SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (the Act), and Marketing Order No. 906 (7 CFR part 906) (the Order), which regulates the handling of oranges and grapefruit grown in the Lower Rio Grande Valley in Texas. The Committee locally administers the Order and is comprised of producers and handlers of oranges and grapefruit operating within the area of production.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends existing Marketing Order No. 906, as amended (7 CFR part 906), Oranges and Grapefruit Grown in the Lower Rio Grande Valley in Texas, and is necessary for the continued operation of Marketing Order No. 906. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. The Agricultural Marketing Service (AMS) has determined this proposed rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” Under the Order now in effect, Texas orange and grapefruit handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the proposed assessment rate would be applicable to all assessable Texas oranges and grapefruit for the 2025-2026 fiscal period, and continue until amended, suspended, or terminated.

This proposed rule would increase the assessment rate for Texas oranges and grapefruit handled under the Order from $0.04 to $0.07 per 7/10-bushel carton or equivalent for the 2025-2026 fiscal period and subsequent fiscal periods.

Sections 906.33 and 906.34 of the Order authorize the Committee, with the approval of AMS, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are familiar with the Committee's needs and with the costs of goods and services in their local area and, thus, can formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting, and all directly affected persons have an opportunity to participate and provide input.

For the 2024-2025 fiscal period, the Committee recommended, and AMS approved, an assessment rate of $0.04 per 7/10-bushel carton or equivalent of Texas oranges and grapefruit. That rate continues in effect from fiscal period to fiscal period until modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other information available to AMS.

The Committee met on June 3, 2025, and unanimously recommended 2025-2026 fiscal period expenditures of $209,970 and an increased assessment rate of $0.07 per 7/10-bushel carton or equivalent of Texas oranges and grapefruit handled for the 2025-2026 fiscal period and subsequent fiscal periods. The proposed assessment rate of $0.07 is $0.03 higher than the rate currently in effect. The Committee recommended increasing the assessment rate to provide additional funding for compliance and to increase its financial reserve. The Committee estimates shipments of approximately 3,600,000 7/10-bushel cartons or equivalent of Texas oranges and grapefruit for the 2025-2026 fiscal period, which is 400,000 fewer cartons than was handled for the 2024-2025 fiscal period.

The Committee derived the recommended assessment rate by ( printed page 23022) considering anticipated expenses, an estimated 3,600,000 7/10-bushel cartons or equivalent of assessable Texas oranges and grapefruit, and the amount of funds available in the authorized reserve. At the current assessment rate of $0.04, the expected shipments of 3,600,000 7/10-bushel cartons or equivalent of assessable Texas oranges and grapefruit would generate $144,000 in assessment revenue (3,600,000 7/10-bushel cartons or equivalent of fruit multiplied by $0.04 assessment rate), which would require the use of $65,970 from the financial reserve to cover the anticipated expenditures of $209,970 for the 2025-2026 fiscal period. By increasing the assessment rate by $0.03 to $0.07, assessment income would generate $252,000 (3,600,000 7/10-bushel cartons or equivalent of fruit multiplied by $0.07 assessment rate) for the 2025-2026 fiscal period. Income derived from handler assessments would be sufficient to meet the Committee's recommended budgeted expenditures of $209,970 for the 2025-2026 fiscal period, while adding money to the financial reserve ($42,030). Funds available in the financial reserve (currently about $37,500) would be kept within the maximum permitted by the Order (approximately one fiscal period's expenses as authorized in § 906.35).

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other available information. Although this assessment rate would be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or AMS. Committee meetings are open to the public and interested persons may express their views at these meetings. AMS will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2025-2026 fiscal period budget, and those for subsequent fiscal periods, will be reviewed and approved by AMS.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this proposed rule 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 businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act are unique in that they are brought about through group action of typically small entities acting on their own behalf.

There are approximately 75 citrus producers in the production area and 17 handlers subject to regulation under the Order. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural producers as those having annual receipts equal to or less than $4,000,000 for orange producers (NAICS code 111310, Orange Groves), and $4,250,000 for other citrus producers, including grapefruit (NAICS code 111320, Citrus (except Orange) Groves). Small agricultural service firms, which include citrus handlers, were defined by the SBA as those having annual receipts equal to or less than $34,000,000 (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).

The USDA National Agricultural Statistics Service (NASS) reported the 2023-2024 producer prices for U.S. fresh oranges and grapefruit were $11.63 and $15.63 per carton, respectively. The prices for U.S. fresh oranges and grapefruit are used for this RFA because NASS does not publish fresh citrus prices for Texas. Based on data provided by the Committee, the number of orange and grapefruit 7/10-bushel cartons or equivalents shipped in the 2023-2024 season were 1,462,800 and 2,513,258, respectively.

Using the producer prices, shipment data, and the total number of Texas orange and grapefruit producers, and assuming a normal distribution, the majority of producers have estimated average annual receipts of significantly less than the SBA threshold of $4 million ($11.63 multiplied by 1,462,800 cartons plus $15.63 multiplied by 2,513,258 cartons equals $56,294,586, divided by 75 producers equals $750,594 per producer).

In addition, based on the NASS data, the average prices of fresh U.S. oranges and grapefruit handled for 2023-2024 season were $18.40 and $23.05 per carton, respectively. Using the same shipment data from the Committee, the number of orange and grapefruit cartons shipped in the 2023-2024 season, and assuming a normal distribution, the majority of Texas orange and grapefruit handlers have average annual receipts of less than $34 million ($18.40 multiplied by 1,462,800 cartons plus $23.05 multiplied by 2,513,258 cartons equals $84,846,117, divided by 17 handlers equals $4,990,948 per handler). Thus, the majority of Texas orange and grapefruit producers and handlers may be classified as small entities.

This proposed rule would increase the assessment rate collected from handlers for the 2025-2026 fiscal period and subsequent fiscal periods from $0.04 to $0.07 per 7/10-bushel carton or equivalent of Texas oranges and grapefruit. The Committee unanimously recommended 2025-2026 expenditures of $209,970 and an assessment rate of $0.07 per 7/10-bushel carton or equivalent. The proposed assessment rate of $0.07 is $0.03 more than the current assessment rate. The 2025-2026 shipments are estimated to be 3,600,000 7/10-bushel cartons or equivalent of Texas oranges and grapefruit. The $0.07 rate should provide $252,000 in assessment income (3,600,000 7/10-bushel cartons or equivalent of fruit multiplied by $0.07 assessment rate). Income derived from handler assessments should provide sufficient funds to meet budgeted expenses for the 2025-2026 fiscal period.

The Committee recommended increasing the assessment rate to provide additional funding for compliance and to increase its financial reserve. The Committee estimates shipments for the 2025-2026 season to be around 3,600,000 7/10-bushel cartons or equivalent of Texas oranges and grapefruit. Given the estimated number of shipments, the current assessment rate of $0.04 would generate $144,000 in assessment income (3,600,000 7/10-bushel cartons or equivalent of fruit multiplied by $0.04 assessment rate), which would require the use of $65,970 from the financial reserve to cover the anticipated expenditures of $209,970 for the 2025-2026 fiscal period. By increasing the assessment rate from $0.04 to $0.07, assessment income would be $252,000 (3,600,000 7/10-bushel cartons or equivalent of fruit multiplied by $0.07 assessment rate). This amount should provide sufficient funds to meet the anticipated 2025-2026 expenses, while adding money to the financial reserve.

Prior to arriving at this budget and the assessment rate, the Committee considered alternatives, including five different proposed budgets with different combinations of assessment rates, estimated shipments, and alternate expenditure levels. Ultimately, the Committee determined the assessment rate of $0.07 would achieve its goals of both adequately funding Committee operations and increasing its ( printed page 23023) financial reserve. Consequently, the alternatives were rejected.

A review of historical and preliminary information pertaining to the 2025-2026 fiscal period indicates the average producer price for Texas oranges and grapefruit for the 2025-2026 season should be approximately $14.15 per 7/10-bushel carton or equivalent. Therefore, utilizing the recommended assessment rate of $0.07 per 7/10-bushel carton or equivalent, assessment revenue for the 2025 fiscal period as a percentage of total producer revenue would be approximately 0.5 percent ($0.07 divided by $14.15 multiplied by 100).

This proposed rule would increase the assessment obligation imposed on Texas orange and grapefruit handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, these costs are expected to be offset by the benefits derived by the operations of the Order.

Committee meetings are widely publicized throughout the Texas citrus industry. All interested persons are invited to attend meetings and participate in Committee deliberations. Like all Committee meetings, the June 3, 2025, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189, Fruit Crops. This proposed rule does not require changes to the current information collection. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large Texas citrus handlers. 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.

AMS is committed to complying with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this proposed rule is consistent with and would effectuate the purposes of the Act.

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this rulemaking.

For the reasons set forth in the preamble, the Agricultural Marketing Service proposes to amend 7 CFR part 906 as follows:

1. The authority citation for 7 CFR part 906 continues to read as follows:

Authority: 7 U.S.C. 601-674.

2. Section 906.235 is revised to read as follows:

91 FR 23021