[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29505]


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[Federal Register: November 30, 1994]


                                                   VOL. 59, NO. 229

                                       Wednesday, November 30, 1994

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 945

[Docket No. AO-150-A6; FV-92-945-2]

 

Irish Potatoes Grown in Certain Designated Counties in Idaho, and 
Malheur County, Oregon; Recommended Decision and Opportunity to File 
Written Exceptions to Proposed Further Amendment of the Marketing 
Agreement and Order No. 945

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and opportunity to file exceptions.

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

SUMMARY: This recommended decision invites written exceptions on 
proposed amendments to the subject marketing agreement and order 
(order). The proposed amendments would include authority to: regulate 
shipments of potatoes within the production area, change representation 
and quorum procedures of the Idaho-Eastern Oregon Potato Committee 
(committee), set container marking and labeling requirements, and 
require the committee to consider, at least every six years, changes in 
committee size or reapportionment of committee membership. Also, other 
proposals would change committee fiscal operations, add confidentiality 
and verification provisions to the order, and make other miscellaneous 
changes that would be consistent with the proposed amendments. The 
proposed amendments are designed to improve order operations.

DATES: Written exceptions must be filed by December 30, 1994.

ADDRESSES: Written exceptions should be filed with the Hearing Clerk, 
U.S. Department of Agriculture, Room 1081-S, Washington, D.C. 20050-
9200, Fax (202) 720-9776. Four copies of all written exceptions should 
be submitted and should reference the docket number and the date and 
page number of this issue of the Federal Register. Exceptions will be 
made available for public inspection in the Office of the Hearing Clerk 
during regular business hours.

FOR FURTHER INFORMATION CONTACT: Valerie L. Emmer or James B. Wendland, 
Marketing Specialists, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, Room 2523-S, P.O. Box 96456, Washington, 
D.C. 20090-6456; telephone: (202) 205-2829 or 720-2170 respectively, or 
Fax (202) 720-5698; or Gary Olson, Northwest Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, 1220 S.W. Third Avenue, Room 369, Portland, Oregon, 97204; 
telephone: (503) 326-2725, or Fax (503) 326-7440.

SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice 
of Hearing issued on August 3, 1993, and published in the August 11, 
1993, issue of the Federal Register [58 FR 42696].
    This administrative action is governed by the provisions of 
sections 556 and 557 of title 5 of the United States Code, and, 
therefore, is excluded from the requirements of Executive Order 12866.

Preliminary Statement

    Notice is hereby given of the filing with the Hearing Clerk of this 
recommended decision with respect to the proposed further amendment of 
the Marketing Agreement and Marketing Order No. 945, regulating the 
handling of Irish potatoes grown in designated counties in Idaho and 
Malheur County, Oregon, and of the opportunity to file written 
exceptions thereto. Copies of this decision may be obtained from 
Valerie L. Emmer, James B. Wendland, or Gary D. Olson, whose addresses 
are listed above.
    This notice is issued pursuant to the provisions of the 
Agricultural Marketing Agreement Act of 1937, as amended [7 U.S.C. 601 
et seq.], hereinafter referred to as the ``Act,'' and the applicable 
rules of practice and procedure governing the formulation of marketing 
agreements and orders [7 CFR part 900].
    The proposed further amendment of the Marketing Agreement and Order 
No. 945 is based on the record of a public hearing held in Idaho Falls, 
Idaho, on September 8, 1993. Notice of this hearing was published in 
the Federal Register on August 11, 1993. The notice of hearing 
contained eight proposals submitted by the committee, which locally 
administers the order.
    Those proposed amendments would: (1) Redefine ``ship or handle'' to 
include shipments of potatoes within the production area; (2) provide 
seed producers with representation on the committee and add authority 
for the committee to recommend to the Secretary changes in the 
committee size and composition; (3) update ``Districts'' to show the 
current composition; (4) require the committee to consider, at least 
every six years, whether to recommend changes in committee size or 
reapportionment of committee membership; (5) change committee quorum 
procedures; (6) remove an outdated assessment limitation of $1 per 
carload and allow the committee to impose late payment or interest 
fees, or both, on late assessment payments, accept advance payments, 
and borrow monies in an extreme emergency for program administration; 
(7) add authority for the committee to recommend container marking and 
labeling requirements; and (8) specify confidentiality requirements for 
handler reports submitted to the committee.
    The notice of hearing also included one proposal and a portion of 
another by the Fruit and Vegetable Division, Agricultural Marketing 
Service (AMS), U.S. Department of Agriculture (Department), which would 
add requirements regarding the verification of reports; and make such 
changes as are necessary to the order, if any or all of the above 
amendments are adopted, so that all of its provisions conform with the 
proposed amendments. The Department also proposed revising the language 
in several sections of the order that are in need of updating.
    No person testified in opposition to any of the proposals offered 
at the hearing and no alternative proposals were offered.
    At the conclusion of the hearing, the administrative law judge 
fixed October 1, 1993, as the final date for interested persons to file 
corrections to the hearing transcript, proposed findings and 
conclusions, and written arguments or briefs based on the evidence 
received at the hearing. On October 1, the administrative law judge 
extended the deadline to October 15, since the transcript of the 
hearing had not been received. On October 14, the deadline was further 
extended to November 1.
    Russell O. Baum of Ashton, Idaho, submitted a comment objecting to 
the term ``Irish Potato'' as an ethnic misrepresentation of the true 
identity of the commonly referred potato. He suggested that 
consideration be given to more accurately renaming the potato by 
either: (1) Dropping ``Irish''; (2) changing it to ``Burbank Potato'', 
in recognition of the fact that Luther Burbank originated the major 
species of potatoes grown in Idaho; (3) changing it to ``American 
Generic Potato'' because the potato originated in the Americas, and not 
in Ireland; or (4) adopting any other more correct name. Since this 
comment is outside the scope of the proposals specified in the notice 
of hearing, it is denied.

Small Business Considerations

    In accordance with the provisions of the Regulatory Flexibility Act 
(RFA) [5 U.S.C. 601 et seq.], the Administrator of the AMS has 
determined that this action would not have a significant economic 
impact on a substantial number of small entities. Small agricultural 
service firms, which include handlers regulated under this order, have 
been defined by the Small Business Administration (SBA) [13 CFR 
121.601] as those having annual receipts for the last three years of 
less than $5,000,000. Small agricultural producers are defined as those 
having annual receipts of less than $500,000.
    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. Interested persons were 
invited to present evidence at the hearing on the probable regulatory 
and informational impact of the proposed amendments on small 
businesses. The record indicates that handlers would not be unduly 
burdened by any additional regulatory requirements, including those 
pertaining to reporting and recordkeeping, that might result from this 
proceeding. The record also indicates that a majority of handlers and 
producers would meet the SBA definitions of small agricultural service 
firms and small agricultural producers, respectively.
    During the 1992-93 crop year, 66 handlers were regulated under 
Marketing Order No. 945. In addition, there were approximately 2,200 
producers of potatoes in the production area. The Act requires the 
application of uniform rules on regulated handlers. Since handlers 
covered under the potato marketing order are predominantly small 
businesses, the order itself is tailored to the size and nature of 
small businesses. Marketing orders and amendments thereto, are unique 
in that they are normally brought about through group action of 
essentially small entities for their own benefit. Thus, both the RFA 
and the Act are compatible with respect to small entities.
    The proposed amendments to the order include amending: Sec. 945.20 
Establishment and membership pertaining to operations of the committee, 
including providing seed producers representation on the committee; 
Sec. 945.23 Redistricting and reapportionment authorizing changes in 
committee size, composition, and representation; Sec. 945.30 Procedure 
regarding quorum requirements; and Sec. 945.42 Assessments removing a 
$1 per carload maximum assessment rate and allowing the committee to 
impose late payment and interest fees on late assessment payments and 
borrow monies in an extreme emergency for program administration. These 
proposed amendments would provide an opportunity for broader based 
representation on the committee and more flexibility to adjust to 
future changes in industry structure, potato production and financial 
operations. These changes are designed to enhance the administration 
and functioning of the order and would have negligible, if any, 
economic impact on small businesses.
    The proposal amending Sec. 945.9 Ship or handle would broaden the 
scope of the order by revising the definition of these terms to include 
the handling of potatoes in the current of commerce within the counties 
covered by the order's production area. This would require the 
inspection of all regulated shipments of potatoes for fresh market and 
compliance with order requirements, including grade, size, quality, 
pack, and payment of assessments. This proposal would improve the 
market for potatoes handled within the production area. This would 
benefit both producers and handlers because minimum grade, size and 
quality requirements established under the order are important to the 
industry in fostering consumer satisfaction, increasing the demand for 
Idaho-Eastern Oregon potatoes, and improving industry returns. The 
additional assessment income would improve the financial operations of 
the order. Any added burden on small businesses should be outweighed by 
the added benefits accruing to them.
    The proposed change to allow the rate of assessment to be based on 
a hundredweight of potatoes, rather than an outdated maximum amount of 
$1 per railroad carload, would improve the financial operations of the 
order and not adversely impact small businesses. This change would 
provide more efficient funding of order operations and activities. 
Fresh potato shipments have stabilized in recent years, and if costs 
continue to rise, the current maximum rate is likely to be insufficient 
to properly fund committee operating costs beyond the next few years.
    Another recommended change would amend Sec. 945.52 Issuance of 
regulations to add authority to require accurate and uniform marking 
and labeling of the containers. The benefits of the expected higher 
returns that could result from increases in buyer and consumer 
satisfaction due to accurate marking and labeling should outweigh any 
potential burden on small businesses.
    Another proposed amendment, to Sec. 945.80 Reports, would provide 
confidentiality requirements for reports submitted to the committee. 
This would safeguard handlers' proprietary information, including that 
for small businesses, without imposing any burden on them. 
Additionally, new Sec. 945.80 provisions would add authority for the 
Secretary and the committee to verify the accuracy of reports filed by 
handlers, and handler compliance with recordkeeping requirements. The 
requirement would not have a significant impact on small entities in 
the industry.
    Finally, the proposed amendments would have no significant impact 
or burden on small businesses' recordkeeping and reporting 
requirements.
    All of these changes are designed to enhance the administration and 
functioning of the marketing agreement and order to the benefit of the 
industry. If implemented, these amendments might impose some costs on 
affected handlers and producers. However, the added burden on small 
entities, if present at all, would not be significant because the 
benefits of the proposed amendments are expected to outweigh the costs.
    The amendments proposed herein have been reviewed under Executive 
Order 12778, Civil Justice Reform. They are not intended to have 
retroactive effect. If adopted, the proposed amendments would not 
preempt any state or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with the amendments.
    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 requesting 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 in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.
    In accordance with the Paperwork Reduction Act of 1980 [44 U.S.C. 
Chapter 35], any additional handler reporting and recordkeeping 
requirements, including any new reports and the two succeeding fiscal 
periods record retention, that might result from the proposed 
amendments would be submitted to the Office of Management and Budget 
(OMB). The provisions would not be effective until receiving OMB 
approval.

Material Issues

    The material issues of record addressed in this decision are:
    (1) Whether to redefine ``ship or handle'' to include shipments of 
potatoes within the production area;
    (2) whether seed producers should be provided representation on the 
committee and whether there should be authority to change committee 
size and composition;
    (3) update ``Districts'' to list the current composition;
    (4) whether to require the committee to consider, at least every 
six years, whether to recommend changes in committee size or 
reapportionment of committee membership;
    (5) whether committee procedures should be changed to require a 
simple majority of all members to constitute a quorum, pass a motion or 
approve a committee action, except to change committee size would 
require a unanimous vote;
    (6) whether the $1 per carload maximum rate for handler assessments 
should be removed and assessments be permitted on a rate per 
hundredweight of assessable potatoes handled and whether there should 
be authority for the committee to impose late payment/interest charges, 
accept advance assessment payments, and borrow monies in an extreme 
emergency;
    (7) whether there should be authority for container marking and 
labeling requirements;
    (8) whether to add provisions for the Secretary and the committee 
to verify the accuracy of reports filed by handlers, protect the 
confidentiality of such information, and require each handler to 
maintain records of potatoes handled for at least two succeeding fiscal 
periods to verify required reports specified in the rules and 
regulations; and
    (9) whether any conforming changes should be made to the order if 
any or all of these proposals were to become effective.

Findings and Conclusions

    The findings and conclusions on the material issues, all of which 
are based on evidence presented at the hearing and the record thereof, 
are:
    (1) Section 945.9 Ship or handle of the order should be amended to 
authorize the regulation of fresh market shipments of Irish potatoes 
within the production area, which includes Malheur County, Oregon, and 
the counties of Adams, Valley, Lemhi, Clark, and Fremont in Idaho, and 
all of the counties in Idaho lying south thereof. Currently, the order 
authorizes regulating interstate and foreign shipments of fresh market 
Irish potatoes grown in the production area. This recommended change 
would broaden the scope of the order to cover shipments within the 
production area, as well as those outside the production area. The Act 
exempts potatoes for canning, freezing, or other processing from 
regulation under any order.
    The lack of regulation of fresh market potatoes within the 
production area has caused a number of significant problems for the 
industry. Sales of unregulated potatoes within the production area have 
(1) depressed the price of potatoes sold in other markets; (2) made 
compliance more difficult since the committee cannot track these 
unregulated potatoes, allowing handlers to claim that their potatoes 
were sold within the production area and were thus exempt from 
regulation; and (3) adversely affected the committee's income since 
assessments are not collected on these potatoes. Yet, such handlers may 
receive the higher prices typically paid for the higher quality 
potatoes resulting from the committee's mandatory quality control 
activities, without absorbing any of the costs to conduct these 
activities. Based on per capita figures, an estimated 48.8 million 
pounds of Idaho-Eastern Oregon fresh market potatoes are consumed 
annually within the production area, compared with about 3.3 billion 
pounds of sales outside the production area. Since potatoes marketed 
within the production area are not currently subject to the order's 
mandatory inspection, minimum grade, size, quality, maturity, pack, and 
assessment requirements, the market for potatoes within the production 
area has received a large volume of poor quality, ungraded potatoes. 
The prices paid for such undesirable potatoes are typically lower than 
those paid for the better quality required under the order for potatoes 
shipped outside the production area. This lower quality price has 
depressed the price for all potatoes in that market. Also, with modern 
communications and daily Market News reports nationwide, lower prices 
in the production area become known quickly in other markets and have a 
depressing effect on prices in those markets as well. This negative 
effect on prices is contrary to the policy of the Act, which includes 
establishing and maintaining orderly marketing conditions and 
increasing returns to producers.
    Record evidence indicates that the price of potatoes in production 
area markets has a direct and immediate effect on prices in markets 
outside that area. Therefore, under the order, the handling of potatoes 
within the production area directly burdens, obstructs, or affects the 
handling of potatoes in interstate commerce to such an extent as to 
make appropriate the regulation of potatoes in Malheur County, Oregon, 
and in the counties of Adams, Valley, Lemhi, Clark, and Fremont in the 
State of Idaho, and all counties in Idaho lying south thereof.
    Although it was not included in the notice of hearing, the 
proponents testified that ``consign'' should be added to the other 
actions included in the definition of ``ship or handle'' specified in 
Sec. 945.9. The record indicates that ``consign'' is defined as an 
agreement between a buyer and seller for the transportation of product 
to be marketed with no previous determination of the return of the 
product. It is the responsibility of the buyer to market the product 
and return to the seller the proceeds. This should be included as 
``handling'' because the ``agent'' or ``handler'' who receives the 
commodity is engaged in the buying, selling and distributing of the 
commodity into market channels. Record evidence supported adding 
``consign'' to the definition of ``ship or handle''.
    Such changes are hereby recommended and would be implemented upon 
amendment of the order.
    (2) Section 945.20 Establishment and membership should be amended 
to provide that at least one member and alternate member position for 
District No. 1 on the Idaho-Eastern Oregon Potato Committee shall be 
represented by producers predominately of potatoes for seed. The 
committee is the administrative body selected by the Secretary to make 
recommendations for operating the order. Currently, the order specifies 
that the committee shall consist of eight members, of whom five shall 
be producers. For each member there shall be an alternate who shall 
have the same qualifications as the member. However, there has been no 
requirement that any producer should be predominately a seed producer. 
There are approximately 200 seed producers involved in this unique 
production and marketing facet of the industry. Since approximately 90 
percent of the order's seed production comes from District No. 1, it is 
appropriate that the seed producer member and alternate should come 
from that district.
    Seed potatoes are typically produced in areas isolated from where 
potatoes are produced for commercial fresh or processing markets. Seed 
potato needs are different than those for fresh market consumption. 
Seed potato buyers are particularly concerned about receiving certified 
seed potatoes, which require that certain plant diseases are within 
established tolerances, and that potatoes are of an appropriate 
(smaller) size for planting.
    This change in representation would allow for new and more specific 
ideas from this unique facet of the industry. Providing for such 
representation would be consistent with a stated objective of the 
Department's Guidelines for Fruit, Vegetable, and Specialty Crop 
Marketing Orders of improving representation and allowing for different 
and more contemporary ideas.
    A proponent for this proposal testified that proposed seed producer 
members not be required to be producing potatoes or to have produced 
potatoes during the previous two years. However, the order specifies 
that to be eligible to serve as a producer on the committee the person 
must be currently producing potatoes. Also, being a current producer 
would result in better qualified nominees who would be more 
knowledgeable of the current problems and situation regarding seed 
potato production and marketing. To best represent seed producers, the 
nominees for the position should be current producers who predominately 
produce seed potatoes and who have produced such potatoes during at 
least three of the last five years. The order defines Producer as any 
person engaged in the production of potatoes for market. It is also a 
requirement that to vote in any referendum held under the order a 
producer must be producing potatoes at that time. Currently, the order 
only specifies two types of committee members--producers and handlers.
    This proposal would encourage, to the maximum extent possible, 
broader-based participation by all industry members of the regulated 
community in the administration of the order. It is hereby concluded 
that this provision should be changed.
    The section should also be amended by adding a paragraph (d) to 
require that at least every six years, the committee shall review 
committee size, composition, and representation and recommend to the 
Secretary whether changes should be made, as provided in Sec. 945.23 
Redistricting and reapportionment. Currently, no minimum period is 
specified during which the committee should review whether significant 
changes in the industry warrant a change in committee representation. 
However, the industry is dynamic and some changes in acreage, 
production, and number of producers and handlers occur every year. 
Although review of the committee structure could be conducted annually, 
testimony indicated that at least every six years was an appropriate 
period within which the committee should review the changes and 
recommend whether the Secretary should change committee makeup or 
representation. Record evidence supports the need to provide the 
committee with flexibility to make necessary changes in the composition 
of the committee to reflect future changes in industry structure or 
production shifts. These changes to this section are hereby 
recommended.
    (3) Section 945.22 Districts currently specifies the original 
districts which had been established in 1941. The order has authority 
in Sec. 945.23 to change districts through informal rulemaking. In 
1972, new districts were established, based on the significant changes 
in industry conditions since the order was first issued in 1941. The 
proposal simply updates the Districts section to list the current 
districts. This change would also bring the district listings in 
Sec. 945.22 in conformity with the listings specified in Sec. 945.130 
Reestablishment of districts and reapportionment of committee 
membership of the rules and regulations. It is hereby recommended that 
Sec. 945.22 be revised by listing the current districts.
    (4) The proposed amendment to Sec. 945.23 Redistricting would 
revise the heading to read ``Redistricting and reapportionment'', and 
would reapportion committee membership. No new authority is being 
proposed. Existing provisions are simply being rearranged for easier 
reference. In Sec. 945.20 it is recommended that authority be provided 
for a seed producer member and alternate to serve on the committee 
representing District No. 1. The section should continue to provide 
flexibility to reestablish districts within the production area, 
reapportion committee membership among the various districts, and 
change committee size and composition. Section 945.24 Selection 
currently specifies committee membership as it was constituted prior to 
being reapportioned in 1972. The order has authority in Sec. 945.23 to 
reapportion committee membership among the various districts through 
informal rulemaking. The proposal is simply to update the listing to 
the current apportionment. District No. 1 is shown as consisting of two 
producer members and one handler member, with their respective 
alternates. The proponents testified that District No. 1's 
representation should be shown as three producer members (one to be a 
new seed producer position) and one handler member, with their 
respective alternates. District No. 2 specifies one producer member and 
one handler member, with their respective alternates. No revision in 
this representation is needed for District No. 2. District No. 3 
currently lists two producer members and one handler member, with their 
respective alternates. The proponents testified that it should show one 
producer member position (after one had been moved to District No. 1, 
to now provide a new seed producer member position). Therefore, 
District No. 3 membership should be revised to provide for one producer 
member and one handler member, with their respective alternates.
    Future representation should be as recommended by the committee and 
approved by the Secretary, as significant changes occur in the 
industry.
    Also Sec. 945.24 Selection, should be revised to eliminate 
paragraphs (a), (b) and (c) which lists the committee membership 
apportionment for Districts Nos. 1, 2 and 3, to avoid redundancy in the 
language as recommended in Sec. 945.23.
    Based on the recommended revision of Sec. 945.20 Establishment and 
membership that adds a paragraph requiring that the committee, at least 
every six years, review committee size, composition, and 
representation, and recommend any changes to reflect developments in 
the industry, Sec. 945.23 should also be revised by adding a similar 
paragraph specifying that at least every six years the committee should 
review industry changes and recommend any necessary redistricting, 
reapportioning, or change in committee size or composition.
    (5) Paragraph (a) of Sec. 945.30 Procedure should be revised to 
require a simple majority of all members of the committee, including 
alternates acting for members, to constitute a quorum or to pass any 
motion or approve any committee action, except any motion regarding a 
change in committee size shall require a unanimous vote. Currently, 
there is an eight-member committee, and five members are necessary to 
constitute a quorum and to pass any action. The proponents have 
testified that the committee should have the authority to recommend 
changes in the size of the committee to adjust to future changes in the 
industry. Any size increase approved by the Secretary would necessitate 
a corresponding change in the number required for a quorum and to pass 
any action. Rather than specify all the possible combinations of such 
numbers, record evidence supports adoption of the proponents' proposed 
language that a quorum be a simple majority. This would simplify 
procedures if the committee size is changed. Therefore, it is hereby 
recommended that Sec. 945.30 Procedure be amended by specifying that a 
simple majority of all members, including alternates acting for 
members, shall be necessary to constitute a quorum to pass any motion 
or approve any committee action, except any motion regarding a change 
in committee size shall require a unanimous vote. Changing the 
committee size is such a significant action that it should be favored 
by all committee members. It was testified that a near unanimous vote 
would not suffice, even if it might give one member veto power over the 
committee.
    (6) Section 945.42 Assessments deals with the administrative 
funding of committee operations. The Act authorizes establishment of an 
agency, the committee, to administer the order. Currently, the order 
authorizes the committee, with the approval of the Secretary, to make 
expenditures and establish an assessment rate for each fiscal period 
for assessable potatoes shipped under the order. Any assessment in 
excess of expenses incurred during a fiscal period may be carried over 
as a reserve, provided that reserve funds do not exceed approximately 
one fiscal period's budgeted expenses. Each handler who ships potatoes 
into regulated markets is required to pay a pro rata share of the 
committee's expenses. Currently, the order specifies such assessments 
shall not exceed $1 per carload, or equivalent quantity. Potatoes for 
canning, freezing, or other processing are exempt from regulation, 
including assessments. Record evidence supports revising paragraph (b) 
to remove the outdated assessment limitation of $1 per carload. Since 
railcar capacities have increased significantly after this limit was 
set more than three decades ago and the load per carload may vary 
greatly, it has become impractical to base the assessment rate on this 
fixed rate per carload.
    Committee operating costs have continued to rise over the years 
along with the cost of living and presumably will continue to do so. 
However, total assessments collected during the past five years have 
tended to stabilize at an average of $78,434 per year. Thus, assessment 
income under present order authority is not expected to keep up with 
rising costs. Although the committee presently has adequate operating 
reserve funds and does not anticipate any need to increase the 
assessment rate in the near future, record evidence indicates that the 
current maximum assessment rate of $1 per carload will not be 
sufficient to properly fund committee expenses for the long term 
administration of the order. Therefore, the evidence supports providing 
authority to establish an assessment on a different unit basis of 
potatoes. The proponents recommended that the assessment be levied at a 
rate per hundredweight of potatoes or equivalent quantity. Such rate 
would be recommended by the committee and approved by the Secretary 
through informal rulemaking.
    This section should also be amended by adding a paragraph (c) to 
provide authority for the committee to impose a late payment or 
interest charge, or both, upon any handlers who are delinquent in their 
assessment payments. Currently, there is no such incentive to pay 
assessments in a timely manner. It is unfair to other handlers who pay 
assessments promptly if another handler fails to pay assessments when 
due. A delinquent handler has an advantage in the use of these unpaid 
assessment funds. Also, delinquencies by some handlers leads to 
delinquencies by others. Moreover, nonpayment of assessments can have 
an adverse effect on the stable financial operation of an order and may 
require the committee to borrow money and pay interest to continue 
operation. Record evidence indicates that the charging of late payment 
or interest charges, or both, on all late accounts would defray some of 
the added cost of collecting such accounts and discourage handlers from 
delaying their payments. The late payment and interest rate charges 
would be recommended by the committee, subject to approval by the 
Secretary through informal rulemaking. An example of such charges would 
be similar to what commercial businesses charge, such as a five dollar 
late fee and one and one-half percent per month on the unpaid balance. 
Other similar programs which had experienced problems in collecting 
assessments promptly have found such provisions useful and effective. 
The provision should be of similar value to the Idaho-Eastern Oregon 
potato order.
    This section should also be amended by adding a paragraph (e) to 
provide authority for the committee to accept advance assessment 
payments from handlers. Although handlers could make advance payments 
of assessments at any time, the provision would be most needed by the 
committee when its funds were short. The committee could send a request 
to handlers for voluntary advance assessment payments. Prepayments 
would be credited toward assessments levied against that handler during 
that fiscal period.
    A question raised at the hearing was whether the committee should 
have authority to offer a small discount, such as one percent, to any 
handler who made advance assessment payments. The witness testifying on 
the proposal to authorize advance payments declined to answer the 
question. No witness offered evidence that supported such a discount as 
a routine procedure. The committee manager testified that he would 
support a discount in case of emergency. Therefore, due to the lack of 
record evidence and because such discounted assessment rate is contrary 
to both Sec. 945.42 Assessments language and the providing of one 
uniform assessment rate on all first handlers (which shall be such 
handler's pro rata share of the committee's approved expenses), it is 
determined that such discount should not be authorized.
    The committee should be authorized to borrow money on a short term 
basis in case of an extreme emergency, such as a disastrous year 
regarding potato production, to continue normal operations. The 
authority to borrow money is not intended to permit the committee to 
obligate itself to borrow large sums of money over an extended period 
of time. Such borrowing should only be used when necessary to meet 
financial obligations when operating reserve funds are inadequate and 
until sufficient assessment revenue could be generated to repay the 
loan and meet other financial obligations necessary to insure continued 
operation of the order. The loan should be repaid by the end of the 
next fiscal period. Any such borrowed money would only be used to meet 
the committee's current financial obligations. It is hereby recommended 
that Sec. 945.42 of the order be amended to include the above 
provisions.
    (7) Section 945.52 Issuance of regulations should be amended by 
revising paragraph (a)(3) to add authority to require accurate and 
uniform marking and labeling of the containers in which production area 
potatoes are shipped. Such authority would help interested persons more 
readily identify such shipments and help buyers in managing inventory 
and marketing the potatoes. These advantages can foster buyer 
satisfaction.
    The industry has had problems of confusion from count cartons being 
sold without the size being marked on the container. Section 945.341 
(c) Pack specifies the size, count (number of potatoes needed to fill a 
50-pound container), and allowable weight range of each potato therein. 
Information was provided that such unmarked cartons have been sold at 
inflated prices by wholesalers who misrepresented the contents as 
larger and more valuable potatoes. An example is unmarked cartons of 
100 count potatoes which were sold by the wholesaler as larger 90 count 
because 90 count was what the end user had requested. The end users 
complained because they did not receive the larger potatoes and were 
overcharged for the smaller ones. Thus, wholesalers were getting paid a 
higher price by misrepresenting potatoes as a larger size. This 
practice has damaged the Idaho-Eastern Oregon potato industry in three 
ways--it deprives the handler of the higher price that should be paid 
him/her by the wholesaler for the larger potatoes, it harms the 
industry's high quality reputation and it creates a dissatisfied end 
user. Such confusion and damage to the industry and consumers would be 
eliminated by authorizing requirements for accurate markings on 
containers.
    Another example would involve bulk potato loads which enter the 
order's production area from another State such as Nevada, and are 
repacked in Idaho. If the repacked containers did not show that the 
potatoes were grown in Nevada, but showed potatoes were packed or 
distributed in Idaho, any buyer or consumer could be misled into 
believing they had purchased Idaho-grown potatoes. Section 945.65 
Inspection and certification specifies that potatoes must be inspected 
and be covered by a valid inspection certificate and that repacking any 
lot of potatoes invalidates any prior inspection certificate. When non-
production area potatoes are repacked in production area facilities, 
those potatoes must meet the order's requirements unless the Federal-
State Inspection Service representative in the facility is satisfied 
that those potatoes were not commingled with production area potatoes. 
Procedures for safeguarding such repacking of bulk loads within the 
production area would be specified in rules and regulations recommended 
by the committee and approved by the Secretary through informal 
rulemaking. Damage to the industry would be eliminated by authorizing 
requirements for accurate markings on containers.
    In addition to accurate markings on containers, the committee 
should also have authority, with the approval of the Secretary, to 
require accurate and adequate labeling, including the identification of 
the variety of potato. With more new and different varieties being 
marketed each season, consumers would benefit from being apprised of 
the variety in the container. Although variety labeling and use of the 
Idaho logo are currently a State program requirement of the Idaho 
Potato Commission (Commission), this would not preclude the committee 
from issuing regulations concerning marking and labeling for different 
varieties of potatoes. Such labeling would complement the Commission's 
potato promotion program. In addition, the committee should have the 
option of issuing regulations for potatoes grown in the Oregon portion 
of the production area. Such marking requirements could require the 
containers to be clearly marked and identified with the variety of 
potatoes; net weight; count and/or volume; name and address of the 
packer or shipper; origin of the potatoes; grade and size if 
applicable; and any other information on quality and pack of the 
potatoes as may be recommended by the committee and approved by the 
Secretary through informal rulemaking.
    Clear markings also would enable the committee to more easily 
determine whether the potatoes have been inspected and certified as 
required under the order. Comparison with inspection documents would be 
easier. This action is needed to provide flexibility to meet current 
and future marketing problems. It is hereby recommended that 
Sec. 945.52(a) be amended by adding authority for container marking and 
labeling.
    (8) Section 945.80 Reports should be amended, as proposed by the 
Fruit and Vegetable Division, AMS, by adding new paragraphs (b) through 
(d) to assure confidentiality of information provided by handlers and 
to expressly state in the order the right of the Secretary, and confer 
such right on the committee, to verify the accuracy of reports filed by 
handlers and to check handler compliance with recordkeeping 
requirements.
    A new Sec. 945.80 (b) should be added to specify that confidential 
information provided to the committee would be protected from 
disclosure. The section should specify that all data or other 
information constituting a trade secret or disclosing a trade position 
or business condition shall be received by, and kept in the custody of, 
one or more designated employees of the committee. Information which 
would reveal the circumstances of a single handler shall be disclosed 
to no person other than the Secretary, except as provided by law. Under 
certain circumstances, the release of composite information compiled 
from data and information submitted by handlers may be helpful to the 
committee in planning operations under the order. Such composite 
information would not disclose the identities of the individual 
handlers or their separate business operations.
    The record evidence indicates that the proposal on verification 
would merely specify in the order the investigative authority already 
provided in the Act. Section 945.80 should be amended to specify that 
the Secretary and the committee, through its duly authorized employees, 
would have access to any premises where handlers' potatoes are held 
and, at any time during normal business hours, would be permitted to 
examine any such potatoes and any and all records with respect to 
matters within the purview of the order. Handlers would be responsible 
for furnishing labor as may be necessary to facilitate such 
examinations. The Secretary and duly authorized committee employees 
would thus explicitly have the authority to examine and audit the 
records of all handlers to determine compliance with provisions of the 
order. The committee would report the results of such examinations and 
audits to the Secretary.
    So that the committee would be able to perform investigations 
effectively and to verify compliance under the order, each handler 
should be required to maintain complete records which accurately show 
such handler's acquisition and disposition of potatoes each season, 
including the quantity of potatoes held, sold, and shipped. Such 
information is generally maintained by handlers in the normal course of 
business and maintenance of such records would not impose additional 
costs and reporting burdens on the handlers.
    Further, should it be found necessary, the committee, with the 
approval of the Secretary, should have the authority to issue 
regulations which would establish the types of records which must be 
maintained. Handlers would be required to keep such records for at 
least two succeeding fiscal periods. This period should afford the 
committee's employees adequate time to examine and review such records 
in the event of alleged program violations by handlers. This 
requirement should not impose an undue burden on handlers, since such 
records are likely retained for a similar or longer period under normal 
business practices.
    It is hereby recommended that Sec. 945.80 be amended by adding new 
paragraphs (b) through (d) as discussed above.
    (9) The Department proposed in the notice of hearing that it be 
authorized to make any necessary changes in the order language to make 
the entire order conform with any amendments resulting from this 
proceeding. This proposal was supported at the hearing without 
opposition. Such conforming changes as necessary and stated herein have 
been incorporated in this recommended decision. The record evidence 
supports these changes.

Rulings on Briefs of Interested Persons

    The presiding officer of the hearing set November 1, 1993, as the 
final date for filing briefs with respect to the evidence presented at 
the hearing and the conclusions which should be drawn therefrom. No 
briefs were received.

General Findings

    Upon the basis of the record it is found that:
    (1) The findings hereinafter set forth are supplementary to the 
previous findings and determinations which were made in connection with 
the issuance of the marketing agreement and order and each previously 
issued amendment thereto. Except insofar as such findings and 
determinations may be in conflict with the findings and determinations 
set forth herein, all of the said prior findings and determinations are 
hereby ratified and affirmed;
    (2) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, and all of the terms and conditions 
thereof, will tend to effectuate the declared policy of the Act;
    (3) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, regulate the handling of potatoes grown 
in the production area in the same manner as, and are applicable only 
to, persons in the respective classes of commercial and industrial 
activity specified in the marketing agreement and order upon which a 
hearing has been held;
    (4) The marketing agreement and order, as amended, and as hereby 
proposed to be further amended, are limited in their application to the 
smallest regional production area which is practicable, consistent with 
carrying out the declared policy of the Act, and the issuance of 
several orders applicable to subdivisions of the production area would 
not effectively carry out the declared policy of the Act; and
    (5) All handling of potatoes grown in the production area as 
defined in the marketing agreement and order, as amended, and as hereby 
proposed to be further amended, is in the current of interstate or 
foreign commerce or directly burdens, obstructs or affects such 
commerce.

List of Subjects in 7 CFR Part 945

    Marketing agreements, Potatoes, Reporting and recording 
requirements.

Recommended Further Amendment of the Marketing Agreement and Order

    The following amendment of the marketing agreement and order, both 
as amended, is recommended as the detailed means by which the foregoing 
conclusions may be carried out:

PART 945--IRISH POTATOES GROWN IN CERTAIN DESIGNATED COUNTIES IN 
IDAHO, AND MALHEUR COUNTY, OREGON

    1. The authority citation for 7 CFR part 945 continues to read as 
follows:

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

    2. Section 945.9 is revised as follows:


Sec. 945.9  Ship or handle.

    Ship is synonymous with handle and means to pack, sell, consign, 
transport or in any other way to place potatoes grown in the production 
area, or cause such potatoes to be placed, in the current of commerce 
within the production area or between the production area and any point 
outside thereof, so as to directly burden, obstruct, or affect any such 
commerce: Provided, That the definition of ship or handle shall not 
include the transportation of ungraded potatoes within the production 
area for the purpose of having such potatoes stored or prepared for 
market, except that the committee may impose safeguards pursuant to 
Sec. 945.53 with respect to such potatoes.
    3. Section 945.20 is amended by revising paragraph (a) and adding a 
new paragraph (d) to read as follows:


Sec. 945.20  Establishment and membership.

    (a) The Idaho-Eastern Oregon Potato Committee is hereby established 
consisting of eight members, of whom four shall currently be producers 
of potatoes for the fresh market who produced such potatoes during at 
least three of the last five years; at least one member shall be a 
producer predominately of potatoes for seed during a similar period; 
and three shall be handlers. For each member of the committee, there 
shall be an alternate who shall have the same qualifications as the 
member. The number of producer and/or handler members and alternates on 
the committee may be increased and the composition of the committee 
between producers and handlers may be changed as provided in 
Sec. 945.23.
* * * * *
    (d) At least every six years, the committee shall review committee 
size, composition, and representation and recommend to the Secretary 
whether changes should be made, as provided in Sec. 945.23.
    4. Sections 945.22 through 945.24 are revised to read as follows:


Sec. 945.22  Districts.

    For the purpose of selecting committee members and alternate 
members, the following districts of the production area are hereby 
established: Provided, That these districts may be changed as provided 
in Sec. 945.23.
    (a) District No. 1: The counties of Bonneville, Butte, Clark, 
Fremont, Jefferson, Madison, and Teton;
    (b) District No. 2: The counties of Bannock, Bear Lake, Bingham, 
Caribou, Franklin, Oneida, and Power; and
    (c) District No. 3: Malheur County, Oregon, and the remaining 
designated counties in Idaho included in the production area, and not 
included in District No. 1 or District No. 2.


Sec. 945.23  Redistricting and reapportionment.

    (a) The Secretary, upon recommendation of the committee, may 
reestablish districts within the production area, may reapportion 
committee membership among the various districts, may increase the 
number of producer and/or handler members and alternates on the 
committee, and may change the composition of the committee by changing 
the ratio between producer and handler members, including their 
alternates. At least every six years, the committee shall review 
committee size, composition and representation and recommend to the 
Secretary whether changes should be made. In recommending any such 
changes, the committee shall give consideration to:
    (1) Shifts in potato acreage within districts and within the 
production area during recent years;
    (2) The importance of new potato production in its relation to 
existing districts;
    (3) The equitable relationship between committee membership and 
districts;
    (4) Economies to result for producers in promoting efficient 
administration due to redistricting or reapportionment of members 
within districts; and
    (5) Other relevant factors.
    (b) Membership of the committee shall be apportioned among the 
districts of the production area so as to provide the following 
representation or such other representation as recommended by the 
committee and approved by the Secretary:
    (1) Three producer members, including at least one who 
predominately produces seed potatoes, and one handler member, with 
their respective alternates, from District No. 1;
    (2) One producer member and one handler member, with their 
respective alternates, from District No. 2; and
    (3) One producer member and one handler member, with their 
respective alternates, from District No. 3;


Sec. 945.24  Selection.

    Members and alternates of the committee shall be selected by the 
Secretary on the basis specified in Sec. 945.23 (b) from nominations 
made pursuant to Sec. 945.25 or from other eligible persons.
    5. In Sec. 945.30, paragraph (a) is revised to read as follows:


Sec. 945.30  Procedure.

    (a) A simple majority of all members of the committee, including 
alternates acting for members, shall be necessary to constitute a 
quorum or to pass any motion or approve any committee action, except 
any motion regarding a change in committee size shall require a 
unanimous vote. At any assembled meeting, all votes shall be cast in 
person.
* * * * *
    6. In Sec. 945.42, paragraph (b) is revised and new paragraphs (d) 
and (e) are added to read as follows:


Sec. 945.42  Assessments.

* * * * *
    (b) Assessments shall be levied upon handlers at a rate per 
hundredweight of potatoes or equivalent established by the Secretary. 
Such rate may be established upon the basis of the committee's budget 
recommendations, and other available information.
* * * * *
    (d) The committee may impose a late payment charge or an interest 
charge, or both, on any handler who fails to pay, on or before the due 
date established by the Secretary, the total assessment for which such 
handler is liable. Such due date and the late payment fee and interest 
rate shall be recommended by the committee and approved by the 
Secretary.
    (e) In order to provide funds to carry out its function, after the 
effective date of this subpart the committee may accept advance 
assessments from handlers. Advance assessments received from a handler 
shall be credited toward assessments levied against that handler during 
that fiscal period. In the case of an extreme emergency, the committee 
may also borrow money on a short term basis to provide funds for the 
administration of this part. Any such borrowed money shall only be used 
to meet the committee's current financial obligations, and the 
committee shall repay all borrowed money by the end of the next fiscal 
period from assessment income.
    7. In Sec. 945.52, paragraph (a)(3) is revised to read as follows:


Sec. 945.52  Issuance of regulations.

* * * * *
    (3) Fix the size, capacity, weight, dimensions, pack, labeling or 
marking of the container, or containers, which may be used in the 
packaging or handling of potatoes, or both; or
* * * * *
    8. Section 945.80 is amended by designating the existing 
undesignated text as paragraph (a) and adding new paragraphs (b) 
through (d) to read as follows:


Sec. 945.80  Reports.

    (a) * * *
    (b) All data or other information constituting a trade secret, or 
disclosing a trade position or business condition of a particular 
handler shall be treated as confidential and shall at all times be 
received by and kept in the custody and under the control of one or 
more designated employees of the committee. Information which would 
reveal the circumstances of a single handler shall be disclosed to no 
person other than the Secretary.
    (c) Each handler shall maintain for at least two succeeding fiscal 
periods such records of potatoes received and of potatoes disposed of 
by such handler as may be necessary to verify reports required pursuant 
to this section. The committee, with the approval of the Secretary, may 
prescribe rules and regulations issued pursuant to this section 
specifying handler records and reports which the committee may need to 
perform its functions.
    (d) For the purpose of assuring compliance and checking and 
verifying reports filed by handlers, the Secretary and the committee, 
through its duly authorized agents, shall have access to any premises 
where applicable records are maintained, where potatoes are held, and, 
at any time during reasonable business hours, shall be permitted to 
inspect such handlers' premises and any and all records of such 
handlers with respect to matters within the purview of this part.

    Dated: November 23, 1994.
Lon Hatamiya,
Administrator.
[FR Doc. 94-29505 Filed 11-29-94; 8:45 am]
BILLING CODE 3410-02-P