40482 Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules

this chapter and who is reemployed in

a position covered by subchapter I of

chapter 63 of title 5, United States Code,

shall have a new personal leave ceiling

established at the lesser of his or her

personal leave ceiling established under

§ 630.301(d) of this chapter at the time

of separation or transfer or the amount

of annual leave to be recredited to the

SES member under paragraph (b) of this

section. The new personal leave ceiling

shall be subject to reduction in the same

manner as provided in 5 U.S.C. 6304(c)

until the SES member’s accumulated

annual leave is equal to or less than the

maximum annual leave limitation for

the position in which reemployed.

(e) An employee who is reemployed

in a position listed in 5 U.S.C. 6301(2)

(ii), (iii), (vi), or (vii) shall not be

required to refund a lump-sum payment

under paragraph (a) of this section.

(f) An employee who is reemployed in

a position that has no leave system to

which annual leave can be recredited

shall not be required to refund a lumpsum payment under paragraph (a) of

this section.

(g) When an employee is reemployed

in a position listed in 5 U.S.C. 6301(2)

(x)–(xiii), the amount of annual leave to

be recredited to the employee under

paragraph (b) of this section shall

remain to the employee’s credit and

shall become payable when the

employee becomes eligible for a lumpsum payment under the conditions

prescribed in § 550.1203. If the

employee subsequently transfers to a

position covered by subchapter I of

chapter 63 of title 5, United States Code,

or to a position under a different formal

leave system to which his or her annual

leave can be recredited, the annual leave

to the employee’s credit shall be

recredited to the employee by the

employing agency under

§ 550.1206(b)(1).

(h) An agency shall document the

calculation of an employee’s lump-sum

payment as provided in § 550.1205(b) so

as to permit the subsequent calculation

of any refund required under paragraph

(a) of this section and any recredit of

annual leave required under paragraph

(b) of this section.

[FR Doc. 97–19774 Filed 7–28–97; 8:45 am]

BILLING CODE 6325–01–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV97–905–1 PR]

Oranges, Grapefruit, Tangerines, and

Tangelos Grown in Florida; Limiting

the Volume of Small Florida Red

Seedless Grapefruit

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Proposed rule.

SUMMARY: This proposed rule invites

comments on limiting the volume of

small red seedless grapefruit entering

the fresh market under the marketing

order covering oranges, grapefruit,

tangerines, and tangelos grown in

Florida. The marketing order is

administered locally by the Citrus

Administrative Committee (committee).

This rule would limit the volume of size

48 and/or size 56 red seedless grapefruit

handlers could ship during the first 11

weeks of the 1997–1998 season that

begins in September. This proposal

would provide a sufficient supply of

small sized red seedless grapefruit to

meet market demand, without saturating

all markets with these small sizes. The

committee believes this rule is

necessary to help stabilize the market

and improve grower returns.

DATES: Comments must be received by

August 13, 1997.

ADDRESSES: Interested persons are

invited to submit written comments

concerning this proposal. Comments

must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division,

AMS, USDA, room 2525-S, P.O. Box

96456, Washington, DC 20090–6456;

Fax: (202) 720–5698. All comments

should reference the docket number and

the date and page number of this issue

of the Federal Register and will be

made available for public inspection in

the Office of the Docket Clerk during

regular business hours.

FOR FURTHER INFORMATION CONTACT:

William G. Pimental, Southeast

Marketing Field Office, AMS, USDA,

P.O. Box 2276, Winter Haven, Florida

33883–2276; telephone: (941) 299–4770,

Fax: (941) 299–5169; or Anne Dec,

Marketing Order Administration

Branch, F&V, AMS, USDA, room 2522–

S, P.O. Box 96456, Washington, DC

20090–6456; telephone: (202) 720–5053,

Fax: (202) 720–5698. Small businesses

may request information on compliance

with this regulation by contacting Jay

Guerber, Marketing Order

Administration Branch, Fruit and

Vegetable Division, AMS, USDA, room

2525–S, P.O. Box 96456, Washington,

DC 20090–6456; telephone (202) 720–

2491, Fax: (202) 720–5698.

SUPPLEMENTARY INFORMATION: This

proposal is issued under Marketing

Agreement No. 84 and Marketing Order

No. 905, both as amended (7 CFR part

905), regulating the handling of oranges,

grapefruit, tangerines, and tangelos

grown in Florida, hereinafter referred to

as the ‘‘order.’’ The marketing

agreement and order are effective under

the Agricultural Marketing Agreement

Act of 1937, as amended (7 U.S.C. 601–

674), hereinafter referred to as the

‘‘Act.’’

The Department of Agriculture

(Department) is issuing this rule in

conformance with Executive Order

12866.

This proposal has been reviewed

under Executive Order 12988, Civil

Justice Reform. This rule is not intended

to have retroactive effect. This proposal

will not preempt any State or local laws,

regulations, or policies, unless they

present an irreconcilable conflict with

this rule.

The Act provides that administrative

proceedings must be exhausted before

parties may file suit in court. Under

section 608c(15)(A) of the Act, any

handler subject to an order may file

with the Secretary a petition stating that

the order, any provision of the order, or

any obligation imposed in connection

with the order is not in accordance with

law and request a modification of the

order or to be exempted therefrom. A

handler is afforded the opportunity for

a hearing on the petition. After the

hearing the Secretary would rule on the

petition. The Act provides that the

district court of the United States in any

district in which the handler is an

inhabitant, or has his or her principal

place of business, has jurisdiction to

review the Secretary’s ruling on the

petition, provided an action is filed not

later than 20 days after date of the entry

of the ruling.

The order provides for the

establishment of grade and size

requirements for Florida citrus, with the

concurrence of the Secretary. These

grade and size requirements are

designed to provide fresh markets with

citrus fruit of acceptable quality and

size. This helps create buyer confidence

and contributes to stable marketing

conditions. This is in the interest of

growers, handlers, and consumers, and

is designed to increase returns to

Florida citrus growers. The current

minimum grade standard for red

seedless grapefruit is U.S. No. 1, and the

minimum size requirement is size 56 (at

least 35⁄16 inches in diameter).
Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules 40483

Section 905.52 of the order provides

authority to limit shipments of any

grade or size, or both, of any variety of

Florida citrus. Such limitations may

restrict the shipment of a portion of a

specified grade or size of a variety.

Under such a limitation, the quantity of

such grade or size that may be shipped

by a handler during a particular week

would be established as a percentage of

the total shipments of such variety by

such handler in a prior period,

established by the committee and

approved by the Secretary, in which the

handler shipped such variety.

Section 905.153 of the order provides

procedures for limiting the volume of

small red seedless grapefruit entering

the fresh market. The procedures

specify that the committee may

recommend that only a certain

percentage of sizes 48 and/or 56 red

seedless grapefruit be made available for

shipment into fresh market channels for

any week or weeks during the regulatory

period. The 11 week period begins the

third Monday in September. Under such

a limitation, the quantity of sizes 48

and/or 56 red seedless grapefruit that

may be shipped by a handler during a

regulated week is calculated using the

recommended percentage. By taking the

recommended weekly percentage times

the average weekly volume of red

grapefruit handled by such handler in

the previous five seasons, handlers can

calculate the volume of sizes 48 and/or

56 they may ship in a regulated week.

This proposed rule would limit the

volume of small red seedless grapefruit

entering the fresh market for each week

of the 11 week period beginning the

week of September 15. The proposal

would limit the volume of sizes 48 and/

or 56 red seedless grapefruit by

establishing the weekly percentage for

each of the 11 weeks at 25 percent. This

action was recommended by the

committee at its meeting on May 28,

1997, by a vote of 10 in favor to 7

opposed.

For the past few seasons, returns on

red seedless grapefruit have been at all

time lows, often not returning the cost

of production. On tree prices for red

seedless grapefruit have declined

steadily from $9.60 per carton (3/5

bushel) during the 1989–90 season, to

$3.45 per carton during the 1994–95

season, to a low of $1.41 per carton

during the 1996–97 season. The

committee believes that to stabilize the

market and improve returns to growers,

demand for fresh red seedless grapefruit

must be stabilized and increased.

One problem contributing to the

current state of the market is the

excessive number of small sized

grapefruit shipped early in the

marketing season. During the past three

seasons, sizes 48 and 56 accounted for

34 percent of total shipments during the

11 week regulatory period, with the

average weekly percentage exceeding 40

percent of shipments. This contrasts

with sizes 48 and 56 representing only

26 percent of total shipments for the

remainder of the season. While there is

a market for early grapefruit, the

shipment of large quantities of small red

seedless grapefruit in a short period

oversupplies the fresh market for these

sizes and negatively impacts the market

for all sizes.

For the majority of the season, larger

sizes return better prices than smaller

sizes. However, there is a push early in

the season to get fruit into the market to

take advantage of the higher prices

available at the beginning of the season.

The early season crop tends to have a

greater percentage of small sizes. This

creates a glut of smaller, lower priced

fruit on the market that drives down the

price for all sizes. Early in the season,

larger sized fruit commands a premium

price. In some cases, the f.o.b. is $4 to

$6 a carton more than for the smaller

sizes. In early October, the f.o.b. for a

size 27 averages around $10.00 per

carton. This compares to an average

f.o.b. of $5.50 per carton for size 56. By

the end of the 11 week period outlined

in this rule, the f.o.b. for large sizes has

dropped to within two dollars of the

f.o.b. for small sizes.

In the past three seasons, during the

period covered by this rule, prices of red

seedless grapefruit have fallen from a

weighted average f.o.b. of $7.80 per

carton to an average f.o.b. of $5.50 per

carton. Even though later in the season

the crop has sized to naturally limit the

amount of smaller sizes available for

shipment, the price structure in the

market has already been negatively

affected. In the past three years, the

market has not recovered, and the f.o.b.

for all sizes fell to around $5.00 to $6.00

per carton for most of the rest of the

season.

The committee discussed this issue at

length at several meetings. The

committee believes that the

overshipment of smaller sized red

seedless grapefruit early in the season

has contributed to below production

cost returns for growers and lower on

tree values. An economic study done by

the University of Florida—Institute of

Food and Agricultural Sciences (UFIFAS) in May 1997, found that on tree

prices have fallen from a high near

$7.00 in 1991–92 to around $1.50 for

this past season. The study projects that

if the industry elects to make no

changes, the on tree price will remain

around $1.50. The study also indicates

that increasing minimum size

restrictions could help to raise returns.

The committee examined shipment

data covering the 11 week regulatory

period for the last four seasons. The

information contained the amounts and

percentages of sizes 48 and 56 shipped

during each week. They compared this

information with tables outlining

weekly f.o.b. figures for each size. Based

on this statistical information from past

seasons, the committee members believe

there is an indication that once

shipments of sizes 48 and 56 reach

levels above 250,000 cartons a week,

prices decline on those and most other

sizes of red seedless grapefruit. Without

volume regulation, the industry has

been unable to limit the shipments of

small sizes. The committee believes that

if shipments of small sizes could be

maintained at around 250,000 cartons a

week, prices should stabilize and

demand for larger, more profitable sizes

should increase.

The committee discussed at what

level to establish the weekly

percentages. They wanted to

recommend a weekly percentage that

would provide a sufficient volume of

small sizes without adversely impacting

the markets for larger sizes. The

committee recommended that the

percentage for each of the 11 weeks be

established at the 25 percent level. This

percentage, when combined with the

average weekly shipments for the total

industry, would provide a total industry

allotment of 244,195 cartons of sizes 48

and/or 56 red seedless grapefruit per

regulated week. This percentage would

allow the total shipments of small red

seedless grapefruit to approach the

250,000 carton mark during regulated

weeks without exceeding it.

In its deliberations, the committee

also recognized that if crop and market

conditions should change, the

committee could recommend that the

percentage be increased or eliminated to

provide for the shipment of more small

sizes in any one, or all of the 11 weeks.

While the official crop estimate will not

be available until October, information

in the UF-IFAS study and committee

discussions indicate that the 1997–98

season production will be near or

greater than the 1996–97 estimate of

30.8 million boxes (13⁄5 bushel) of red

seedless grapefruit. Committee members

also stated that the crop is sizing well

and should produce a greater number of

larger sizes than the past season. Using

this information on the 1997–98 crop,

the committee members thought that

establishing a weekly percentage of 25

percent would provide enough small

sizes to supply those markets without

disrupting the markets for larger sizes.
40484 Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules

Under the procedures in section

905.153, the quantity of sizes 48 and/or

56 red seedless grapefruit that may be

shipped by a handler during a regulated

week would be calculated using the

recommended percentage of 25 percent.

By taking the 25 percent weekly

percentage times the average weekly

volume of red grapefruit handled by

such handler in the previous five

seasons, handlers can calculate the

volume of sizes 48 and/or 56 they may

ship in a regulated week.

An average week has been calculated

by the committee for each handler using

the following formula. The total red

seedless grapefruit shipments by a

handler during the 33 week period

beginning the third Monday in

September and ending the first Sunday

in May during the previous five seasons

are added and divided by five to

establish an average season. This

average season was then divided by the

33 weeks in a season to derive the

average week. This average week would

be the base for each handler for each of

the 11 weeks contained in the regulation

period. The weekly percentage, in this

case, 25 percent, is multiplied by a

handler’s average week. The total is that

handler’s allotment of sizes 48 and/or

56 red seedless grapefruit for the given

week.

Under this proposed rule, the

calculated allotment is the amount of

small sized red seedless grapefruit a

handler could ship. If the minimum size

established under section 905.52

remains at size 56, handlers could fill

their allotment with size 56, size 48, or

a combination of the two sizes such that

the total of these shipments are within

the established limits. If the minimum

size under the order is 48, handlers

could fill their allotment with size 48

fruit such that the total of these

shipments are within the established

limits. The committee staff would

perform the specified calculations and

provide them to each handler.

To illustrate, suppose Handler A

shipped a total of 50,000 cartons, 64,600

cartons, 45,000 cartons, 79,500 cartons,

and 24,900 cartons of red seedless

grapefruit in the last five seasons,

respectively. Adding these season totals

and dividing by five yields an average

season of 52,800 cartons. The average

season would then be divided by 33

weeks to yield an average week, in this

case, 1,600 cartons. This would be

Handler A’s base. The weekly

percentage of 25 percent would then be

applied to this amount. This would

provide this handler with a weekly

allotment of 400 cartons (1,600 × .25) of

size 48 and/or 56.

The average week for handlers with

less than five previous seasons of

shipments would be calculated by the

committee by averaging the total

shipments for the seasons they did ship

red seedless grapefruit during the

immediately preceding five years and

dividing that average by 33. New

handlers with no record of shipments

would have no prior period on which to

base their average week. Therefore,

under this proposal, a new handler

could ship small sizes equal to 25

percent of their total volume of

shipments during their first shipping

week. Once a new handler has

established shipments, their average

week will be calculated as an average of

the weeks they have shipped during the

current season.

This proposed rule would establish a

weekly percentage of 25 percent for

each of the 11 weeks to be regulated.

The regulatory period runs from the

third Monday in September (September

15, 1997) through the last Sunday in

November (November 30, 1997). Each

regulation week would begin Monday at

12:00 a.m. and end at 11:59 p.m. the

following Sunday, since most handlers

keep records based on Monday being

the beginning of the work week. If

necessary, the committee could meet

and recommend a percentage above 25

percent to the Secretary at any time

during the regulatory period.

The rules and regulations contain a

variety of provisions designed to

provide handlers with some marketing

flexibility. When regulation is

established by the Secretary for a given

week, the committee calculates the

quantity of small red seedless grapefruit

which may be handled by each handler.

Section 905.153(d) provides allowances

for overshipments, loans, and transfers

of allotment. These allowances should

allow handlers the opportunity to

supply their markets while limiting the

impact of small sizes on a weekly basis.

During any week for which the

Secretary has fixed the percentage of

sizes 48 and/or 56 red seedless

grapefruit, any handler could handle an

amount of sizes 48 and/or 56 red

seedless grapefruit not to exceed 110

percent of their allotment for that week.

The quantity of overshipments (the

amount shipped in excess of a handler’s

weekly allotment) would be deducted

from the handler’s allotment for the

following week. Overshipments would

not be allowed during week 11 because

there would be no allotments the

following week from which to deduct

the overshipments.

If handlers fail to use their entire

allotments in a given week, the amounts

undershipped would not be carried

forward to the following week.

However, a handler to whom an

allotment has been issued could lend or

transfer all or part of such allotment

(excluding the overshipment allowance)

to another handler. In the event of a

loan, each party would, prior to the

completion of the loan agreement, notify

the committee of the proposed loan and

date of repayment. If a transfer of

allotment is desired, each party would

promptly notify the committee so that

proper adjustments of the records could

be made. In each case, the committee

would confirm in writing all such

transactions prior to the following week.

The committee could also act on behalf

of handlers wanting to arrange allotment

loans or participate in the transfer of

allotment. Repayment of an allotment

loan would be at the discretion of the

handlers party to the loan.

The committee would compute each

handler’s allotment by multiplying the

handler’s average week by the

percentage established by regulation for

that week. The committee would notify

each handler prior to that particular

week of the quantity of sizes 48 and 56

red seedless grapefruit such handler

could handle during a particular week,

making the necessary adjustments for

overshipments and loan repayments.

This rule does not affect the provision

that handlers may ship up to 15

standard packed cartons (12 bushels) of

fruit per day exempt from regulatory

requirements. Fruit shipped in gift

packages that are individually

addressed and not for resale, and fruit

shipped for animal feed are also exempt

from handling requirements under

specific conditions. Also, fruit shipped

to commercial processors for conversion

into canned or frozen products or into

a beverage base are not subject to the

handling requirements under the order.

During committee deliberations,

several concerns were raised regarding

this proposed regulation. One area of

concern was the possible impact this

regulation may have on exports. Several

members stated that there is a strong

demand in some export markets for

small sizes. Other members responded

that the percentage set should allow

handlers enough volume of small sizes

to meet the demand in these markets. It

was also stated that any shortfall an

individual handler might have could be

filled by loan or transfer. There was also

some discussion that markets that

normally demand small sizes have

shown a willingness to purchase larger

sizes. In addition, committee data

indicate that the majority of export

shipments occur after the 11 week
Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules 40485

period when there are no restrictions on

small sizes.

Another concern raised was the effect

this proposal may have on packouts. It

was stated that this rule could reduce

the volume packed, resulting in higher

packinghouse costs. The purpose of this

rule is to limit the volume of small sizes

marketed early in the season. Larger

sizes could be substituted for smaller

sizes with a minimum effect on overall

shipments. This rule may require more

selective picking of only the sizes

desired, something that many growers

are doing already. The UF–IFAS study

presented indicated that it would

increase returns if growers would

harvest selectively and return to repick

groves as the grapefruit sized. This also

would allow growers to maximize

returns on fresh grapefruit by not

picking unprofitable grades and sizes of

red grapefruit that would be sent to the

less profitable processing market. The

study also indicated that selective

harvesting can reduce the f.o.b. cost per

carton. Therefore, this action should

have a positive impact on grower

returns.

Several members were concerned

about what would happen if market

conditions were to change. Other

committee members responded that if

industry conditions were to change (for

example, if there was a freeze, or if the

grapefruit was not sizing), the

committee would meet and recommend

that the percentage be raised to allow for

more small sizes, or that the limits be

removed all together.

Another concern raised was that

market share could be lost to Texas.

According to the Economic Analysis

Branch (EAB), of the Fruit and

Vegetable Division, of the Agricultural

Marketing Service (AMS), limiting

shipments of small Florida grapefruit

would probably not result in a major

shift to Texas grapefruit because the

Texas industry is much smaller and

would have higher freight costs to some

markets supplied by Florida. The UF–

IFAS study made similar findings.

Texas production is much smaller and

has been susceptible to freezes that take

it out of the market. This has lessened

its impact on the overall grapefruit

market.

One handler expressed that they ship

early in the season and this action could

be very restrictive. Members responded

that the availability of loans and

transfers would address these concerns.

There was also discussion of how

restrictive this proposal would actually

be. Based on shipments from the past

four seasons, available allotment would

have exceeded actual shipments for

each of the first three weeks that would

be regulated under this rule. In the three

seasons prior to last season, if a 25

percent restriction on small sizes had

been applied during the 11 week period,

only an average of 4.2 percent of overall

shipments during that period would

have been affected. A large percentage

of this volume most likely could have

been replaced by larger sizes. A

sufficient volume of small sized red

grapefruit would still be allowed into all

channels of trade, and allowances

would be in place to help handlers

address any market shortfall.

After considering the concerns

expressed, and the available

information, the committee determined

that this rule was needed to regulate

shipments of small sized red seedless

grapefruit.

Section 8(e) of the Act requires that

whenever grade, size, quality or

maturity requirements are in effect for

certain commodities under a domestic

marketing order, including grapefruit,

imports of that commodity must meet

the same or comparable requirements.

This rule does not change the minimum

grade and size requirements under the

order, only the percentages of sizes 48

and/or 56 red grapefruit that may be

handled. Therefore, no change is

necessary in the grapefruit import

regulations as a result of this action.

Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA),

AMS has considered the economic

impact of this action on small entities.

Accordingly, AMS has prepared this

initial regulatory flexibility analysis.

The purpose of the RFA is to fit

regulatory actions to the scale of

business subject to such actions in order

that small businesses will not be unduly

or disproportionately burdened.

Marketing orders issued pursuant to the

Act, and rules issued thereunder, are

unique in that they are brought about

through group action of essentially

small entities acting on their own

behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 80 handlers

subject to regulation under the order

and approximately 11,000 growers of

citrus in the regulated area. Small

agricultural service firms, which

includes handlers, have been defined by

the Small Business Administration

(SBA) (13 CFR 121.601) as those having

annual receipts of less than $5,000,000,

and small agricultural producers are

defined as those having annual receipts

of less than $500,000.

Based on the Florida Agricultural

Statistics Service and committee data

for the 1995–96 season, the average

annual f.o.b. price for fresh Florida red

grapefruit during the 1995–96 season

was $5.00 per 4/5 bushel cartons for all

grapefruit shipments, and the total

shipments for the 1995–96 season were

23 million cartons of grapefruit.

Approximately 20 percent of all

handlers handled 60 percent of Florida

grapefruit shipments. In addition, many

of these handlers ship other citrus fruit

and products which are not included in

committee data but would contribute

further to handler receipts. Using the

average f.o.b. price, about 80 percent of

grapefruit handlers could be considered

small businesses under SBA’s definition

and about 20 percent of the handlers

could be considered large businesses.

The majority of Florida grapefruit

handlers, and growers may be classified

as small entities.

The committee believes that the

overshipment of smaller sized red

seedless grapefruit early in the season

has contributed to below production

cost returns for growers and lower on

tree values. For the past few seasons,

returns on red seedless grapefruit have

been at all time lows, often not

returning the cost of production. On tree

prices for red seedless grapefruit have

declined steadily from $9.60 per carton

(3/5 bushel) during the 1989–90 season,

to $3.45 per carton during the 1994–95

season, to a low of $1.41 per carton

during the 1996–97 season. The

committee believes that to stabilize the

market and improve returns to growers,

demand for fresh red seedless grapefruit

must be stabilized and increased.

Under the authority of section 905.52

of the order, this proposed rule would

limit the volume of small red seedless

grapefruit entering the fresh market for

each week of the 11 week period

beginning the week of September 15.

The proposal would limit the volume of

sizes 48 and/or 56 red seedless

grapefruit by establishing the weekly

percentage for each of the 11 weeks at

25 percent. Under such a limitation, the

quantity of sizes 48 and/or 56 red

seedless grapefruit that may be shipped

by a handler during a particular week is

calculated using the recommended

percentage. By taking the recommended

percentage times the average weekly

volume of red grapefruit handled by

such handler in the previous five

seasons, the committee would calculate

a handler’s weekly allotment of small

sizes. This proposal would provide a

supply of small sized red seedless

grapefruit sufficient to meet market

demand, without saturating all markets

with these small sizes. The committee

believes this rule is necessary to help

stabilize the market and improve grower

returns.

At the meeting, there was discussion

regarding the expected impact of this
40486 Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules

change on handlers and growers in

terms of cost. Discussion focused on the

possibility that market share would be

lost to Texas and that this proposed rule

could increase packinghouse costs.

According to EAB, limiting shipments

of small Florida grapefruit would

probably not result in a major shift to

Texas grapefruit because the Texas

industry is much smaller and would

have higher freight costs to some

markets supplied by Florida. The UF–

IFAS study made similar findings.

Texas production is much smaller and

has been susceptible to freezes that take

it out of the market. This has lessened

its impact on the overall grapefruit

market.

The concern about packinghouse

costs was that this proposal would mean

lower packouts which may increase

cost. However, the availability of loans

and transfers would provide some

flexibility. Also, this proposal would

only affect small sizes and only during

the 11 week period. By substituting

larger sizes and using loans and

transfers, packouts should approach the

weekly volume of seasons prior to this

proposal.

The weekly percentage of 25 percent,

when combined with the average

weekly shipments for the total industry,

would provide a total industry

allotment of 244,195 cartons of sizes 48

and/or 56 red seedless grapefruit per

regulated week. Based on shipments

from the past four seasons, the total

available weekly allotment of 244,195

cartons would exceed actual shipments

for each of the first three weeks that

would be regulated under this rule. In

addition, if a 25 percent restriction on

small sizes had been applied during the

11 week period in the three seasons

prior to last season, an average of 4.2

percent of overall shipments during that

period would have been affected. A

large percentage of this volume most

likely could have been replaced by

larger sizes. Under this proposal a

sufficient volume of small sized red

grapefruit would still be allowed into all

channels of trade, and allowances

would be in place to help handlers

address any market shortfall. Therefore,

the overall impact on total seasonal

shipments and on industry cost should

be minimal.

The committee also discussed the

state of the market and the cost of doing

nothing. During the past three seasons,

sizes 48 and 56 accounted for 34 percent

of total shipments during the 11 week

regulatory period, with the average

weekly percentage exceeding 40 percent

of shipments. For the remainder of the

season, sizes 48 and 56 represent only

26 percent of total shipments. While

there is a market for early grapefruit, the

shipment of large quantities of small red

seedless grapefruit in a short period

oversupplies the fresh market for these

sizes and negatively impacts the market

for all sizes.

The early season crop tends to have

a greater percentage of small sizes. The

large volume of smaller, lower priced

fruit drives down the price for all sizes.

Early in the season, larger sized fruit

commands a premium price. In some

cases, the f.o.b. is $4 to $6 a carton more

than for the smaller sizes. In early

October, the f.o.b. for a size 27 averages

around $10.00 per carton. This

compares to an average f.o.b. of $5.50

per carton for size 56. By the end of the

11 week period outlined in this rule, the

f.o.b. for large sizes has dropped to

within two dollars of the price for small

sizes.

In the past three seasons, during the

period covered by this rule, prices of red

seedless grapefruit have fallen from a

weighted average f.o.b. of $7.80 per

carton to an average f.o.b. of $5.50 per

carton. Even though later in the season

the crop has sized to naturally limit the

amount of smaller sizes available for

shipment, the price structure in the

market has already been negatively

affected. This leaves the f.o.b. for all

sizes around $5.00 to $6.00 per carton

for the rest of the season.

As previously stated, the on tree price

of red seedless grapefruit has also been

falling. On tree prices for fresh red

seedless grapefruit have declined

steadily from $9.60 per carton during

the 1989–90 season, to $3.45 per carton

during the 1994–95 season, to a low of

$1.41 per carton during the 1996–97

season. In many cases, prices during the

past two seasons have provided returns

less than production costs. This price

reduction could force many small

growers out of business. If no action is

taken, the UF–IFAS study indicates that

on tree returns would remain at levels

around $1.50.

This proposal would provide a supply

of small sized red seedless grapefruit to

meet market demand, without saturating

all markets with these small sizes. The

committee believes that if the supply of

small sizes were limited early in the

season, prices could be stabilized at a

higher level. This would provide

increased returns for growers. In

addition, if more small grapefruit were

allowed to remain on the tree to

increase in size and maturity, it could

provide greater returns to growers.

The committee surveyed shipment

data covering the 11 week regulatory

period for the last four seasons and

examined tables outlining weekly f.o.b.

figures for each size. The committee

believes that if shipments of small sizes

could be maintained at around 250,000

cartons a week, prices should stabilize

and demand for larger, more profitable

sizes should increase. The weekly

percentage of 25 percent, when

combined with the average weekly

shipments for the total industry, would

provide a total industry allotment of

244,195 cartons of sizes 48 and/or 56

red seedless grapefruit per regulated

week. A stabilized price that returns a

fair market value would be beneficial to

both small and large growers and

handlers.

This rule may require more selective

picking of only the sizes desired,

something that many growers are doing

already. The UF–IFAS study indicated

that returns could increase if growers

would harvest selectively and return to

repick groves as the grapefruit sized.

This also would allow growers to

maximize returns on fresh grapefruit by

not picking unprofitable grades and

sizes of red grapefruit that would be

sent to the less profitable processing

market. The study indicated that

selective harvesting can reduce the f.o.b.

cost per carton. The study also indicates

that increasing minimum size

restrictions could help to raise returns.

Fifty-nine percent of red seedless

grapefruit is shipped to fresh market

channels. There is a processing outlet

for grapefruit not sold into the fresh

market. However, the vast majority of

processing is squeezing the grapefruit

for juice. Because of the properties of

the juice of red seedless grapefruit,

including problems with color, the

processing outlet is limited, and not

currently profitable. Therefore, it is

essential that the market for fresh red

grapefruit be fostered and maintained.

Any costs associated with this action

would only be for the 11 week

regulatory period. However, benefits

from this action could stretch

throughout the entire 33 week season.

Even if this action was successful only

in raising returns a few pennies a

carton, when applied to 34 million

cartons of red seedless grapefruit

shipped to the fresh market, the benefits

should more than outweigh the costs.

The limits that would be established

under this action would be based on

percentages applied to a handler’s

average week. This process was

established by the committee because it

was the most equitable. Also, all

handlers would have access to loans

and transfers. All handlers and growers

would benefit from increased returns.

The costs or benefits of this rule are not

expected to be disproportionately more

or less for small handlers or growers

than for larger entities.
Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Proposed Rules 40487

The committee discussed alternatives

to this action. The committee discussed

eliminating shipments of size 56

grapefruit all together. Several members

expressed that there is a market for size

56 grapefruit. Members favored the

percentage rule recommended because

it would supply a sufficient quantity of

small sizes should there be a demand

for size 56. Therefore, the motion to

eliminate size 56 was rejected. Another

alternative discussed was to do nothing.

However, the committee rejected this

option, taking in account that returns

would remain stagnant without action.

This rule would change the

requirements under the Florida citrus

marketing order. Handlers utilizing the

flexibility of the loan and transfer

aspects of this action would be required

to submit a form to the committee. The

rule would increase the reporting

burden on approximately 80 handlers of

red seedless grapefruit who would be

taking about 0.03 hour to complete each

report regarding allotment loans or

transfers. The information collection

requirements contained in this section

have been approved by the Office of

Management and Budget (OMB) under

the provisions of the Paperwork

Reduction Act of 1995 (Pub. L. 104–13)

and assigned OMB number 0581–0094.

As with all Federal marketing order

programs, reports and forms are

periodically reviewed to reduce

information requirements and

duplication by industry and public

sector agencies.

The Department has not identified

any relevant Federal rules that

duplicate, overlap or conflict with this

proposed rule. However, red seedless

grapefruit must meet the requirements

as specified in the U.S. Standards for

Grades of Florida Grapefruit (7 CFR

51.760 through 51.784) issued under the

Agricultural Marketing Act of 1946

(7 U.S.C. 1621 through 1627).

In addition, the committee’s meeting

was widely publicized throughout the

citrus industry and all interested

persons were invited to attend the

meeting and participate in Committee

deliberations on all issues. Like all

Committee meetings, the May 28, 1997,

meeting was a public meeting and all

entities, both large and small, were able

to express views on this issue.

Interested persons are invited to submit

information on the regulatory and

informational impacts of this action on

small businesses.

A 15-day comment period is provided

to allow interested persons to respond

to this proposal. Fifteen days is deemed

appropriate because this rule would

need to be in place as soon as possible

since handlers will begin shipping

grapefruit in September. In addition,

because of the nature of this rule,

handlers need time to consider their

allotment and how best to service their

customers. Also, the industry has been

discussing this issue for some time. The

committee has kept the industry well

informed on this issue. It has also been

widely discussed at various industry

and association meetings. Interested

persons have had time to determine and

express their positions. All written

comments timely received will be

considered before a final determination

is made on this matter.

List of Subjects in 7 CFR Part 905

Grapefruit, Marketing agreements,

Oranges, Reporting and recordkeeping

requirements, Tangelos, Tangerines.

For the reasons set forth in the

preamble, 7 CFR part 905 is proposed to

be amended as follows:

PART 905—ORANGES, GRAPEFRUIT,

TANGERINES, AND TANGELOS

GROWN IN FLORIDA

1. The authority citation for 7 CFR

Part 905 continues to read as follows:

Authority: 7 U.S.C. 601–674.

2. In § 905.306, paragraphs (a) and (b),

the word ‘‘During’’ is removed and the

words ‘‘Except as otherwise provided in

section 905.601, during’’ are added in

its place.

3. A new § 905.601 is added to read

as follows:

§ 905.601 Red seedless grapefruit

regulation 101.

The schedule below establishes the

weekly percentages to be used to

calculate each handler’s weekly

allotment of small sizes. If the minimum

size in effect under section 905.306 for

red seedless grapefruit is size 56,

handlers can fill their allotment with

size 56, size 48, or a combination of the

two sizes such that the total of these

shipments are within the established

weekly limits. If the minimum size in

effect under section 905.306 for red

seedless grapefruit is 48, handlers can

fill their allotment with size 48 red

seedless grapefruit such that the total of

these shipments are within the

established weekly limits. The weekly

percentages for sizes 48 and/or 56 red

seedless grapefruit grown in Florida,

which may be handled during the

specified weeks are as follows:

Week

Weekly

percentage

(a) 9/15/97 through 9/21/97 ............ 25

(b) 9/22/97 through 9/28/97 ............ 25

(c) 9/29/97 through 10/5/97 ............ 25

Week

Weekly

percentage

(d) 10/6/97 through 10/12/97 .......... 25

(e) 10/13/97 through 10/19/97 ........ 25

(f) 10/20/97 through 10/26/97 ......... 25

(g) 10/27/97 through 11/2/97 .......... 25

(h) 11/3/97 through 11/9/97 ............ 25

(i) 11/10/97 through 11/16/97 ......... 25

(j) 11/17/97 through 11/23/97 ......... 25

(k) 11/24/97 through 11/30/97 ........ 25

Dated: July 25, 1997.

Ronald L. Cioffi,

Acting Director, Fruit and Vegetable Division,

Agricultural Marketing Service.

[FR Doc. 97–20034 Filed 7–25–97; 1:13 pm]

BILLING CODE 3410–02–U

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 312

RIN 3064–AC01

Prevention of Deposit Shifting

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Proposed rule; withdrawal.

SUMMARY: The FDIC is withdrawing a

proposed rule to implement a statute

prohibiting the shifting of deposits

insured under the Savings Association

Insurance Fund (SAIF) to deposits

insured under the Bank Insurance Fund

(BIF) for the purpose of evading the

assessment rates applicable to SAIF

deposits. The FDIC is taking this action

in response to comments received on

the proposed rule, which was published

in the Federal Register on February 11,

1997.

DATES: The proposed rule is withdrawn

July 29, 1997.

FOR FURTHER INFORMATION CONTACT:

Joseph A. DiNuzzo, Counsel, (202) 898–

7349, Legal Division; or George Hanc,

Associate Director, Division of Research

and Statistics, (202) 898–8719, Federal

Deposit Insurance Corporation,

Washington, D. C. 20429.

SUPPLEMENTARY INFORMATION:

I. The Funds Act and the Deposit

Shifting Statute

A provision of the Deposit Insurance

Funds Act of 1996 (Funds Act) requires

the Comptroller of the Currency, the

Board of Directors of the FDIC, the

Board of Governors of the Federal

Reserve System, and the Director of the

Office of Thrift Supervision (federal

banking agencies) to take ‘‘appropriate

actions’’ to prevent insured depository

institutions and holding companies