[Federal Register Volume 62, Number 105 (Monday, June 2, 1997)]
[Rules and Regulations]
[Pages 29649-29652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14273]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 105 / Monday, June 2, 1997 / Rules 
and Regulations  

[[Page 29649]]


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DEPARTMENT OF AGRICULTURE

Agriculture Marketing Service

7 CFR Part 80

[FV-97-80-01]


Regulation Governing the Fresh Irish Potato Diversion Program, 
1996 Crop

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim rule sets forth the terms of the Fresh Irish 
Potato Diversion Program for the 1996 crop pursuant to clause (2) of 
section 32 of the Act of August 24, 1935, as amended. The program will 
assist fresh Irish potato growers faced with oversupplies and low 
prices by diverting potatoes to charitable institutions, and to 
livestock feed.

DATES: This rule is effective May 29, 1997. Comments must be received 
by July 2, 1997.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action to: Susan Proden, Acting Chief, Commodity 
Procurement Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 
96456, room 2548--South Building, Washington, DC 20090-6456. All 
written submissions made pursuant to this rule will be made available 
for public inspection in room 2548--South Building, USDA, between the 
hours of 8:00 a.m. and 4:30 p.m. Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Sandra Gardei, Assistant Branch Chief, 
room 2548--South Building, USDA or call (202) 720-6391.

SUPPLEMENTARY INFORMATION:

Regulatory Requirements

    This interim final rule has been reviewed under USDA procedures 
established in accordance with Executive Order 12291 and Departmental 
Regulation No. 1512-1 and has been designated as ``nonmajor''. It has 
been determined that this rule will not result in: (1) An annual effect 
on the economy of $100 million or more; (2) A major increase in costs 
or prices for consumers, individual industries, federal, state or local 
governments, or geographical regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States based enterprises in 
domestic or export markets.

Executive Order 12778

    This interim rule has been reviewed under USDA procedures 
established in accordance with Executive Order 12778 Civil Justice 
Reform. The provisions of the interim rule do not preempt state law and 
are not retroactive. Before any judicial action may be brought 
regarding the provisions of this interim rule the appeal and mediation 
procedure in 7 CFR part 780 must be exhausted.

Paperwork Reduction Act

    Information collection requirements contained in this (part, 
subpart) have been approved by the Office of Management and Budget 
(OMB) in accordance with the provisions of 44 U.S.C. chapter 35, and 
have been assigned OMB control numbers 0560-0145.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has determined that this action will not have a significant 
economic impact on a substantial number of small entities. 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 disproportionally burdened. The Small Business Administration 
(13 CFR 121.1) has defined small agricultural producers as those having 
annual gross revenue for the last three years of less than $500,000, 
and small agricultural service firms are defined as those whose gross 
annual receipts are less than $5,000,000. Because there is a 
preponderance of entities shipping fresh Irish potatoes that meet these 
gross revenue limitations it is anticipated that the majority of the 
program participants could be classified as small entities without 
substantial regulatory restriction. Therefore the provisions of the RFA 
are not applicable and no Regulatory Flexibility analysis is required.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with state and 
local officials. See the Notice related to 7 CFR part 3015, subpart V. 
Published at 4 FR 29115 (June 24, 1983).

Unfunded Mandates

    The provisions of the Unfunded Mandates Reform Act of 1995 are not 
applicable to this rule because AMS is not required by 5 U.S.C. 553 or 
any other provision of the law to publish a notice of proposed 
rulemaking with respect to the subject matter of this rule.
    Interested parties are invited to submit comments with respect to 
this action. However, pursuant to 5 U.S.C. 553, it is found and 
determined that, upon good cause, it is impracticable, unnecessary and 
contrary to the public interest to give notice prior to putting this 
rule into effect, and that good cause exists for not postponing the 
effective date of this action until 30 calendar days after publication 
in the Federal Register because marketing is in process, the commodity 
is perishable, and program effectiveness would be adversely affected by 
undue delay. The crop is in the process of being sent to market and for 
a diversion to occur the rule must be made effective immediately. 
Written comments may be submitted within 30 calendar days of the 
publishing of the rule in the Federal Register and will be considered 
when the rule is made final.

Executive Order 12612

    It has been determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on States or their political subdivisions, or 
on the distribution of power and responsibilities among the various 
levels of government.

[[Page 29650]]

Background

    Clause (2) of section 32 of the Act of August 24, 1935, as amended 
(7 U.S.C. 612c) authorizes the Secretary of Agriculture to ``encourage 
the domestic consumption of such [agricultural] commodities or products 
by diverting them, by the payment of benefits or indemnities or by 
other means, from the normal channels of trade and commerce * * *.'' 
Section 32 also authorizes the Secretary to use section 32 funds ``at 
such times, in such manner, and in such amounts as the Secretary of 
Agriculture finds will effectuate substantial accomplishment of any one 
or more of the purposes of this section.'' Furthermore, 
``determinations by the Secretary as to what constitutes diversion, and 
what constitutes normal channels of trade and commerce, and what 
constitutes normal production for domestic consumption shall be 
final.''
    According to crop storage reports, on May 1, 1997, fresh white 
Irish potatoes and russet potatoes stored in 15 states were 32 percent 
above the stocks on May 1, 1996. Storage reports for May 1, 1997, 
indicate that the production of fresh Irish potatoes is up 65 percent 
from the same period in 1996. Based on these statistics and other 
market factors, the Secretary has determined that the fresh Irish 
potato 1996 crops are in surplus supply and that the domestic 
consumption of such potatoes will be encouraged by using section 32 
funds to divert the fresh Irish potatoes from the normal channels of 
trade and commerce under a Fresh Irish Potato Diversion Program. This 
fresh Irish potato diversion program encompasses all types and 
varieties of potatoes (except sweet potatoes) of U.S. Grade No. 2 
(fairly clean) and U.S. Grade No. 2 Processing, including varieties 
commonly used for processing, chipping and table stock. Due to a need 
for expediency in implementing the Fresh Irish Potato Diversion Program 
and concern about undue delay in conducting environmental analysis and 
impact studies on composting, this program is limited to charitable 
institutions and livestock feed.
    The price established for fresh Irish potatoes destined for animal 
feed will include all costs including transportation. The price 
established for fresh Irish potatoes destined for use by charitable 
institutions will cover all costs except transportation. USDA will 
arrange and pay for the transportation costs between the grower and the 
charitable institution because it is in a better position than the 
grower to efficiently and effectively match the grower with the 
charitable institutions already identified by USDA.

List of Subjects in 7 CFR Part 80

    Administrative practice and procedures, Agriculture, Agricultural 
commodities, Reporting and record keeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 80 is amended 
as follows:
    1. In Part 80, Subpart A is revised to read as follows:

PART 80--FRESH IRISH POTATO DIVERSION PROGRAM

Subpart A--Fresh Irish Potato--Diversion Program

Sec.  
80.1  Applicability.
80.2  Administration.
80.3  Definitions.
80.4  Length of program.
80.5  Rate of payment.
80.6  Eligibility for payment.
80.7  Application and approval for participation.
80.8  Inspection and certificate of diversion.
80.9  Claim for payment.
80.10  Compliance with program provisions.
80.11  Inspection of premises.
80.12  Records and accounts.
80.13  Offset and assignment.
80.14  Appeals.

    Authority: 7 U.S.C. 612c.

Subpart A--Fresh Irish Potato--Diversion Program


Sec. 80.1  Applicability.

    In order to encourage the domestic consumption of the 1996 crop of 
fresh Irish potatoes by diverting them from normal channels of trade 
and commerce, the Secretary of Agriculture, pursuant to the authority 
conferred by section 32 of the Act of August 24, 1935, as amended (7 
U.S.C. 612c) (Section 32), will make payment to producers who divert 
fresh Irish potatoes that they produced by donating them to charitable 
institutions for human consumption or by using such fresh Irish 
potatoes as livestock feed in accordance with the terms and conditions 
set forth herein.


Sec. 80.2  Administration.

    The program will be administered under the general direction and 
supervision of the Director, Fruit and Vegetable Division, Agricultural 
Marketing Service (AMS), United States Department of Agriculture 
(USDA), and will be implemented by the Farm Service Agency (FSA). AMS, 
FSA, or their authorized representatives do not have authority to 
modify or waive any of the provisions of this subpart.


Sec. 80.3  Definitions.

    Application means Form FSA-117.
    Charitable institutions means those organizations which offer food, 
housing, and other necessities to low income, homeless, or other 
persons in need of assistance in obtaining basic sustenance.
    Diversion means the delivery of potatoes to an eligible outlet.
    Eligible outlet means charitable institutions or livestock feeding 
operations.
    Fresh Irish Potatoes means the 1996 crop of all types and varieties 
of potatoes (except sweet potatoes) fit for human consumption and 
produced and stored in the United States.
    Invoice and certificate of inspection and diversion means Form FSA-
118.
    Producer means an individual, partnership, association, or 
corporation located in the United States who grows potatoes for market 
and is in possession of such potatoes as of the date of May 29, 1997, 
and whose Form FSA-117 has been approved by USDA.


Sec. 80.4  Length of program.

    This program will be effective May 29, 1997, and will continue 
until July 28, 1997. Producers diverting potatoes to charitable 
institutions must file an application at the FSA office responsible for 
the county in which the farm is located for FSA purposes within the 
first ten Federal Government business days following the effective date 
of this program. Producers diverting potatoes to livestock feed must 
file an application at such office no later than July 28, 1997.


Sec. 80.5  Rate of payment.

    (a) The rate of payment for potatoes for charitable institutions 
will be $1.50 per hundredweight for fresh Irish potatoes. All eligible 
fresh Irish potatoes intended for donation to charitable institutions 
must: Meet U.S. Grade No. 2 (fairly clean) requirements as certified by 
the AMS or the Federal-State Inspection Service; be in a quantity of 
40,000 pounds net or a multiple of 40,000 pounds net; be in 50 pound 
bags or cases and be palletized. Only transportation costs associated 
with donations to charitable institutions may be arranged for and paid 
by USDA. USDA will make no other payment with respect to such potatoes.
    (b) Livestock feed payments will be $.75 per hundredweight for U.S. 
Grade No. 2 Processing potatoes when whole as certified by AMS or the 
Federal-State Inspection Service. Payment will not be made for any 
fractional part of a hundredweight not meeting grade requirements. All 
arrangements and costs for: U.S. grading and inspection;

[[Page 29651]]

processing, and transportation, as well as identifying the livestock 
feed recipient will be included in the $.75 per hundredweight payment. 
USDA will make no other payment with respect to such potatoes.


Sec. 80.6  Eligibility for payment.

    (a) To the extent applications for payment do not exceed $9 
million, payments will be made under this program to any producer of 
fresh Irish potatoes who:
    (1) Provides fresh Irish potatoes that are free from any water 
damage and:
    (i) If intended for human consumption, meet the requirements of 7 
CFR 51.1540-51.3006 U.S. Grade No. 2 (fairly clean); or
    (ii) If intended for livestock feed, meet the requirements of 7 CFR 
51.3410-51.3418 U.S. Grade No. 2 Processing when whole, and are cut, 
chopped sliced, gouged, crushed, ensiled, or cooked to the degree that 
the potatoes are readily and obviously identifiable as having been 
rendered unsuitable to enter into normal channels of trade and commerce 
as determined by FSA or its representative;
    (2) Executes and files Form FSA-117 with the FSA county office 
responsible for the county where the producer's farm is located for FSA 
program purposes;
    (3) Receives approval for their application;
    (4) Completes form FSA-118 and whose fresh Irish potatoes are 
shipped in accordance with this regulation;
    (5) Diverts fresh Irish potatoes after the date the Form FSA-117 is 
approved by USDA before July 28, 1997.
    (6) Files a claim as provided in Sec. 80.10; and
    (7) Complies with all other terms and conditions in this subpart.
    (b) In the event applications for participation in the program 
authorized by this subpart exceed $9 million, USDA shall, at its sole 
discretion, determine which applications to accept.


Sec. 80.7  Application and approval for participation.

    (a) The applications will be reviewed by the FSA in the order shown 
on the FSA register located at the respective FSA county office and 
will be approved taking into account the availability of funds, for 
each method of diversion;
    (b) An approved Form FSA-117 may be modified or amended with the 
consent of the applicant and the duly authorized representative of AMS 
or FSA provided that such modification or amendment does not conflict 
with the provisions of this subpart; and
    (c) Copies of the applicable U.S. grade standards and the 
application for participation in the Fresh Irish Potato Diversion 
Program can be obtained from the local county FSA office.


Sec. 80.8  Inspection and certificate of diversion.

    Prior to diversion of potatoes to a charitable institution, the 
fresh Irish potatoes must be inspected by an inspector authorized or 
licensed by the USDA to inspect and certify the class, quality, and 
condition of fresh Irish potatoes. The producer will be responsible for 
requesting and arranging for inspection. For charitable institutions 
the product must be Positive Lot Identification (PLI) or certified by 
USDA grading personnel at time of loading. With respect to potatoes 
diverted for livestock feed, the producer must furnish to FSA such 
scale tickets, weighing facilities, or volume measurements as 
determined by the inspector to be necessary for ascertaining the net 
weight of the potatoes being diverted.


Sec. 80.9  Claim for payment.

    (a) In order to obtain payment for shipments to charitable 
institutions, the producer must submit to the county FSA office which 
approved the application: a properly executed Form FSA-118; a copy of 
the Notice to Deliver sent from FSA, Kansas City Commodity Office, 
Kansas City, Missouri; a bill of lading showing shipment was made. All 
such claims must be filed no later than 30 days after the termination 
date specified in the applicable approved application. For those 
potatoes which fail to meet the definition of fresh Irish potatoes 
provided in Sec. 80.3 or the eligibility requirements of Sec. 80.6, the 
producer may request an appeal inspection; however, payment of the 
truck detention and storage charges will be the responsibility of the 
producer.
    (b) Livestock feed payments will be based on the percentage of the 
offered fresh Irish potatoes meeting U.S. Grade No. 2 Processing. In 
order to obtain payment the producer must submit to the county FSA 
office which approved the application a properly executed FSA-118, and 
a livestock feed recipient delivery receipt indicating hundredweight 
received, the date and name, address, and telephone number of the 
recipient.


Sec. 80.10  Compliance with program provisions.

    If USDA determines that any provisions of the application or of 
these regulations has not been complied with, whether by the producer, 
charitable institution, or livestock feeder, or that any quantity of 
fresh Irish potatoes diverted under this program was not used 
exclusively for donation to charitable institutions or livestock 
feeders (whether such failure was caused directly by the producer or by 
any other person or persons), the producer will not be entitled to 
diversion payments in connection with such fresh Irish potatoes, must 
refund any USDA payment made in connection with such fresh Irish 
potatoes, and will also be liable to USDA for any other damages 
incurred as a result of such failure to use the fresh Irish potatoes 
exclusively for donation to charitable institutions or for use as 
livestock feed. The USDA may deny any producer the right to participate 
in this program or the right to receive payments in connection with any 
diversion previously made under this program, or both, if USDA 
determines that:
    (a) The producer has failed to use or caused to be used any 
quantity of fresh Irish potatoes diverted under this program 
exclusively for donation to charitable institutions or livestock feed, 
whether such failure was caused directly by the producer or by any 
other person or persons;
    (b) The producer has not acted in good faith in connection with any 
transaction under this program; or
    (c) The producer has failed to discharge fully any obligation 
assumed by him under this program.


Sec. 80.11  Inspection of premises.

    The producer, charitable institution, or livestock feeder must 
permit authorized representatives of USDA, at any reasonable time, to 
have access to their premises to inspect and examine such fresh Irish 
potatoes as are being diverted or stored for diversion, and to inspect 
and examine the facilities for diverting fresh Irish potatoes to 
determine compliance with the provisions of this program.


Sec. 80.12  Records and accounts.

    The producer, charitable institution, or livestock feeder 
participating in this program must keep accurate records and accounts 
showing the details relative to the diversion and livestock feeding of 
the fresh Irish potatoes. The producer, charitable institution, or 
livestock feeder must permit authorized representatives of USDA and the 
General Accounting Office at any reasonable time to inspect, examine, 
and make copies of such records and accounts to determine compliance 
with provisions of this program; such records and accounts must be 
retained for three years after the date of last payment to the producer 
under the program, or for two years after

[[Page 29652]]

date of audit of records by USDA as provided herein, whichever is the 
later.


Sec. 80.13  Offset and assignment.

    (a) Except as provided in paragraph (b) of this section, below, any 
payment or portion thereof due any person shall be allowed without 
regard to questions of title under state law, and without regard to any 
claim or lien against the crop or proceeds thereof in favor of the 
owner or any other creditor, except for statutory liens belonging to 
agencies of the U.S. Government. The regulations governing offsets and 
withholdings found at 7 CFR part 3 shall be applicable to such 
payments.
    (b) Assignments. Assignments will be done in accordance with Form 
FSA-117.


Sec. 80.14  Appeals.

    Appeals under this part will be in accordance with 7 CFR part 780.

    Dated: May 28, 1997.
Lon Hatamiya,
Administrator.
[FR Doc. 97-14273 Filed 5-29-97; 8:45 am]
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