop were not known, and that viable adults were not 
produced. Even allowing for the few larvae, ARS experts still concluded 
that the fruit were a ``very poor host'' of Mexican fruit fly. The 
Aluja et al. research included fruit at all levels of maturity 
including fruit off of the tree that had been allowed to ripen for 
three hours. The conclusion was that fruit still on the tree was not a 
host for the fruit fly.
    The Mexican Mediterranean fruit fly trapping areas include all of 
the avocado-growing areas of Michoacan. APHIS monitors all aspects of 
the pest detection protocol in all avocado producing municipalities 
that export to United States, including trapping for Medfly. Under our 
regulations, Medfly is trapped at a density of 1 trap per 1 to 4 square 
miles. Any findings of Medfly must be reported to APHIS.
    Comment: There are a number of issues of concern not addressed in 
the underlying research and the APHIS risk assessment used to justify 
the expansion of the Mexican Hass avocado import program. These issues 
are:
    <bullet> The APHIS risk assessment does not provide scientific data 
covering phenology of fruit or the changes in soluble solids throughout 
the year as it relates to pest infestation;
    <bullet> Traceback methods have been ineffective in the past;
    <bullet> The movement of fruit from an area of low pest prevalence 
may not be accurate. The number of infested fruit could be much higher 
than predicted;
    <bullet> There is no information about temperature ranges during 
exposure period and effect of temperature changes on quarantine pests;
    <bullet> USDA has never clarified how the Mexican fruit fly 
infestation entered Valley Center, CA, in 2002.
    Response: The Aluja et al. study did include the summer months 
June, August, and September as well as other months, fruits of a range 
of sizes that were commercially mature, and mature fruit attached to 
the tree as well as off the tree. This covered a range of fruit sizes 
and soluble solid ranges. APHIS and ARS both concluded, based on the 
study, that the fruit were a very poor host for Mexican fruit fly. 
Fruit of a range of sizes and solid content have been present on the 
trees during the 6-month shipping season, and only mature fruit are 
exported, which may represent a range of soluble solid contents. 
Sampling is done throughout the shipping period as well as in the 
orchards before the season, so a range of soluble solid contents that 
may occur in mature fruit would be in the sampled fruit. The shipping 
season, which has occurred during a 6-month period with wide 
temperature fluctuations, and the inspections conducted during that 
period were considered in the risk assessment. The risk assessment 
describes fruit sampling by other researchers that included most months 
of the year when pests would be likely to be found.
    Regarding tracebacks, because no infested exported fruit have been 
detected in 6 years of sampling, no tracebacks have been necessary in 
the program. However, because of required labeling on the boxes, the 
necessary information is available to trace fruit back to packinghouses 
and orchards if necessary.
    Additionally, APHIS has monitored infestation through inspection of 
program exported fruit. Predictions of infestation are based on the 
inspections. The ``area of low prevalence'' concept is not an element 
of the systems approaches that is relied upon under the importation 
program. In relation to fruit flies, orchard trapping and subsequent 
eradication if there is a detection are required under the program.
    Finally, as stated previously, the Valley Center infestation 
stemmed from unknown origins and not from a legally imported commercial 
Hass avocado shipment from Mexico, which were prohibited from entering 
California. The Mexican fruit fly could have been introduced into 
California through a number of pathways, including the smuggling of 
many different kinds of fruit.
    Comment: Allowing Mexican avocados into California would be a 
signal to the public that it is permissible to bring avocados across 
the border from sources that have not been inspected. Therefore, USDA 
should formulate a rule that includes a permanent provision to not 
allow Mexican Hass avocados to be imported into California or any other 
avocado-producing State.
    Response: It is stated in the regulations that commercial shipments 
of Hass avocados from Mexico cannot be imported or distributed into 
California, Florida, and Hawaii for the first 2 years of the expanded 
importation program. Inspectors will continue to check returning 
travelers for unapproved agricultural commodities, including avocados. 
Our regulations are enforceable under the provisions of the Plant 
Protection Act.
    Comment: Based on the results reported in the Aluja et al. study, 
which established that the avocado should be considered a non-host for 
Anastrepha spp. fruit flies, we request that A. ludens and A. striata 
be removed from the list of pests of Hass avocados grown in Mexico that 
follow the pathway.
    Response: APHIS has concluded in the risk assessment that there is 
low likelihood of introduction of fruit flies based on the finding of 
ARS that commercial program Hass avocados are a ``very poor host'' of 
Mexican fruit fly, and on analysis of detections based on over 10 
million fruit sampled over 6 years of the import program. During the 
near future, however, APHIS plans to work with Mexico, ARS, and 
independent researchers in the scientific community to form a consensus 
on the host status issue of the Hass avocado and Anastrepha spp. fruit 
flies. At that time we will evaluate all Anastrepha spp. fruit flies 
and determine which species should be removed from the pest list.
    Comment: For reasons not known, it appears that APHIS has accepted 
the unsupported and seemingly arbitrary opinion of ARS over the 
conclusions of a team of scientific experts, headed by one of the 
foremost fruit fly researchers in the world, after 2 years of exacting 
research on the precise issue, and subsequently peer reviewed and 
published in the Journal of Economic Entomology. In short, a three-page 
memo based upon the opinion of two

[[Page 69762]]

ARS researchers with limited history in this area, containing one 
reference to a study that was done on a different avocado, in a 
different environment, with different insects has overruled the years 
of painstaking research and the peer reviewed study published in the 
Nation's leading relevant scientific journal.
    Even the California Avocado Commission (CAC) supports this concept. 
On December 20, 2002, in a letter to Dr. Richard Dunkle, Deputy 
Administrator, USDA-APHIS-PPQ, an official of the CAC requested an 
``alternative protocol'' that would allow Hass avocado growers in the 
core area of the Valley Center Mexican fruit fly outbreak in California 
the opportunity to harvest and distribute Hass avocados under a system 
that mirrors the Mexican Hass avocado export program. Surely, the CAC 
would not make this request if they thought that the Hass avocado would 
pose the threat of moving Anastrepha spp. fruit flies out of the 
quarantined area into other areas of California and the country.
    Response: The claim that non-experts from ARS provided input is 
incorrect. Whereas those particular ARS experts may not have published 
extensively on fruit flies, a biological scientist is perfectly able to 
review documents for scientific validity. The input from ARS follows 
the tradition and guidelines of peer review, and the ARS experts did 
not say that the article from Aluja et al. was invalid; rather the ARS 
experts offered their own interpretation of the scope and applicability 
of the findings. This information suggested that we should update our 
risk assessment, and we considered the ARS input in preparing our 
updates. We fully intend to continue to seek and incorporate ARS 
expertise and guidance in our risk analysis products.
    Comment: The Mediterranean fruit fly (Ceratitis capitata) is not 
present in Mexico. Only two outbreaks have occurred along the border 
between Chiapas and Guatemala, which were treated through the National 
C. capitata Campaign, in which the Governments of the United States, 
Mexico, and Guatemala participate, and those outbreaks were controlled. 
For this reason, there is no justification for establishing measures to 
prevent the introduction of this pest by means of the entry of Mexican 
Hass avocados into the United States, since the avocado exporting zone 
is located far away from the site of the outbreaks in Chiapas.
    Response: While the Mediterranean fruit fly is currently considered 
eradicated in Michoacan, there have been occasional limited outbreaks 
beyond those cited by the commenter. Therefore, APHIS will continue 
monitoring for Medfly. APHIS continues to consider Mediterranean fruit 
fly monitoring and control as important elements of the Hass avocado 
program systems approach, as avocados are considered to be a good host 
of Mediterranean fruit fly. The pest is regarded in the risk assessment 
as a quarantine pest that could be in the pathway if it is detected in 
the avocado-producing area.
    Comment: An expansion of the Mexican Hass avocado import program 
will lead to increased air pollution and unsafe Mexican truck traffic.
    Response: USDA has no authority over emissions or safety standards 
for Mexican trucks.

Comments on the Economic Analysis

    A number of commenters raised issues regarding the economic 
analysis that accompanied the proposed rule. These issues are grouped 
into three sections: The model and analysis, effects for California 
avocado producers, and other comments.

The Model and Analysis

    Comment: The base period for the analysis is October 15, 2000, 
through October 15, 2002, with base figures being an average of these 2 
years. A possible problem with the use of these 2 years is that the 
rules for Mexican avocado imports changed, effective November 2001, and 
only 1 of the 2 years included the expanded number of States and time 
period that are currently effective. This choice of base period tends 
to understate likely Mexican imports.
    Response: We agree with the commenter and have changed the baseline 
used in the analysis for this final rule to the 2-year period October 
15, 2001, to October 15, 2003.
    Comment: There is evidence that the producer level price elasticity 
of demand may be even less than the -0.57 [used in the proposed rule]. 
If a more inelastic coefficient were used (-0.50 or lower), the 
estimated price impacts of Mexican imports on California producers 
would be greater, especially in the short run.
    Response: USDA agrees with the commenter that price elasticity of 
demand seems to have generally decreased over time. However, year-to-
year fluctuations occur, due to changes in real price levels. In the 
analysis for the proposed rule, the elasticity of demand was adjusted 
downward from an earlier study (``An Economic Evaluation of California 
Avocado Industry Marketing Programs 1961-1995,'' by Hoy F. Carman and 
R. Kim Craft, Giannini Foundation Research Report Number 345, 
University of California, July 1998), from -0.75 to -0.57. In the 
analysis for this final rule, the price elasticity of demand used for 
California avocados is -0.63, based on the parameters estimated in 
Carman and Kraft and the observed level of per-capita consumption and 
the real producer price of California avocados from our baseline data. 
This elasticity is somewhat higher than that used in the analysis for 
the proposed rule due to a higher real producer price in the new 
baseline.
    The commenter provides an equation by which he has estimated a 
price elasticity of -0.53 at average prices and quantities, and an 
average of -0.44 for the period 1996/1997 through 2000/2001. (We 
presume that the description of Q<INF>t</INF> as consumption of 
avocados from all sources is a notational error, since the equation is 
supposed to represent the demand function for only California 
avocados.)
    The small changes suggested by the commenter would affect the 
results of the analysis insignificantly. As the commenter himself 
states, ``Estimated coefficients from a recent demand function indicate 
that the f.o.b. [free-on-board] level price elasticity of demand for 
California avocados may be slightly more inelastic than -0.57, but this 
should have only a small effect on the final estimates.'' The overall 
conclusions of the study in terms of net social benefits of the rule 
would still hold.
    Comment: Mexico's market share in currently approved States during 
Period 1 (October 15 through April 15) is understated in the analysis 
for the proposed rule because the baseline is not current. A more 
current baseline would show Mexico's larger market share, thereby 
affecting the shift parameters and resulting in larger Mexican imports.
    Response: We agree with the commenter. Based on the updated 
baseline (October 15, 2001, to October 15, 2003) used in the analysis 
for this final rule, we find nearly an 11 percent increase in Mexico's 
market share in the currently approved region and time period, from 
57.5 percent to 68.3 percent.
    Comment: The retail food sector has significant market power. At 
the very least, the analysis should point out that retailers 
(middlemen) will use their market power to capture a portion of the 
welfare gains.
    Response: If food retailers do possess some degree of market power 
in pricing avocados, we agree that retailers will

[[Page 69763]]

use their market power to capture some of the welfare benefits. 
However, this will largely represent a change in the distribution of 
the welfare gains from the proposed rule, with some of the benefits 
being transferred from consumers to retailers. There will be some 
increase in the deadweight loss due to an increase in the retail 
margin, but the magnitude of deadweight loss is typically a very small 
portion of the overall welfare change.
    As the commenter suggests, we acknowledge in the analysis for this 
final rule that if retailers do possess market power in the pricing of 
avocados, a portion of the welfare gains to consumers will be 
transferred to retailers, with a resulting small deadweight loss. In 
this case, the overall welfare gain will be slightly overstated.
    Comment: The price elasticity of supply used in the analysis, 0.35, 
is overly elastic. Perennial crop acreage adjustments are lagged and 
occur over many years. California production will change very little in 
the first year or two after a rule change, with the result that prices 
may be lower than projected for several years. The decrease in supply 
will occur over time as some producers go out of business and others 
remove trees in response to low prices and returns.
    Response: The elasticity of supply used in the analysis for the 
proposed rule was based on elasticities used in previous avocado 
studies. We agree with the commenter that there will be limited 
opportunity for producer adjustments during the first year following 
publication of the final rule. In the analysis for the final rule, the 
time assumed for moving to the new equilibrium is 2 years. Due to the 
uncertainty of the magnitudes of the supply and demand elasticities in 
the model, we conduct a sensitivity analysis that considers alternative 
elasticity values. For the supply elasticity, we consider a range of 
0.05 to 0.65. As is reported in the analysis accompanying this final 
rule, the estimated standard deviations of the estimated changes in the 
producer price of California avocados are relatively small. Thus, the 
model results are not very sensitive to the choice of the value of the 
supply elasticity within this range.
    Comment: The initial values for the shift parameters for Region A 
during Period 1 should be applied to Regions B and C during Period 1. 
Adjustment of the shift parameters for Period 2 (April 15 to October 
15) in all three regions will be a judgment call. I suggest that the 
parameter for Mexico must be increased significantly (at least to 
midway between Chile's parameter for Period 2 and Mexico's parameter 
for Region A, Period 1), with proportional reductions in the parameters 
for the United States and Chile.
    Response: For time period 1, we disagree that the initial values of 
the shift parameters for Region A should be applied to Regions B and C. 
First, consumers in Region A have been able to purchase fresh Hass 
avocados from Mexico for an extended period of time; since 1997 for 
some consumers. Because individual preferences are usually thought to 
evolve slowly over time, applying the shift parameters for Region A to 
the other regions during Period 1 would likely overstate the increase 
in demand for Mexican avocados. We believe that it is more likely that 
consumers in Regions B and C will maintain a slight preference for 
California avocados, at least in the short run. This belief is based on 
the observation that the quantity market shares for avocados from 
California and Chile for Regions B and C in the baseline data for the 
final rule are almost equal. The wholesale price premium for California 
avocados in both regions implies a preference towards California 
avocados. (The initial values of the shift parameters are approximately 
0.6 for California avocados and 0.4 for Chilean avocados.) This 
preference may be a result of marketing activities by the Californian 
Avocado Commission or consumer perceptions that fruit from California 
is fresher than fruit from Chile. In the analysis of the final rule, 
the shift parameters for Regions B and C during Period 1 are adjusted 
to 0.4 for California avocados and 0.3 each for Chilean and Mexican 
avocados.
    For period 2, we disagree with the commenter that the shift 
parameters for Mexican avocados should be increased significantly. Due 
to seasonality in production, we believe that the preference parameter 
for Californian avocados should be higher in Period 2 than in Period 1. 
More fresh avocados are available from California than from Chile and 
Mexico during the summer months and therefore the shift parameter for 
California avocados should be larger for this time period. In the 
analysis accompanying this final rule, the shift parameters for 
California avocados in Regions A and B are approximately equal to 0.65, 
and the preference parameters for Chilean and Mexican avocados are each 
approximately equal to 0.175. Using this pattern of shift parameters, 
the empirical model estimates that approximately 60 percent of total 
Mexican and Chilean exports will occur during Period 1. This closely 
matches historical seasonal export shares for both Mexico and Chile.
    Comment: Mexican producers with avocados certified for export to 
the United States have a choice to ship to the United States or to a 
domestic Mexican market, with the choice of shipping destination based 
on where the avocados will return the highest net price to the 
producer. Given average wholesale prices in Mexico, I would expect 
Mexican producers to continue to ship avocados to the United States 
until U.S. prices decreased to that available for domestic shipments. I 
do not have the ``break-even'' producer price for Mexican shipments to 
the domestic or U.S. export markets, but it could be estimated. I would 
expect this price to be significantly less than $0.63 per pound (the 
producer price used in the analysis for the proposed rule); perhaps 
less than $0.50 per pound. A realistic Mexican farm price for analysis 
of the proposed rule change, one that accounts for domestic marketing 
opportunities in Mexico, should be estimated and entered into the 
model.
    Response: Mexico exports only about one-tenth of its production (in 
2002, about 94,243 metric tons out of 897,231 metric tons), so we would 
generally not expect export prices to have a large effect on Mexico's 
domestic prices. Moreover, the export and domestic markets are 
different in their production requirements. For exports to the United 
States (the destination of half of Mexico's exports in 2003), the 
required risk mitigation measures mean higher costs of production--
costs readily borne because of the much higher net returns compared to 
domestic sales. We expect that most of Mexico's avocado producers have 
limited access to export opportunities because they cannot satisfy the 
risk mitigation requirements, and perhaps because of commercial and 
infrastructural limitations as well. Mexican growers, however, are 
currently exporting to the United States only a fraction of the 
avocados they could export from already approved orchards and 
municipalities in the State of Michoac[aacute]n, thus the rule does 
assume a substantial increase in imported Mexican avocados.
    We agree with the commenter that producers with certified fields 
will prefer to export to the United States as long as there is an 
export premium to be gained. Because the average U.S. wholesale price 
of Mexican avocados is substantially less than the wholesale prices of 
California and Chilean avocados, we would not expect significant 
decreases in the U.S. wholesale and farm prices of Mexican avocados. 
Thus, we believe that any

[[Page 69764]]

price premium enjoyed by Mexican producers from exporting to the United 
States will be maintained. Because exports are a small share of total 
avocado production in Mexico, even a large increase in exports will not 
likely substantially affect the Mexican domestic price.
    Comment: The analysis assumes that recent price differentials 
between California, Chilean, and Mexican Hass avocados will continue. I 
believe that a portion of the differential will disappear over time as 
Mexican shippers improve their quality of pack and as they establish 
relationships with large U.S. buyers.
    Response: The model does indicate a reduction in price 
differentials with the increase in imports from Mexico, as shown in the 
following table of the results of the analysis for the proposed rule.

------------------------------------------------------------------------
                                                 Wholesale
                                                 prices in    Wholesale
                                                the initial  prices with
                                                               the rule
                                                equilibrium
------------------------------------------------------------------------
Supply region:
  California..................................        $1.63        $1.43
  Chile.......................................         1.29         1.20
  Mexico......................................         1.14         1.14
Price differences:
  California-Chile............................         0.34         0.23
  Chile-Mexico................................         0.15         0.06
  Mexico-California...........................         0.49         0.29
------------------------------------------------------------------------

    Comment: We generally concur with the evaluation and offer the 
following perspectives for consideration in reviewing the model. We 
believe that the increase in consumption of 10.4 percent utilized in 
the model may be overly conservative. The introduction of Mexican grown 
avocados over a period of 7 years has resulted in an increase of over 
400 percent in the consumption of avocados in the approved States. We 
believe that the quality of Mexican avocados, coupled with targeted 
promotional activities, may likely yield a higher growth in consumption 
than is assumed within the model. We believe that the impact of future 
imports from Chile will have a greater effect than is being projected 
in the model. Chilean avocado growers have invested significantly in 
new avocado groves that will increase the volume of fruit exported to 
the United States in the near future. Approximately 95 percent of 
Chilean avocado exports are destined for the U.S. marketplace, and it 
is unlikely that these exports will be reduced regardless of the 
opening of the U.S. marketplace to Mexican Hass avocados. We believe 
that greater consideration should be given to the impact that the 
proposed rule will have on the domestic Mexican avocado market. We 
believe that historical domestic consumption rates coupled with the 
reaction of prices in the domestic Mexican markets as a result of 
decreases in the domestic supply of avocados will have a significant 
impact. If Mexican domestic prices increase substantially, it is likely 
that the Mexican avocado producers will choose to supply quantities 
that are less than those contemplated in the model. A significant 
adjustment in volumes from those assumed in the model may have a 
considerable impact on the results of the analysis.
    Response: We acknowledge the significant growth in consumption of 
avocados from Mexico in the approved States, but also note that this is 
the region and time period of weakest demand for California avocados. 
We do not expect the same market dominance by Mexican imports in the 
currently non-approved States, especially during the summer months.
    The model shows continued strong participation in the U.S. avocado 
market by Chile. Notwithstanding the expected decline in prices earned 
and quantities supplied by that country, the model shows that with the 
rule, prices and quantities of Chilean avocados will remain higher than 
those of Mexican avocados.
    The difference between Mexican domestic and export wholesale 
avocado prices is significant. Compared to an average wholesale price 
during the baseline period in the United States of $1.08 per pound, the 
average wholesale price per pound in Mexico was $0.46 in 2001, $0.37 in 
2002, and $0.46 in January through October 2003. There will be price 
adjustments in Mexico in response to increased exports to the United 
States, but we do not believe that increases in Mexican domestic prices 
will significantly affect expected export levels.
    Comment: I believe that the USDA is being negligent in concluding 
that the U.S. economy will have a significant net welfare benefit from 
the proposed rule. According to your own economic analysis (May 19, 
2004), the proposed rule will result in a net welfare loss of somewhere 
around $85 million to the California avocado producers. However, in 
that same analysis you admit that you cannot reasonably predict the 
impact to the California producer. In fact, you conclude that the cost 
to producers could be as high as $114 million. Shouldn't we know with 
reasonable certainty whether it will cost producers $114 million or 
not? It is important to know because if the impact is $114 million, it 
will substantially eliminate the $115 million gain to the consumer.
    Response: The results of the analysis for the proposed rule were 
tested for their sensitivity to changes in the parameters used in the 
model. The range in values from the sensitivity analysis for the loss 
in producer surplus did include $114 million as an extreme upper end-
point value. Larger losses in producer surplus for Californian 
producers are associated with larger decreases in the price of 
California avocados, which also create larger welfare gains for 
consumers. In the preliminary economic analysis (May 19, 2004), the net 
change in U.S. welfare was approximately $31 million with a standard 
deviation of $2.3 million. Assuming a normal distribution, a 95 percent 
confidence interval for the net change in welfare would be 
approximately $26.5 million to $34.5 million.
    Comment: The analysis reports that small entities are a factor to 
be considered, and that 98 percent of the producers are small entities. 
However, it does not report how much weight is to be given to this 
factor. I believe that it should be given much weight. This proposed 
rule could wipe out 6,500 avocado growers for the benefit of a handful 
of large Mexican avocado producers. Other ramifications would include 
the handlers, the fertilizer suppliers, the grove managers, equipment 
suppliers, the City of Fallbrook, CA, etc. Are these ramifications 
insignificant to the USDA? If not, then why have they not been 
accounted for?
    Response: As discussed in other responses, the California avocado 
industry will not be eliminated by the rule, although producers will 
incur price and quantity declines due to increased avocado imports from 
Mexico. Expected losses for California's producers are evaluated as 
part of the expected benefits and costs of the rule. As stated in the 
Small Business Administration's ``A Guide for Government Agencies: How 
to Comply with the Regulatory Flexibility Act [RFA]'' (page 1): ``The 
RFA does not seek preferential treatment for small entities, require 
agencies to adopt regulations that impose the least burden on small 
entities, or mandate exemptions for small entities.''
    We recognize that their will be indirect and induced effects of the 
rule, especially in avocado-growing localities. We note that while some 
U.S. entities will be indirectly affected negatively, others will 
benefit indirectly from the increase in imports from Mexico.

[[Page 69765]]

    Comment: An in-depth economic and business assessment should be 
done to take the needed measures to avoid a negative impact in the 
agricultural businesses of California and Texas.
    Response: An economic and business assessment of measures that 
could be taken to avoid negative agricultural impacts is beyond the 
scope of the regulatory impact analysis.
    Comment: How is it Chile presently ships in avocados with no 
appreciable drop in price? We know this because we hear a common 
complaint from friends who say the fruit seems to get smaller but stays 
the same price.
    Response: The increased supply of Mexican avocados will result in 
lower wholesale and producer prices for Californian and Chilean 
suppliers. Chile has exported avocados to the United States for many 
years, and the impact of imports from Chile on the aggregate price for 
avocados would need to be considered in terms of a base period. The 
aggregate price for avocados and relative prices for California, 
Chilean, and Mexican avocados depend on a variety of market influences, 
including promotional activities.
    Comment: Increased imports from Mexico would increase consumption 
of all avocados.
    Response: We expect that increased supply of Mexican avocados will 
cause a reduction in the demand for higher-priced avocados from 
California and Chile, and an increase in the total demand for avocados.
    Comment: The analysis of effects for small entities should be 
redone using the 2002 Census of Agriculture.
    Response: In the analysis prepared for this final rule, we cite the 
2002 Census of Agriculture.

Effects for California Avocado Producers

    A number of commenters emphasized the financial hardship and 
negative economic effects the rule will cause California avocado 
producers, with several stating that jobs will be lost and avocado 
farms will be put out of business.
    Three examples of these types of comments are the following:
    <bullet> USDA's economic analysis estimated that opening all of the 
United States all year to Mexican imports will reduce the price that 
California growers receive by about 20 percent. When you consider that 
avocado growers in the United States make less than a 10 percent margin 
on their crops, this proposal will mean an end to avocado production in 
the United States.
    <bullet> Our county has enacted laws restricting the use of 
agricultural land for any other purposes. These types of laws have been 
upheld in court. Because Mexico clearly has cost advantages that cannot 
be enjoyed in the United States, many of our farms may no longer be 
economically viable. Our farms cannot be retooled like factories to 
produce different parts. We have trees that would have to be destroyed 
and replanted with other crops. Many growers are in situations like 
mine where the only possible alternate crop is lemons. It would take 
over 5 years and enormous costs to make that change. Right now that 
does not look like a practical option.
    <bullet> The California avocado industry is made up almost entirely 
(98 percent) of small business entities. Most of these entities are 
likely to go out of business if the proposed rule is implemented. What 
now brings $330 million into the U.S. economy, and provides tens of 
thousands of jobs, could be destroyed forever.
    The following comment received from the Office of Advocacy of the 
U.S. Small Business Administration encapsulates many of these issues:
    ``APHIS documented the impacts as a percentage of revenue lost in 
California, but it doesn't go the next extra step to examine how that 
might impact growers. The agency should determine profit margins for 
growers and examine how the impact will affect their bottom line, 
perhaps by using average industry profit margins for appropriately 
sized agricultural firms. This could reveal a potentially important 
impact caused by one parameter in the model. Specifically, very 
inelastic supply of avocados by California producers means that while 
prices fall dramatically, California growers don't reduce production 
much. Thus, California producer costs do not decrease nearly as much as 
their revenues, which drop over 30 percent. This undoubtedly will 
strain profit margins and suggests that there potentially could be 
significant business closures among growers--particularly among very 
small growers--who may exit the market. APHIS should consider 
completing a profitability analysis that will assess the possibility of 
business closures. Ideally, the model should also include a more long 
run market analysis that will allow entry and exit of producers. It 
seems likely that with the possibility of exit, and the relatively 
elastic supply of Mexican avocados, the losses to California growers 
will be greater in the long run than in the short run.''
    Response: California producers will be economically harmed by the 
rule, but not as severely as they would be if there were no delayed 
access of Mexican Hass avocados into California, Florida, and Hawaii. 
As shown in the analysis for this final rule, we have no reason to 
expect the demise of the California avocado industry.
    The question of effects of the rule on small entity profit margins 
is not easily addressed. Each avocado farm draws upon a unique set of 
human and capital resources and marketing arrangements that define its 
financial position and prospects. Profit margins vary among firms and 
from one season to the next. Nonetheless, the Agency agrees with the 
commenter that small-entity producers with recent histories of small or 
negative profit margins may be placed at risk by the rule.
    As an indicator of possible effects, we reproduce in the following 
table part of the results of a profitability analysis published in 
2002. The table shows returns to management (returns per acre above 
cash and non-cash costs) for various price-yield combinations. For 
example, for a yield of 5,000 pounds per acre, a drop in price from 
$1.10 to $1.00 per pound would mean returns to management declining 
from $276 per acre to a negative $224 per acre.
    The profitability analysis was based on avocado orchard 
establishment and production practices considered typical in Ventura 
and Santa Barbara Counties. The results are applicable to the economic 
analysis to the extent that costs and returns in Ventura and Santa 
Barbara Counties in 2001 are similar to those for California Hass 
avocado producers generally between October 2001 and October 2003. With 
the rule, California producer prices are shown to fall from $1.02 to 
$0.81 per pound. Using the price-yield combinations from the table, 
farms with yields of at least 7,000 pounds per acre would still show 
positive returns to management (although total returns would be reduced 
due to the 7.3 percent decline in California's overall supply indicated 
by the model). Farms with yields of 6,000 pounds per acre would move 
from positive to negative returns to management. Farms with yields of 
5,000 pounds per acre or less would probably not be providing positive 
returns to management to begin with, given the initial baseline price 
of $1.02 per pound. The 2003-2004 estimated average yield for Hass 
avocado orchards in California is 6,865 pounds per acre (California 
Avocado Commission, http://www.avocado.org/growers/pages/2000_38.php?sd=growers).

[[Page 69766]]



                         Returns to Management per Acre for Various Yields and Prices, Ventura and Santa Barbara Counties, 2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Yield in pounds per acre
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                 10,000
                                                                                                                                              ----------
                                                         3,000      4,000      5,000      6,000      7,000      7,500      8,000      9,000     Dollars
                                                                                                                                                per acre
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars/pound:
$0.70................................................    -$2,871   - $2,298    -$1,724    -$1,151      -$557      -$290        -$4       $570     $1,143
0.80.................................................     -2,571     -1,898     -1,224       -551        123        460        796      1,470      2,143
0.90.................................................     -2,271     -1,498       -724         49        823      1,210      1,596      2,370      3,143
1.00.................................................     -1,971     -1,098       -224        649      1,523      1,960      2,396      3,270      4,143
1.10.................................................     -1,691       -698        276      1,249      2,223      2,710      3,196      4,170      5,143
1.20.................................................     -1,371       -298        776      1,849      2,923      3,460      3,996      5,070      6,143
1.30.................................................     -1,071        102      1,276      2,449      3,623      4,210      4,796      5,970     7,143
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Table 7 of ``Avocado Sample Establishment and Production Costs and Profitability Analysis for Ventura and Santa Barbara Counties, Based on 2001
  Data Collected in Ventura and Santa Barbara Counties, California,'' by Etaferahu Takele, Ben Faber, and Silvana Chambers, UCCE Southern California.

    The rule may contribute to some small entity avocado farms failing, 
if their operation is already showing borderline returns. We note that 
the California avocado industry has been trending toward fewer 
operations, with expansion only among the very largest producers. 
Overall, the number of avocado farms in California dropped by nearly 20 
percent between 1997 and 2002, from 5,963 to 4,801 farms. This decline 
in the number of avocado farms is on top of a 16 percent decline 
between 1992 and 1997. There was a decrease in the number for farms of 
all sizes except those with 100 or more acres (which increased in 
number from 99 in 1997 to 114 in 2002), and the smaller farms 
experienced the larger percentage declines. Even without this rule, 
avocados farms are becoming fewer, with the sharpest decline for those 
of smallest size.
    Comment: APHIS should analyze the potential impact to the very 
small growers with less than 5-acre plots, and potentially those in the 
next higher size category as well. As it stands, the analysis for the 
proposed rule mentions only that it is likely these growers produce 
other agricultural products in addition to avocados because of the 
small revenue earned from avocado production. To analyze profitability 
and business survival, a proper baseline of revenues for these 
producers would need to be established, including revenues from all 
production, so that the losses from diminished avocado revenues could 
be properly analyzed. One way to accomplish this might be to assume 
that these growers would earn revenues equivalent to the average small 
farm in California.
    Response: In the analysis for the proposed rule, we took note of 
the large number of very small avocado farms. The 1997 Census of 
Agriculture data showed over half of the avocado farms that year 
harvested less than 5 acres. Average 1997 receipts for these farms was 
about $4,800.
    We did not intend to imply that these smaller avocado producers 
grow other crops, but only that their average annual revenue from 
avocado production would necessitate other sources of income. We agree 
that to properly analyze impacts of the rule for small entities, we 
would need to have data on these other revenue sources, but this 
information is not available. If all revenue sources for small entity 
avocado producers could be obtained, it would likely indicate a wide 
range of income from a variety of sources. We have no basis for 
assuming that agricultural receipts for California's small entity 
avocado growers are on average equivalent to revenues earned by other 
small entity farmers in that State. Other Comments
    Comment: In its analysis, APHIS mentions that California, Florida, 
and Hawaii produce avocados. However, the analysis included in the 
proposed rule only discusses the impact on California producers. While 
it is clear that Hawaii produces avocados for intrastate consumption, 
there should be some discussion of the impact of the rule on Florida 
producers. For example, the rule should identify the number of 
producers in Florida and estimate how many are small and thus will be 
impacted by the rule.
    Response: Production of Hass avocados in Florida and Hawaii is 
negligible, and therefore producers in those States will not be 
directly affected by the rule. The green-skin avocado varieties grown 
in Florida and Hawaii and Hass avocados grown in California are weak 
substitutes for one another and should not be compared, as evidenced by 
the large difference in their prices. The 2003-2004 average prices per 
ton were $2,170 for California avocados (where the Hass variety is 
dominant), $1,240 for Hawaii avocados, and $808 for Florida avocados 
(USDA NASS, ``Noncitrus Fruits and Nuts 2003 Summary,'' July 2004). In 
the model, green-skin avocado varieties are included with other goods 
that compete with Hass avocados for the consumer's dollar. Whatever 
indirect impacts the rule may have on small entity avocado producers in 
Florida and Hawaii are expected to be small, all the more so given the 
2-year delay of entry of Mexican Hass avocados into those States.
    Comment: The permanent reduction in California avocado acreage 
because of the rule will lead to the loss of open space and costs of 
urbanization that are not taken into account in the analysis.
    Response: Replacement of avocado orchards by housing communities 
signifies the land acquiring greater value in another use. We 
acknowledge that non-market valuations may not be fully realized in the 
transaction. If an avocado orchard, even though privately owned, has 
additional value to society as open space, then theoretically, publicly 
allocated resources could be used to maintain the land in that use. It 
would be very difficult to identify over time the loss of open space 
and increased urban development attributable specifically to the rule. 
Even if it were possible, the sale and purchase of land and changes in 
land use reflect the non-uniform values and personal preferences of 
society. To speak only of the costs of urbanization neglects the 
welfare gains of those benefitting from the new communities.

[[Page 69767]]

    Comment: The following comments concerned zoning restrictions and 
how they may limit alternative uses of land where avocados are 
currently grown:
    I suggest that an economic impact report be made by a qualified 
U.S. economist, paid by Mexican growers, to understand the consequences 
of the elimination of the avocado industry in the San Diego and Ventura 
Counties, CA. The conclusion may well show that the citrus industry 
would be affected negatively by putting a crimp on the supporting 
industries. I am clearly aware that Ventura County has zoning 
ordinances to minimize development for that very reason. If it is so 
important to restrict land developments, there must be a very 
significant reason to maintain viability in the farming industry.
    Our county has enacted laws restricting the use of agricultural 
land for any other purposes. These types of laws have been upheld in 
court. Because Mexico clearly has cost advantages that cannot be 
enjoyed in the United States, many of our farms may no longer be 
economically viable. Our farms cannot be retooled like factories to 
produce different parts. We have trees that would have to be destroyed 
and replanted with other crops. Many growers are in situations like 
mine where the only possible alternate crop is lemons. It would take 
over 5 years and enormous costs to make that change. Right now that 
doesn't look like a practical option.
    Response: If local governments require that land be kept in 
agricultural use regardless of its agricultural return, then the land's 
public value as an agricultural asset or open space may exceed its 
private productive value. If in such circumstances avocado production 
for some producers were no longer viable and local land use 
restrictions would only allow the land to be used in its next best 
agricultural use, then private and public valuations may well diverge.
    Comment: Not only is it unfair to me, but unfair to the general 
population. Someone is not looking at the big picture. In my community, 
80 percent of water usage is agricultural (avocados). This means that 
the water delivery system is paid for, in large part, by the growers. 
As soon as this rule takes effect, it no longer makes sense to water 
and I begin selling firewood. When I stop watering, the 20 percent of 
water users now have to pay for 100 percent of the delivery system 
resulting in domestic water rates tripling, or worse.
    Response: We can expect the land to be put to productive use, 
whether to grow avocados or for other agricultural or non-agricultural 
purposes. Water fees that are charged can be expected to be modified as 
uses of the land change. To the extent that water delivery costs are 
principally borne by avocado producers, there could be a cost 
realignment if land is moved from agricultural to non-agricultural 
uses.
    Comment: I believe the entire issue of ``free trade'' is clouded by 
the reality that its beneficiaries are often not (as we would hope) 
independent producers in other countries gaining access, at a 
reasonable scale, to the U.S. market. Rather, the beneficiaries are 
more often American or multinational corporations that transfer 
production (and jobs) offshore on a massive scale to take advantage of 
relaxed trade rules, along with lower labor costs, more lenient 
environmental and safety regulations, and avoidance of U.S. taxation. 
Offshore competition at that scale is bad for everyone except the 
owners of the corporations involved. American consumers may enjoy lower 
prices for a while, but at whose expense?
    Response: The increase in Mexican avocado imports will benefit U.S. 
consumers and Mexican producers. Firms involved in the trade, including 
U.S. handlers and importers, will benefit as well. The range of 
beneficiaries will extend beyond owners of corporations.
    Comment: Imported fruits and vegetables will lower the price of 
non-organic produce to a degree that California organic farmers will 
not be able to compete in the marketplace and will be forced to use 
non-organic techniques to survive financially.
    Response: Lower-priced, non-organic imports will reduce demand for 
organically grown produce to the extent that customers' willingness to 
forgo organically grown produce is price responsive. The expected 
increase in Mexican avocado imports because of the rule will lead to 
lower avocado prices. We cannot comment on whether the price decline 
will affect demand for organically grown avocados.
    Therefore, for the reasons given in the proposed rule and in this 
document, we are adopting the proposed rule as a final rule, with the 
changes discussed in this document.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. The rule 
has been determined to be economically significant for the purposes of 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget.
    This rule amends the regulations to expand the number of States in 
which fresh Hass avocado fruit grown in approved orchards in approved 
municipalities in Michoacan, Mexico, may be distributed and to allow 
the distribution of the avocados during all months of the year. For the 
first 2 years following the effective date of this rule, those avocados 
may be distributed in all States except California, Florida, and 
Hawaii; after 2 years, the avocados may be distributed in all States. 
We are taking this action in response to a request from the Government 
of Mexico and based on our finding that the phytosanitary measures 
described in this final rule will reduce the risk of introducing plant 
pests associated with Mexican Hass avocados into the United States.
    For this rule, we have prepared an economic analysis. The economic 
analysis contains cost-benefit analysis as required by Executive Order 
12866, as well as a final regulatory flexibility analysis that 
considers the potential economic effects of this rule on small 
entities, as required by the Regulatory Flexibility Act. The economic 
analysis is summarized below. Copies of the full analysis may be 
obtained from the person listed under FOR FURTHER INFORMATION CONTACT. 
In addition, the full analysis may be viewed on the Internet at http://www.aphis.usda.gov/ppq/avocados/.

Summary of Economic Analysis

    Impacts are analyzed using a partial equilibrium model. Expected 
effects of two alternatives are compared: (1) Allowing Hass avocados 
from Mexico to enter all States year-round except California, Florida, 
and Hawaii, for which entry would be delayed 2 years (as set forth in 
the rule); and (2) allowing Hass avocados from Mexico to enter all 
States year-round with no delay for any States.
    The model describes three demand regions and three supply regions 
for two time periods. The three demand regions are: The 31 northeastern 
and central States (and the District of Columbia) currently approved to 
receive Hass avocado imports from Mexico during the 6-month period 
October 15-April 15 (Region A); 15 Pacific and southern States, 
excluding California, Florida, and Hawaii, not currently approved to 
receive Hass avocados from Mexico (Region B); and California, Florida, 
and Hawaii (Region C). (Mexican Hass avocados have been allowed entry 
into Alaska since 1993.) The three supply regions in the model are 
California, Mexico, and Chile. Nearly all U.S. Hass avocado production 
takes place in

[[Page 69768]]

California. Over 96 percent of all Hass avocado imports are supplied by 
Chile and Mexico. The two time periods specified in the model are the 
6-month period during which Hass avocado imports from Mexico are 
currently allowed, October 15-April 15 (Period 1), and April 16-October 
14 (Period 2). Throughout the following discussion, ``avocado'' refers 
only to fresh Hass avocados unless otherwise indicated.
    Currently, Mexico is exporting to the United States a fraction of 
the avocados that could be exported from approved orchards and 
municipalities in the State of Michoacan. For the market year 2003/
2004, an estimated 479 million pounds of avocados will be produced in 
certified areas. During the baseline period, October 15, 2001, to 
October 15, 2003, annual imports from Mexico totaled 58.2 million 
pounds, or about 12 percent of what currently could be certified for 
export to the United States. It is apparent that Mexican producers 
could readily expand avocado exports to the United States at the 
current price level. Compared to an average wholesale price during the 
baseline period in the United States for Mexican avocados of $1.08 per 
pound, the average wholesale price per pound in Mexico was $0.46 in 
2001, $0.37 in 2002, and $0.46 in (January through October) 2003.
    With respect to pest risks, a systems approach currently in place 
provides multiple safeguards against pest introduction. Risk mitigation 
measures include pest field surveys; orchard certification; and 
packinghouse, packaging, and shipping requirements. Since shipments 
into the conterminous United States began in 1997, cutting and 
inspection of over 10 million Mexican Hass avocados has not revealed 
any quarantine pests.
    The pest risk assessment for the rule finds an overall low 
likelihood of pest introduction, concluding with 95 percent confidence 
that:
    <bullet> Fewer than 393 infested avocados will enter the 47 States 
each year.
    <bullet> Fewer than seven avocados infested with stem weevil, seed 
weevils and seed moth will enter avocado producing areas outside of 
California, Florida, and Hawaii each year.
    <bullet> Fewer than 98 avocados infested with fruit flies will 
enter fruit fly susceptible areas outside of California, Florida, and 
Hawaii each year.
    <bullet> Fewer than one avocado infested with stem weevil, seed 
weevils, or seed moth will be discarded in avocado-producing areas 
outside of California, Florida, and Hawaii each year.
    <bullet> Fewer than five avocados infested with fruit flies will be 
discarded in fruit fly susceptible areas outside of California, 
Florida, and Hawaii each year.
    Even if some infested avocados entered the United States, the 
likelihood of pest establishment and spread would require that: (1) The 
infested avocados must be in close proximity to host material; (2) the 
pests must find mates; (3) the pests must successfully avoid predation; 
(4) the adult pests must find host material; and (5) the climatological 
and microenvironmental conditions must be suitable. These factors 
substantially reduce the likelihood of establishment. The degree of 
pest risk reduction attributable to each of the factors has not been 
quantified. People generally consume the fruit they purchase and 
dispose of the waste material in a manner (such as in plastic bags that 
are land-filled or incinerated) that precludes the release of pests 
into the environment. The economic analysis examines expected effects 
of the rule and the no-delay alternative without quantifying the very 
small risk of pest entry and establishment. The difference in risk 
between the two alternatives is assumed to be negligible.
    The rule includes certain changes from existing risk-mitigating 
requirements. In the approved orchards in Michoacan, Mexico, surveys 
for the quarantine pests of concern will be increased from annually to 
semiannually, since the avocados will be allowed to be imported 
throughout the year. In the packinghouses, a sample of 300 avocados per 
consignment currently must be selected, cut, and inspected and found 
free from pests. APHIS is replacing the specific sample size of 300 
fruit with a requirement for a biometric sample at a rate determined by 
the Agency to be appropriate for the size of the particular 
consignment.
    Currently, handlers and distributors are required to enter into 
compliance agreements with APHIS, as well as satisfy requirements 
regarding the repackaging of the avocados after their entry into the 
United States. These requirements are to ensure that handlers and 
distributors are familiar with the distribution restrictions and other 
requirements of the regulations, and to ensure that any boxes used to 
repackage the avocados in the United States bear the same information 
that is required to be displayed on the original boxes in which the 
fruit is packed in Mexico.
    The repackaging requirements will be maintained. However, APHIS has 
decided that requiring compliance agreements for 47 States is both 
untenable and unnecessary. For the 2 years during which Hass avocados 
from Mexico will be prohibited from entering California, Florida, and 
Hawaii, there are appropriate safeguards such as fruit and package 
labeling, regulatory prohibition from importing into and transiting 
through these three States, and ample penalties for violation of these 
regulations under the Plant Protection Act.
    Currently, Hass avocados from Mexico may enter the United States 
only at certain ports. These port-of-entry limitations are intended to 
work in concert with the shipping area provisions to ensure that the 
avocados are moved by the most direct route to the approved States 
where they may be distributed. The port-of-entry limitations will be 
revised to allow Hass avocados from Mexico to enter all States except 
California, Florida, and Hawaii. If the avocados are moved by air, the 
aircraft will not be allowed to land in California, Florida, or Hawaii. 
Hass avocados as residue cargo on maritime vessels will not be 
offloaded in California, Florida or Hawaii.
    Costs related to any of these changes from the current requirements 
are expected to be small and not significantly influence the supply of 
Mexican avocados. Costs associated with risk mitigation changes in 
Mexico will be borne by Mexican entities.

Alternatives

    One alternative would be to leave the regulations unchanged. In 
this case, access of Mexican avocados would continue to be restricted 
to the 31 States and the District of Columbia currently approved to 
receive avocados from Mexico between October 15 and April 15 (and 
Alaska year-round).
    With no rule change, demand for avocados from all three supply 
regions would continue to increase due to population and income growth, 
with the relative percentages supplied by California, Chile, and Mexico 
shifting in response to changes in relative prices and preferences. It 
is noted that Mexico's avocado exports to the United States have been 
expanding rapidly (27.9 million pounds in 2001, 58.8 million pounds in 
2002, 76.8 million pounds in 2003), as it acquires a larger share of 
the market in the approved States between October 15 and April 15. 
During the baseline period (October 15, 2001, to October 15, 2003), 
more than 68 percent of avocado sales in this region and time period 
were supplied by Mexico, an increase of nearly 11 percent from its 
market share between October 15, 2000, and October 15, 2002.
    The analysis that follows considers two alternatives to the status 
quo: The rule, which will allow access of Mexican avocados to all 
States year-round with a 2-year delay for California,

[[Page 69769]]

Florida, and Hawaii, and the alternative of allowing Mexican avocados 
to enter all States year-round with no delays.

The Model

    Both the rule, which includes the 2-year delay in allowing avocados 
from Mexico into California, Florida, and Hawaii, and the no-delay 
alternative are compared to the baseline. Initial quantities and prices 
used as the baseline for the model are averages for the 2-year period 
October 15, 2001, to October 15, 2003. California producer prices are 
prices ``out the packinghouse door'' reported by the California Avocado 
Commission. Chilean and Mexican producer prices are unit import prices 
reported by USDA's Foreign Agricultural Service.
    Wholesale price data are taken from prices reported in Wholesale 
Market Fruit Reports (various issues), by Market News Archive, USDA 
Agricultural Marketing Service. Prices for Mexican avocados include 
costs associated with risk mitigation measures. Changes in Mexican 
avocado costs that may result because of revised risk mitigation 
measures, such as the increased frequency of orchard surveys and the 
larger number of approved ports of entry, are assumed to be minor. A 
fixed Mexican avocado price is assumed throughout the analysis.
    The analysis is based on a set of equations that describe, on the 
demand side, avocado consumption in the United States, and on the 
supply side, foreign and domestic avocado production for the U.S. 
market. Demand for avocados in the model is based on a utility function 
for a representative consumer. On the supply side, the model captures 
the option of producers to leave ripe avocados on the tree and vary 
their sale between time periods as relative prices change.
    Shift parameters are used in specifying the model's utility 
function. The shift parameters can be thought of as reflecting non-
price influences on demand. As described in the economic analysis, even 
if avocados from the three supply regions were equal in price, demand 
for them would not be the same because of consumers' perceptions and 
preferences. A decrease in the shift parameter for avocados from any of 
the three supply regions signifies a decrease in demand relative to the 
demand for avocados from the other regions, for reasons other than a 
change in price.
    Simulation of the changes in Mexican avocado import restrictions as 
set forth in the and the no-delay alternative (no delay) requires that 
the model account for year-round access to the newly approved demand 
regions. New accessibility is represented by changing the shift 
parameters for these regions from zero values based on current 
regulatory restrictions, to non-zero values based on consumer 
preference.

Effects on Supply and Demand

    Expected quantity and price impacts of the rule and the no-delay 
alternative are shown in table 1. With the rule, avocado consumption is 
expected to increase by 9 percent, from 581 million pounds to 634 
million pounds. Quantities supplied by California and Chile will 
decline by 7.3 percent and 10.3 percent, respectively, while imports 
from Mexico will increase to 2.6 times their initial level, from 58 
million pounds to 154 million pounds. Prices for California avocados 
will fall by 12.3 percent at the wholesale level (from $1.63 to $1.43 
per pound) and by 20.6 percent at the producer level (from $1.02 to 
$0.81 per pound).
    Under the no-delay alternative, avocado consumption would increase 
by 13.7 percent, from 581 million pounds to 661 million pounds. 
Quantities supplied by California and Chile would decline by 12.2 and 
16.5 percent, respectively, while imports from Mexico would increase to 
209 million pounds, 3.6 times their initial level. California's prices 
would fall by 20.9 percent at the wholesale level (from $1.63 to $1.29 
per pound) and by 34.3 percent at the producer level (from $1.02 to 
$0.67 per pound). Thus, all impacts would be larger in comparison to 
expected effects with the rule.
    Effects by demand region, supply region, and time period are 
provided by the model. Because overall demand for avocados from 
California and Chile will decrease in both time periods, wholesale and 
producer prices for avocados from California and Chile also will 
decrease in both time periods. With the rule, 62 percent of avocado 
imports from Mexico will enter during Period 1. Since imports from 
Mexico during Period 1 will comprise a larger share of total avocado 
consumption, they will exert greater downward pressure than during 
Period 2 on prices of avocados supplied by California and Chile. In 
Region B during Period 1, avocados from Mexico will displace 32 percent 
of the avocados that had been supplied by California. During Period 2, 
Mexican avocados will displace 19.5 percent and 20.6 percent of 
California avocados in Regions A and B, respectively.

                   Table 1.--Summary of Near-Term Changes in Annual Quantities and Prices \1\
----------------------------------------------------------------------------------------------------------------
                                                                                                       With
                                                                  Initial prices   With rule \2\  alternative to
                                                                  and quantities                     rule \3\
----------------------------------------------------------------------------------------------------------------
                                                                                  Million pounds
                                                                 -----------------
Quantity:
    Total.......................................................         581.071         633.542         660.868
    Supplied by:
        California..............................................         346.011         320.821         303.866
        Chile...................................................         176.814         158.695         147.695
        Mexico..................................................          58.247         154.026         209.307
                                                                 -----------------
                                                                                 Dollars per pound
                                                                 -----------------
Wholesale price of avocados supplied by:
    California..................................................           $1.63           $1.43           $1.29
    Chile.......................................................            1.29            1.20            1.15
Producer price for:
    California..................................................            1.02            0.81            0.67
    Chile.......................................................            0.59            0.49           0.44
----------------------------------------------------------------------------------------------------------------
\1\ Prices weighted by regional and time period quantities. Producer and wholesale prices for avocados from
  Mexico are assumed constant in the model.
\2\ Year-round entry of Hass avocados from Mexico into all States, except California, Florida, and Hawaii.
\3\ Year-round entry of Hass avocados from Mexico into all States.


[[Page 69770]]

Welfare Effects

    Price and quantity changes described by the model translate into 
the welfare changes for U.S. avocado consumers and producers shown in 
table 2. A portion of consumer gains may be captured by retailers 
exerting market power in setting avocado retail prices. To the extent 
that this occurs, overall welfare gains are slightly overstated and 
there is a small deadweight loss.
    With the rule, the decrease in California avocado prices due to 
producers' inelastic supply response will result in gains in consumer 
utility across all regions and time periods of $121.7 million. Not 
surprisingly, consumers in Region A in Period 1 will gain the least, 
since this is the region and time period already approved to receive 
avocados from Mexico. Consumer gains in Region B will be greater than 
in Region C in both time periods, since Mexican avocados will be 
restricted from entering Region C. Under the no-delay alternative, 
consumer gains ($184.5 million) would be over 50 percent greater than 
with the rule, illustrating the significance of avocado demand in 
Region C.
    Welfare impacts for avocado producers in California and Chile are 
determined by computing changes in producer surplus based on their 
avocado factor endowment supply curves. A fall in producer prices will 
decrease the amount of factor endowment employed in avocado production. 
Given the decline in producer prices, California avocado producers 
would experience welfare losses equivalent to $71.4 million with the 
rule, and $114.4 million under the no-delay alternative.
    The net change in U.S. welfare is computed by subtracting losses 
for California producers from consumer gains. As shown, the net welfare 
gains would be $50.3 million with the rule and $70.1 million under the 
no-delay alternative. Although the no-delay alternative is preferable 
in terms of net benefits, the 2-year delay of entry of Mexican avocados 
into California, Florida, and Hawaii has been chosen by USDA because it 
will provide an opportunity for the efficacy of the rule's risk-
mitigating safeguards to be demonstrated through year-round 
distribution to the remaining 47 States, as Mexican avocados currently 
are only allowed entry during the winter months.
    A sensitivity analysis was conducted that considers alternative 
values for the elasticities of substitution and transformation and 
California's aggregate supply elasticity in recognition of the 
uncertainty surrounding the values of these parameters. Because no 
information is available about their distributions, uniform 
distributions were assumed. The results of the sensitivity analysis for 
the welfare effects are given in the standard deviation columns in 
table 2. As shown, the standard deviations for the changes in consumer 
welfare are small. The standard deviations for the changes in producer 
welfare are larger, implying greater variability. This greater 
variability is largely attributable to the wide distribution assumed 
for California's aggregate supply elasticity in the sensitivity 
analysis; there is greater uncertainty with respect to the supply 
elasticity as compared to the demand-based elasticities of 
substitution. If the change in producer surplus for California avocado 
producers is normally distributed, the 95 percent confidence interval 
for their welfare loss with the rule would be ($45 million, $102 
million), and with the alternative to the rule, ($76 million, $158 
million).

                                Table 2.--Near-Term Welfare Gains and Losses \1\
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                    With rule \2\       With alternative to rule
                                                             --------------------------            \3\
                                                                             Standard  -------------------------
                                                               Change in    deviation    Change in     Standard
                                                                welfare        \4\        welfare     deviation
----------------------------------------------------------------------------------------------------------------
Losses in producer welfare:
    California..............................................      -$71.37       $14.27     -$114.39       $20.48
    Chile...................................................       -15.71         5.29       -24.35         5.79
Gains in consumer welfare:
    Period 1: \5\
        Region A \6\........................................         4.02         0.99         7.84         1.18
        Region B \7\........................................        21.92         2.08        29.66         2.34
        Region C \8\........................................        14.17         3.34        27.33         2.48
    Period 2: \9\
        Region A............................................        24.98         2.70        32.42         4.22
        Region B............................................        31.76         3.38        41.08         5.29
        Region C............................................        24.81         5.29        46.12         6.34
                                                             --------------
          Total.............................................       121.66         3.61       184.45         1.93
Net U.S. welfare change \10\................................        50.29        14.27        70.06        20.48
----------------------------------------------------------------------------------------------------------------
\1\ The difference between baseline values and (i) values with the rule and (ii) values with the alternative to
  the rule.
\2\ Year-round entry of Hass avocados from Mexico into all States, except California, Florida, and Hawaii.
\3\ Year-round entry of Hass avocados from Mexico into all States.
\4\ Standard deviations of the sensitivity analysis distributions.
\5\ October 15-April 15.
\6\ The 31 northeastern and central States (and the District of Columbia) currently approved to receive Hass
  avocado imports from Mexico during the 6-month period, October 15-April 15. (Note: Mexican Hass avocados are
  allowed to enter Alaska year-round.)
\7\ Fifteen Pacific and southern States, excluding California, Florida, and Hawaii, not currently approved to
  receive Hass avocados from Mexico.
\8\ California, Florida, and Hawaii.
\9\April 16-October 14.
\10\ The sum of welfare losses for California producers and U.S. consumer welfare gains for all regions and both
  periods.

Final Regulatory Flexibility Analysis

    The Regulatory Flexibility Act requires agencies to evaluate the 
potential effects of their proposed and final rules on small 
businesses, small organizations and small governmental jurisdictions. 
U.S. businesses that will be directly affected by the rule are Hass

[[Page 69771]]

avocado producers, handlers and importers.
    Hass Avocado Producers. An avocado farm is considered small if it 
has annual receipts of not more than $750,000. (All small-entity 
definitions in this analysis are provided in Title 13 of the Code of 
Federal Regulations, Part 121: Small Business Size Regulations.) Based 
on 2002 Census of Agriculture data, over 97 percent of California 
avocado farms are small entities (4687 out of a total of 4801 farms). 
We describe the expected impact of the rule and the no-delay 
alternative for these small-entity producers in terms of decreases in 
gross revenue, as derived from the results of the general analysis. The 
model indicates that with the rule there will be a 26.7 percent decline 
in gross revenue, assuming the decrease is proportionally spread across 
all farms (table 3). Under the no-delay alternative, there would be a 
42.2 percent decline in gross revenue. The gross revenue declines are 
attributable more to decreases in price than to decreases in quantity 
(table 4).
    The status quo alternative would be preferable for California's 
avocado producers, but it would not yield the net benefits to the 
United States shown to be gained by expanding U.S. access for Mexican 
avocados. The rule is preferable to the no-delay alternative for 
California producers. The analysis shows prices for California 
producers falling by 21 cents per pound and California avocado 
production decreasing by 25 million pounds under the rule, compared to 
declines of 35 cents per pound and 42 million pounds if there are no 
delays (table 1). Producer surplus losses--declines in revenue beyond 
variable costs--are estimated with the rule to be about $71 million, 
compared to losses of about $114 million without the 2-year delay 
(table 2). In all respects, California producers will be harmed less 
when there is a 2-year delay for California, Florida, and Hawaii.

  Table 3.--Annual Impact on Gross Revenue for California Hass Avocado
                                Producers
                          [Dollars in millions]
------------------------------------------------------------------------
                                                               With
                                           With rule \1\  alternative to
                                                             rule \2\
------------------------------------------------------------------------
Initial gross revenue (baseline)........         $354.32         $354.32
Gross revenue with the rule or                    259.58          204.73
 alternative to the rule................
Decrease in gross revenue incurred by              94.74          149.59
 large and small Hass avocado producers.
Decrease incurred by small-entity                  59.69           94.24
 avocado producers \3\..................
Decrease as a percentage of initial                26.7%           42.2%
 gross revenue \4\......................
------------------------------------------------------------------------
\1\ Year-round entry of Hass avocados from Mexico into all States,
  except California, Florida, and Hawaii.
\2\ Year-round entry of Hass avocados from Mexico into all States.
\3\ Decreases in gross revenue are multiplied by 63 percent, the
  percentage of the total value produced by farms with less than 100
  acres harvested. Hass avocado production is assumed to be
  proportionally distributed among farms of all sizes.
\4\ The decrease in gross revenue is assumed to be proportionally spread
  across all producers.


  Table 4.--Percentage Changes in California Avocado Producer Prices and in Quantities of Avocados Supplied by
                                                   California
----------------------------------------------------------------------------------------------------------------
                                                                    With rule \1\       With alternative to rule
                                                             --------------------------            \2\
                                                                                       -------------------------
                                                                 Price       Quantity      Price       Quantity
----------------------------------------------------------------------------------------------------------------
Period 1 \3\................................................       -20.0%        -6.8%       -37.3%       -14.0%
Period 2 \4\................................................       -21.3%       -16.0%       -33.2%       -19.4%
----------------------------------------------------------------------------------------------------------------
\1\ Year-round entry of Hass avocados from Mexico into all States, except California, Florida, and Hawaii.
\2\ Year-round entry of Hass avocados from Mexico into all States.
\3\ October 15-April 15.
\4\ April 16-October 14.

    The past decade has seen a decrease in the number of small-entity 
California avocado producers and in the number of acres harvested. 
Revenue declines because of the rule are expected to be large compared 
to losses that small-entity producers may have experienced because of 
the industry's contraction and growing concentration. California 
producers will be harmed by the rule, but we cannot predict that a 
certain number of firms may fail. Each avocado farm draws upon a unique 
set of human and capital resources and marketing arrangements that 
define its financial position and prospects. Firm survival will depend 
on these specific conditions, but in general those small-entity 
producers with recent histories of small or negative profit margins 
will be most at risk.
    Handlers. California Hass avocado handlers (firms engaged in post-
harvest activities) will be directly affected by the rule. Companies 
handling avocados are considered small businesses if their annual 
receipts are not more than $5 million. By this definition, 40 out of 51 
firms that will be affected by the rule, are small entities.
    The decrease in producers' revenues will mean a decrease in 
receipts by small-entity handlers as well. Negative impacts may be at 
least partially alleviated by additional avocado business activities in 
Mexico in which U.S. handlers may be involved, but it is unlikely that 
the smaller firms will have this opportunity. Decreased receipts from 
reduced avocado sales may also be moderated if the firms are engaged in 
handling produce other than avocados. Like California producers, 
affected handlers will benefit from the 2-year delay.
    Importers. Firms that import avocados are defined as small entities 
if they have 100 or fewer employees. The annual wholesale value of Hass 
avocados imported by 52 of the 85 firms expected to be affected by the 
rule is less than $1 million. We believe these firms are likely to 
employ fewer than 100 employees, and therefore can be considered will 
be small entities. As a group, these firms will benefit from the 
increase in imports of Hass avocados from Mexico (an increase of nearly 
96 million pounds with the rule), but gains

[[Page 69772]]

will be tempered by reduced imports from Chile (a reduction of about 18 
million pounds).
    For small-entity Hass avocado importers, the no-delay alternative 
would be preferable, since it would mean a larger increase in imports 
(taking into account reduced quantities from Chile): 122 million pounds 
compared to 78 million pounds with the rule. In either case, importers 
will benefit compared to leaving the regulations unchanged.

Longer-Term Effects

    This analysis describes near-term impacts of two alternatives to 
current regulations restricting the importation of avocados from 
Mexico: The rule, which will allow the avocados to enter all States 
year-round except California, Florida, and Hawaii, for which entry 
would be delayed two years; and an alternative to the rule, which would 
allow importation into all States year-round with no delay for any 
States. The near term may be thought to represent the first year that 
the rule is in effect. We address here the question of how the 
alternatives compare in the longer term.
    A static, partial equilibrium model is used to depict expected 
effects of the regulatory change. An initial market equilibrium for 
avocados was determined based on baseline quantities and prices. 
Regulatory expansion of access of Mexican avocados into the U.S. market 
can be thought of as an exogenous shock. The resulting increase in 
avocado imports from Mexico will lead, in general, to a decline in the 
prices and quantities of avocados supplied by California and Chile. A 
new partial equilibrium is attained through regional price and quantity 
changes, given the parameters of the model. Whether the effects 
described in the analysis would be fully realized in the first year of 
the rule is not known. While the sale of Mexican avocados year-round 
and the addition of 15 States with the rule (or 18 States under the 
alternative) will have immediate effects, impacts in the first 12 
months may or may not match those described by the model. Changes in 
buyers' perceptions and preferences--the non-price influences 
represented by the model's shift parameters--will occur over a period 
of time. The model does not inform as to how long this transition will 
take.
    If we assume that the effects described in this analysis do occur 
in the first year, and we assume that the changed supply and demand 
conditions continue into the second year, then by the end of the second 
year the effects would be twice those reported in the analysis. When 
compared to the baseline, the net welfare gain attributable to the rule 
would be about $50 million in Year 2, the same as in Year 1, for an 
undiscounted net gain of about $100 million over the two years. (The 
preferred comparison would be one of conditions with and without the 
rule in Year 2, but the model describes neither of these situations.)
    More realistically, by the second year there will be production and 
marketing responses by California producers to the substantial increase 
in avocado imports from Mexico. Altered regional marketing strategies 
and industry promotional activities, for instance, may influence the 
effects for California producers from Year 1 to Year 2 of the rule (or 
of the alternative). We do not believe that the new equilibrium 
described by the model, assumed to be attained in Year 1, will remain 
unchanged in Year 2.
    In Year 3 and afterwards, as long as there are not any pest 
discoveries that prevent expansion of Mexican avocado imports into 
California, Florida, and Hawaii, the rule and the alternative are the 
same. Changes in Year 3 of the rule can be expected to be broadly 
similar to differences in impact between the rule and the alternative 
described by the model for Year 1. There will be a further decrease in 
producer welfare and increase in consumer welfare, with the latter 
outweighing the former for an overall net increase in U.S. welfare.
    We would not expect the changes in Year 3 to be equal to the 
differences in impact between the rule and the alternative described 
for Year 1. Inclusion of California, Florida, and Hawaii will take 
place two years after the year-round and 15-State expansions have 
occurred. Two years of Mexican avocado imports into southern and 
western States may result in regional prices and quantities different 
from those portrayed by the model. The Year 1 difference between the 
rule and the alternative in net welfare gains is estimated to be about 
$20 million, but the undiscounted net welfare gain in Year 3 of the 
rule will probably have a different value.
    The analysis shows near-term impacts of the rule and the 
alternative. The period is assumed to represent the first year that the 
rule is in effect. Differences in impact between the rule and the 
alternative will continue during Year 2, but are unlikely to be the 
same as modeled for the first year. The third-year adjustment, when the 
rule will allow Mexican avocado imports into all States, will remove 
all distinctions between the rule and the alternative. Effects in Year 
3 will be like those indicated by the Year 1 differences in impact 
between the rule and the alternative, but the quantity, price, and 
welfare changes are likely to differ from those described by the model 
for Year 1.
    This rule contains no new information collection requirements. (See 
``Paperwork Reduction Act'' below.)

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule has been designated by the Administrator, Office of 
Information and Regulatory Affairs, Office of Management and Budget, as 
a major rule under the Small Business Regulatory Enforcement Fairness 
Act of 1996 (5 U.S.C. 801-808). Accordingly, the effective date of this 
rule has been delayed the required 60 days pending congressional 
review.

Executive Order 12988

    This final rule allows Hass variety avocados to be imported into 
the United States from Mexico. State and local laws and regulations 
regarding Hass variety avocados imported under this rule will be 
preempted while the fruit is in foreign commerce. Fresh fruits and 
vegetables are generally imported for immediate distribution and sale 
to the consuming public, and 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. No retroactive 
effect will be given to this rule, and this rule will not require 
administrative proceedings before parties may file suit in court 
challenging this rule.

National Environmental Policy Act

    An environmental assessment and finding of no significant impact 
have been prepared for this final rule. The assessment provides a basis 
for the conclusion that the potential environmental impacts associated 
with the importation of Hass avocados from Mexico under the conditions 
specified in this rule will not present a risk of introducing or 
disseminating plant pests and will not have a significant impact on the 
quality of the human environment. Based on the finding of no 
significant impact, the Administrator of the Animal and Plant Health 
Inspection Service has determined that an environmental impact 
statement need not be prepared.
    The environmental assessment and finding of no significant impact 
were prepared in accordance with: (1) The National Environmental Policy 
Act of 1969 (NEPA), as amended (42 U.S.C.

[[Page 69773]]

4321 et seq.), (2) regulations of the Council on Environmental Quality 
for implementing the procedural provisions of NEPA (40 CFR parts 1500-
1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) 
APHIS' NEPA Implementing Procedures (7 CFR part 372).
    The environmental assessment and finding of no significant impact 
are available for viewing on the Internet at www.aphis.usda.gov/ppq/avocados/. Copies of the environmental assessment and finding of no 
significant impact are also available for public inspection 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 copies are requested to 
call ahead on (202) 690-2817 to facilitate entry into the reading room. 
In addition, copies may be obtained by writing to the individual listed 
under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

    This final 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

    Coffee, Cotton, Fruits, Honey, Imports, Logs, Nursery stock, Plant 
diseases and pests, Quarantine, Reporting and recordkeeping 
requirements, Rice, Vegetables.


0
Accordingly, we are amending 7 CFR part 319 as follows:

PART 319--FOREIGN QUARANTINE NOTICES

0
1. The authority citation for part 319 continues to read as follows:

    Authority: 7 U.S.C. 450 and 7701-7772; 21 U.S.C. 136 and 136a; 7 
CFR 2.22, 2.80, and 371.3.


Sec.  319.56-2bb  [Removed and Reserved]

0
2. Section Sec.  319.56-2bb is removed and reserved.

0
3. Section 319.56-2ff is amended as follows:
0
a. By revising the section heading and the introductory text of the 
section to read as set forth below.
0
b. By revising the introductory text of paragraph (c) and paragraphs 
(c)(1)(i) and (c)(1)(ii) to read as set forth below.
0
c. By revising the introductory text of paragraph (c)(2) and paragraphs 
(c)(2)(i) and (c)(2)(v) to read as set forth below.
0
d. By revising the introductory text of paragraph (c)(3) and paragraphs 
(c)(3)(i), (c)(3)(iv), (c)(3)(vi), and (c)(3)(vii) to read as set forth 
below.
0
e. By revising paragraphs (d), (e), and (f) to read as set forth below.
0
f. By removing paragraphs (g), (h), and (k) and redesignating 
paragraphs (i) and (j) as paragraphs (g) and (h), respectively.
0
g. By revising newly redesignated paragraph (g) to read as set forth 
below.


Sec.  319.56-2ff  Administrative instructions governing movement of 
Hass avocados from Michoacan, Mexico.

    Fresh Hass variety avocados (Persea americana) may be imported from 
Michoacan, Mexico, into the United States only under a permit issued in 
accordance with Sec.  319.56-3, and only under the following 
conditions:
    (a) * * *
    (2) Between January 31, 2005 and January 31, 2007, the avocados may 
be imported into and distributed in all States except California, 
Florida, and Hawaii. After January 31, 2007, the avocados may be 
imported into and distributed in all States.
* * * * *
    (c) Safeguards in Mexico. The avocados must have been grown in the 
Mexican State of Michoacan in an orchard located in a municipality that 
meets the requirements of paragraph (c)(1) of this section. The orchard 
in which the avocados are grown must meet the requirements of paragraph 
(c)(2) of this section. The avocados must be packed for export to the 
United States in a packinghouse that meets the requirements of 
paragraph (c)(3) of this section. The Mexican national plant protection 
organization (NPPO) must provide an annual work plan to APHIS that 
details the activities that the Mexican NPPO will, subject to APHIS' 
approval of the work plan, carry out to meet the requirements of this 
section; APHIS will be directly involved with the Mexican NPPO in the 
monitoring and supervision of those activities. The personnel 
conducting the trapping and pest surveys must be hired, trained, and 
supervised by the Mexican NPPO or by the Michoacan State delegate of 
the Mexican NPPO.
    (1) Municipality requirements. (i) The municipality must be listed 
as an approved municipality in the bilateral work plan provided to 
APHIS by the Mexican NPPO.
    (ii) The municipality must be surveyed at least semiannually (once 
during the wet season and once during the dry season) and found to be 
free from the large avocado seed weevil Heilipus lauri, the avocado 
seed moth Stenoma catenifer, and the small avocado seed weevils 
Conotrachelus aguacatae and C. perseae.
* * * * *
    (2) Orchard and grower requirements. The orchard and the grower 
must be registered with the Mexican NPPO's avocado export program and 
must be listed as an approved orchard or an approved grower in the 
annual work plan provided to APHIS by the Mexican NPPO. The operations 
of the orchard must meet the following conditions:
    (i) The orchard and all contiguous orchards and properties must be 
surveyed semiannually and found to be free from the avocado stem weevil 
Copturus aguacatae.
* * * * *
    (v) Harvested avocados must be placed in field boxes or containers 
of field boxes that are marked to show the official registration number 
of the orchard. The avocados must be moved from the orchard to the 
packinghouse within 3 hours of harvest or they must be protected from 
fruit fly infestation until moved.
* * * * *
    (3) Packinghouse requirements. The packinghouse must be registered 
with the Mexican NPPO's avocado export program and must be listed as an 
approved packinghouse in the annual work plan provided to APHIS by the 
Mexican NPPO. The operations of the packinghouse must meet the 
following conditions:
    (i) During the time the packinghouse is used to prepare avocados 
for export to the United States, the packinghouse may accept fruit only 
from orchards certified by the Mexican NPPO for participation in the 
avocado export program.
* * * * *
    (iv) Prior to the culling process, a biometric sample, at a rate 
determined by APHIS, of avocados per consignment must be selected, cut, 
and inspected by the Mexican NPPO and found free from pests.
* * * * *
    (vi) Prior to being packed in boxes, each avocado fruit must be 
cleaned of all stems, leaves, and other portions of plants and labeled 
with a sticker that bears the official registration number of the 
packinghouse.
    (vii) The avocados must be packed in clean, new boxes, or clean 
plastic reusable crates. The boxes or crates must be clearly marked 
with the identity of the grower, packinghouse, and exporter. 
Additionally, between January 31, 2005 and January 31, 2007, the boxes 
or crates must be clearly marked with the statement ``Not for

[[Page 69774]]

importation or distribution in CA, FL, and HI.''
* * * * *
    (d) Certification. All consignments of avocados must be accompanied 
by a phytosanitary certificate issued by the Mexican NPPO with an 
additional declaration certifying that the conditions specified in this 
section have been met.
    (e) Pest detection. (1) If any of the avocado seed pests Heilipus 
lauri, Conotrachelus aguacatae, C. perseae, or Stenoma catenifer are 
discovered in a municipality during the semiannual pest surveys, 
orchard surveys, packinghouse inspections, or other monitoring or 
inspection activity in the municipality, the Mexican NPPO must 
immediately initiate an investigation and take measures to isolate and 
eradicate the pests. The Mexican NPPO must also provide APHIS with 
information regarding the circumstances of the infestation and the pest 
risk mitigation measures taken. The municipality in which the pests are 
discovered will lose its pest-free certification and avocado exports 
from that municipality will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that municipality has been eliminated.
    (2) If the Mexican NPPO discovers the stem weevil Copturus 
aguacatae in an orchard during an orchard survey or other monitoring or 
inspection activity in the orchard, the Mexican NPPO must provide APHIS 
with information regarding the circumstances of the infestation and the 
pest risk mitigation measures taken. The orchard in which the pest was 
found will lose its export certification immediately and avocado 
exports from that orchard will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that orchard has been eliminated.
    (3) If the Mexican NPPO discovers the stem weevil Copturus 
aguacatae in fruit at a packinghouse, the Mexican NPPO must investigate 
the origin of the infested fruit and provide APHIS with information 
regarding the circumstances of the infestation and the pest risk 
mitigation measures taken. The orchard where the infested fruit 
originated will lose its export certification immediately and avocado 
exports from that orchard will be suspended until APHIS and the Mexican 
NPPO agree that the pest eradication measures taken have been effective 
and that the pest risk within that orchard has been eliminated.
    (f) Ports. The avocados may enter the United States only through a 
port of entry located in a State where the distribution of the fruit is 
authorized pursuant to paragraph (a)(2) of this section.
    (g) Inspection. The avocados are subject to inspection by an 
inspector at the port of first arrival. At the port of first arrival, 
an inspector will sample and cut avocados from each consignment to 
detect pest infestation.
* * * * *

    Done in Washington, DC, this 23rd day of November 2004.
Charles D. Lambert,
Acting Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 04-26336 Filed 11-29-04; 8:45 am]
BILLING CODE 3410-34-P