Final Rule: Cold Treatment Regulations

Analysis in Support of Certification that the Rule will not have a Significant 

Economic Impact on a Substantial Number of Small Entities

Docket No. APHIS-2006-0050

July 2010

Policy Analysis & Development

Policy & Program Development

Animal & Plant Health Inspection Service

U.S. Department of Agriculture
Cold Treatment Regulations: Analysis in Support of Certification that the Rule will 

not have a Significant Economic Impact on a Substantial Number of Small Entities

Docket No. APHIS-2006-0050 

This analysis examines the impact on U.S. small entities of a final rule following 

an interim rule that sets forth certain phytosanitary treatment amendments for fruit 

imports. The amendments include new requirements for cold treatment enclosures and 

procedures, including precooling. Currently, 26 fruits and nuts are required to be cold

treated to be eligible for import into the United States: apple, apricots, avocado, cape 

gooseberry, cherry, ethrog, grapes, grapefruit, kiwi, lemon, loquat, lychee, nectarine, 

oranges, ortanique, peach, pear, persimmon, plum, plumcot, pomegranate, quince, sand 

pear, tangerine, mandarin, and clementine.1

Stakeholders and industry representatives have raised concerns about the presence 

of hot spots in large, tightly packed fruit shipments undergoing in-transit cold treatment. 

Research and industry experience has established that fruit undergoing cold treatment can 

remain warmer than the target treatment temperature for several days due to natural fruit 

respiration. If infested fruit is contained within a pallet group, natural respiration of the 

larval pests may also significantly raise temperatures in the shipment and reduce 

treatment effectiveness. 

 

1 USDA/APHIS/PPQ, Risk Management Document (http:// 

www.nabcblues.org/legislative/Uruguay%20pest%20risk%20analysis.pdf). As some of 

these commodities are crosses between others (for example, ortanique is a cross between 

sweet orange and tangerine; plumcot a cross between plum and apricot, etc.) and are less 

significant in terms of volume, the focus of the analysis is limited to selected commodities.
3

Precooling of fruit prior to cold treatment has been shown to be effective in 

preventing the emergence of hot spots within shipments of fruit.2 This rule imposes more 

stringent requirements for precooling fruit prior to cold treatment. In addition, it requires

the use of measures approved by the Animal and Plant Health Inspection Service as 

adequate to ensure the security and integrity of cold treatment temperature data, adds

requirements to increase the effectiveness of cold treatment conducted in vessel holds and 

treatment enclosures, and provides for officials authorized by APHIS to conduct audits of 

the cold treatment process. 

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. Section 604 of the Act requires an agency to prepare a final 

regulatory flexibility analysis (FRFA) that describes the expected impact of the rule on 

small entities and the steps the agency has taken to minimize significant economic 

impacts on small entities. In place of the FRFA, the head of the agency may certify that a 

rule will not have a significant economic impact on a substantial number of small entities. 

This analysis provides the factual basis for certification of this rule.

This analysis examines the possible effects on U.S. small entities of the new cold 

treatment regulations. As background, we provide a brief overview of U.S. fruit 

 

2

Pre-cooling of fruit also provides commercial benefits. Various research shows that 

prompt pre-cooling of fruits and vegetables immediately after harvesting maintains the 

quality of fresh fruit for a longer period of time (inhibits growth of decay-causing 

microorganisms, reduces respiratory activities, lessens moisture loss and leads to longer 

shelf life). The suggested length of time varies from commodity to commodity. Michael T. 

Talbot and Khe V. Chau, Pre-cooling Strawberries, Publication #CIR942 

(http://eds.ifas.ufl.edu/AE136); and Mahesh Aswaney, Forced-Air Pre-cooling of Fruits 

and Vegetables, Air Conditioning and Refrigeration Journal, January-March 2007. 

(www.chipl.com/pdf/AHRAE_Journal_Article.pdf).
4

production and trade. This is followed by a comparison of the costs of precooling to the 

value of the fruit imports. We then describe the expected impact on small entities.

U.S. Fruit Production and Trade

From 2003 to 2007, the United States produced an annual average of about 

9 million metric tons (MT) of the fruits mentioned above, valued at over $5.6 billion. 

Most U.S. production of fresh citrus occurs in California and Florida. Non-citrus fruit 

production takes place in many States, with Washington being the main producer of 

apples.3 

Foreign markets are increasingly important for U.S. fruit producers, accounting 

for approximately 27 percent of 2007 fresh fruit sales. As shown in table 1, the United 

States is a net exporter of fresh fruits, exporting an average of about 2.2 million MT 

valued at $2.2 billion (2003-2007) and importing about 1.4 million MT valued at $1.8 

billion (2003-2007).4 Ten countries (Argentina, Australia, Brazil, Canada, Chile, Italy, 

Mexico, New Zealand, South Africa, and Spain) supplied 95 percent of U.S. fresh fruit 

imports.5 

 

3 USDA/NASS, Citrus Fruit 2008 Summary, September 2008; Non-citrus Fruits and 

Nuts: 2008 Preliminary Summary, January 2009.

4 Although the United States is a net aggregate exporter of the above fresh fruits, it is a 

net importer of grapes, blueberries, kiwi fruit, and tangerines (including clementine and 

mandarin).

5 Global Trade Information Services, Inc., the Global Trade Atlas, Country Edition, April

2009. (http.www.gtis.com/gta/).
5

Table 1.—U.S. fruit production, consumption, exports and imports, 2003-2007

Year

Production 

(in 1,000 

metric tons)

Consumption 

(in 1,000 

metric tons)

Exports (in 

1,000 metric 

tons)

Imports (in 

1,000 metric 

tons)

2003 9,311 8,231 2,316 1,236

2004 9,032 8,045 2,180 1,193

2005 9,119 8,213 2,291 1,385

2006 8,420 7,593 2,178 1,351

2007 8,904 8,444 2,133 1,673

5-Year Average 

(2003-2007) 8,957 8,104 2,220 1,367

Sources: Production, consumption, export, and import data are from USDA/NASS, 

Citrus Fruit 2008 Summary, September 2008; Non-citrus Fruits and Nuts: 2008 

Preliminary Summary, January 2009. Export and import data are from Global Trade 

Information Services, Inc., Country Edition, April 2009. 

Note: Production, export, and import quantities are summations for apples, apricots, 

avocados, blueberries, cherries, grapes, grapefruits, kiwifruits, lemons, oranges, peaches 

and nectarines, pears, plums, and tangerines. Consumption is calculated as 

production + imports - exports. 

As shown in table 1, U.S. fresh fruit production has declined slightly in recent 

years. Production totaled 9.3 million MT in 2003 and declined to 8.9 million MT in 

2007, an annual decline of about 0.9 percent. Consumption increased over this same 

period from 8.2 million MT to 8.4 million MT, and U.S. imports increased from 1.2 

million MT to 1.7 million MT. Imports represented 17 percent of consumption. 

Economic Impact of the New Cold Treatment Regulations

The new cold treatment regulations require that fruit intended for in-transit cold 

treatment must first undergo precooling until the temperature of the entire shipment 

reaches the highest allowable temperature in the treatment schedule under which the fruit 

will be treated. 

In-transit treatment enclosures such as ship holds and containers may not be used 

for precooling unless an official authorized by APHIS approves the loading of the fruit in 
6

the enclosure as adequate to allow for fruit pulp temperatures to be taken manually prior 

to beginning treatment. Although in-transit precooling is an available option, precooling 

in a refrigerated warehouse or similar approved facility is considerably more 

cost-effective. On-board precooling requires prolonged shipment times of a day or more 

while the fruit is being precooled to the required temperature, resulting in higher shipping

costs.

In theory, any increase in treatment costs resulting from the new precooling 

regulations could reduce the quantity of fresh fruit supplied by exporters to the United 

States and increase the price, adversely affecting U.S. consumers of imported fresh fruit. 

In addition, U.S. fresh fruit producers who compete with the foreign suppliers could 

benefit. However, the price effects attributable to the new cold treatment regulations are 

expected to be negligible, and impacts for U.S. producers and consumers insignificant. 

For the 10 countries that account for 95 percent of U.S. fresh fruit imports, less than 

10 percent of their exports in 2007 were to the United States.6 These countries are major 

suppliers of fresh fruit worldwide, accounting for over 55 percent of 2007 world exports of 

the various fruits included in table 1.7 Since the U.S. market represents a relatively small 

share of these countries’ total fresh fruit exports, prices and supplies are not expected to be 

much affected by any increase in treatment costs.8 Many of these major fruit-exporting 

countries already have refrigerated warehouses and similar facilities available for 

precooling. 

 

6 Calculated by dividing U.S. imports from the 10 countries by their exports worldwide 

(see table 2): 1,461,030 MT / 15,249,658 MT = 9.6 percent. 

7 Calculated by dividing world exports by the 10 countries by total world exports (see table 

2): 15,249,658 MT / 27,531,836 MT = 55.4 percent. 

8 Global Trade Information Services, Inc., the Global Trade Atlas, Country Edition, April 

2009. (http.www.gtis.com/gta/).
7

Of the countries that supply the remaining five percent of U.S. fresh fruit imports, 

28 of them shipped fruits that combined totaled only a little over 1.5 bulk shipments 

(12,000 MT). Because most of these countries send very small shipments of fresh fruit, it 

may not be economical for them to construct refrigerated warehouses for precooling. 

Based on U.S. construction costs, a medium-sized refrigerated warehouse (between 

60,000 and 100,000 square feet) may cost between $7 million and $10 million.9

Exporters of fresh fruit to the United States, particularly those located in major 

exporting countries, are more likely to acquire needed space in existing refrigerated 

warehouses. The cost of renting precooling space in refrigerated facilities is not expected 

to be significant. 

In table 2, we compare precooling costs to the value of the fruit imported, and 

show that precooling is relatively inexpensive. These precooling costs are borne 

regardless of whether the treatment takes place on land or on a vessel. We base our 

calculations on cold treatment costs reported in an analysis concerning Spanish 

clementine imports.10 

 

9

The Port of Corpus Christi completed in July 2000 a new 99,520 square foot 

refrigerated warehouse at a total cost of $9.2 million (about $92.5 per sq. ft. 

($9,200,000/99,520)) for importing and exporting fruits, vegetables, meats, and other 

commodities (http://www.portofcorpuschristi.com/pdfs/Channels8-99.pdf). As another 

example, the Port of Wilmington, Delaware, completed construction of a new 60,000 

square feet refrigerated warehouse at a total cost of $7.5 million (about $125/sq. ft. 

($7,500,000/60,000)). The facility will be used primarily for fresh fruit. 

(http://www.drba.net/press/releases/files/20040615drbarowanuniversity.pdf).

10 We use 1,984 pounds as the weight of one pallet. Source: USDA/APHIS/PPD/PAD, 

Amending Import Rules for Clementines from Spain: Final Regulatory Impact 

Analysis, October 2002.
8

Table 2.—U.S. fruit imports and pre-cooling treatment costs as a percentage of the value of imports

U.S. imports

Exports by the 10 

major fruit 

exporting countries 

to the United States

World 

exports by

all 

countries

Cost of treatment

(in dollars)

Cost of treatment as a 

percentage of the 

value of U.S. imports

One 

day

Three 

days

One 

day

Three 

days

A (in 

thousands 

of dollars)

B (MT) C (MT) D (MT) E F G H

Apples 144,493 176,005 2,639,019 7,116,322 109,522 328,566 0.076% 0.227%

Apricots 4,315 1,969 90,797 195,572 1,225 3,675 0.028% 0.085%

Avocados 290,171 218,440 561,122 664,635 135,928 407,783 0.047% 0.141%

Blueberries 114,454 23,681 91,543 154,286 14,480 43,439 0.013% 0.038%

Cherries 30,670 9,846 55,330 249,930 6,236 18,709 0.020% 0.061%

Grapes 847,144 567,850 1,999,329 3,322,321 353,354 1,060,061 0.042% 0.125%

Grapefruit 1,990 17,624 351,524 1,136,818 10,967 32,900 0.551% 1.653%

Kiwi 39,778 40,952 251,437 1,058,286 25,483 76,449 0.064% 0.192%

Lemons 21,760 45,189 1,549,540 2,188,628 28,120 84,359 0.129% 0.388%

Oranges 75,855 75,354 3,257,648 4,306,934 47,020 141,061 0.062% 0.186%

Peaches and 

Nectarines 60,372 66,271 1,046,685 1,342,126 41,238 123,715 0.068% 0.205%

Pears and 

Quinces 92,025 85,372 1,036,235 2,419,269 53,124 159,372 0.058% 0.173%

Plums 36,969 34,386 296,365 468,291 21,397 64,192 0.058% 0.174%

Tangerines 1,398,15 98,091 2,023,084 3,066,053 61,039 183,116 0.044% 0.131%

1,899,811 1,461,030 15,249,658 27,531,836 909,149 2,727,448 0.048% 0.144%

Note: Import values and quantities in columns A and B are five-year averages (2003-2007); world export quantities in column D 

are for 2007; E=(B*2,204.6*$0.56/1,984), the cost of one day treatment; F=(B*2,204.6*$1.68/1,984), the cost of three days 

treatment; G = (E/[A*1,000])*100; H = (F/[A*1,000])*100; 2,204.6 is the weight, in pounds of a metric ton, 1,984 pounds is the 

assumed weight of a pallet, and $0.56 and $1.68 are the costs of pre-cooling a pallet for one and three days, respectively.
9

In table 2, the import values and quantities in columns A and B, respectively, are 

five-year averages (2003-2007). Column C quantities are global exports by the top 10 

suppliers of these commodities and Column D shows global exports of these fruits by all 

countries. Columns E and F are precooling costs, calculated as described in the note to 

the table. Column E shows the one-day treatment cost and Column F, the three-day

treatment cost. Columns G and H show the significance of these costs relative to import 

values. Only in the case of grapefruit is the three-day treatment cost greater than one 

percent of the value of the fruit; grapefruit had the smallest import value of the listed 

fruit, averaging $2 million per year. 

Overall, the costs of precooling totaled less than 0.15 percent of the value of the 

fruit imports, assuming a three-day precooling period throughout. In many cases, the 

shipment will reach the required precooling temperature in less time. In dollar terms, 

these precooling costs totaled less than $3 million per year. These costs are a fraction of 

potential losses that may result, for example, from Medfly infestations. A Medfly

infestation that occurred in California during 1980–1982, according to public comments 

received on the proposed rule for Spanish clementines, cost $100 million to eradicate and 

$100 million in lost export revenues.11 

Potentially Affected Entities and Expected Impact of the Rule 

The Small Business Administration (SBA) has established guidelines for 

determining which firms are to be considered small under the Regulatory Flexibility Act. 

U.S. entities that may be affected include producers of Medfly host crops (many of which 

are categorized within the following North American Industry Classification System 

 

11 USDA/APHIS/PPD/PAD, Amending Import Rules for Clementines from Spain: Final 

Regulatory Impact Analysis, October 2002. 
10

subsectors: NAICS 111310 Orange Groves, NAICS 111320 Citrus (except Orange) 

Groves, NAICS 111331 Apple Orchards, NAICS 111332 Grape Vineyards, NAICS 

111334 Berry (except Strawberry) Farming, NAICS 111335 Tree Nut Farming, NAICS 

111336 Fruit and Tree Nut Combination Farming, and NAICS Other Non-citrus Fruit 

Farming), Fruit and Vegetables Merchant Wholesalers (NAICS 422480), Supermarkets 

and other Grocery Stores (NAICS 445110), and Fruit and Vegetable Markets (NAICS 

445230). The vast majority of the businesses that comprise these industries are small 

entities. 

The Small Business Administration (SBA) classifies fruit fly host crop operations 

as small entities if their annual receipts are not more than $750,000.12 According to the 

2007 Census of Agriculture, there were over 127,895 operations engaged in the 

production of citrus and non-citrus fruits. Over 98 percent of these entities were 

designated as small entities. The SBA classifies fresh fruit and vegetable merchant 

wholesalers (NAICS code 422480) as small if they employ 100 or fewer employees. 

According to the 2002 Economic Census, there were 4,644 of these entities, with 484 (or 

10.4 percent) of them considered to be large.13 SBA classifies supermarkets and other 

grocery stores as small entities if their annual receipts are not more than $23 million. 

There were 56,577 supermarkets and other groceries in 2002. Of these, only 3477 or 6.1 

percent are considered to be large. Fruit and vegetable markets (NAICS code 445230) 

are considered small if their annual sales are less than $6.5 million.14 In 2002, the most 

 

12 SBA, Small business Size Standards matched to North American Industry Classification 

System 2002, Effective January 2006 (www.sba.gov/size/sizetable2002.html).

13The 2007 Wholesale Trade/Establishment and Firm Size data release date is November 

2010.

14 The 2007 Retail Trade/Establishment and Firm Size data release date is October 2010.
11

recent year for which data are available, there were 2,257 fruit and vegetable markets.15 

Approximately 96 percent of these are considered to be small entities under the SBA’s 

standards.

The rule has no mandatory reporting, recordkeeping, or other compliance 

requirements. U.S. entities that may be affected by the rule voluntarily engage in trade 

transactions. Any reporting or other requirements will be those normally associated with 

the regular transactions involved in doing business.

Clearly, a majority of the entities that comprise these U.S. industries are small, 

but any impacts on these industries due to the new cold treatment regulations will be 

insignificant. The rule will not have a significant economic impact on a substantial 

number of small entities. 

Summary

It is unlikely that U.S. entities will be directly affected by the new cold treatment

requirements; compliance will be the responsibility of the exporting entity. Any 

reporting or recordkeeping requirements for U.S. entities will be those normally

associated with importing fruit from abroad.

In theory, if foreign exporters do experience a cost increase because of this 

amendment, the quantity of fruit supplied may decrease. This decrease could result in an 

increase in the price of fruit, costing U.S. consumers and benefiting U.S. producers and 

suppliers. However, any additional costs because of this amendment will represent only 

a small fraction of the price of the fruit.

 

15 U.S. Census Bureau, 2002 Economic Census Geographic Area Series: Manufacturing 

and Wholesale Trade, Revised January 2006 (www.census.gov/econ/census02/

guide/geosumm.htm). 
12

The number of U.S. industries that could be potentially affected by this 

amendment are small, and any impacts on these industries due to these changes in the 

cold treatment regulations will be insignificant. Under these circumstances, the 

Administrator of the Animal and Plant Health Inspection Service has determined that this 

action will not have a significant economic impact on a substantial number of small 

entities.