[Federal Register Volume 62, Number 169 (Tuesday, September 2, 1997)]
[Rules and Regulations]
[Pages 46175-46179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23307]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[FV-96-703IFR]


Potato Research and Promotion Plan; Suspension of Portions of the 
Plan; Amendments of the Regulations Regarding Importers' Votes; and 
Clarification of Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule will suspend portions of the Potato Research and 
Promotion Plan (Plan) that require National Potato Promotion Board 
(Board) members be nominated at meetings, suspends obsolete provisions 
in the Plan, amends the rules and regulations issued under the Plan to 
provide for mail balloting as an alternative means of selecting 
nominees for appointment, permits importer members of the Board to vote 
on the basis of the volume of imported potatoes, and provides in the 
rules and regulations that designated handlers must report to the Board 
those potatoes of their own production for which the assessment has 
been paid by another designated handler.

DATES: Effective September 3, 1997. Comments must be received by 
November 3, 1997.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule to: Docket Clerk, Research and Promotion 
Branch, Fruit and Vegetable Division, Agricultural Marketing Service, 
USDA, STOP Code 0244, 1400 Independence Avenue, SW, Washington, DC 
20250-0244, fax (202) 205-2800. Three copies of all written material 
should be submitted. Comments will be made available for public 
inspection at the Research and Promotion Branch during regular business 
hours. All comments should reference the docket number and the date and 
page number of this issue of the Federal Register.

FOR FURTHER INFORMATION CONTACT: Georgia C. Abraham, Research and 
Promotion Branch, Fruit and Vegetable Division, AMS, USDA, STOP Code 
0244, 1400 Independence Avenue, SW, Washington, DC 20250-0244; 
telephone (202) 720-5057 or (888) 720-9917 (toll free).

SUPPLEMENTARY INFORMATION: This rule is issued under the Potato 
Research and Promotion Plan (Plan) [7 CFR Part 1207]. The Plan is 
authorized by the Potato Research and Promotion Act, as amended [7 
U.S.C. 2611-2627], hereinafter referred to as the Act.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. This 
rule will not preempt any state or local laws, regulations, or policies 
unless they present an irreconcilable conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 311 of the Act, a 
person subject to a plan may file a petition with the Secretary of 
Agriculture (Secretary) stating that such plan, any provision of such 
plan, or any obligation imposed in connection with such plan is not in 
accordance with law; and requesting a modification of the plan or an 
exemption from the plan. Such person is afforded the opportunity for a 
hearing on the petition. After the hearing, the Secretary will rule on 
the petition. The Act provides that the district court of the United 
States in any district in which such person is an inhabitant, or has 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided that a complaint is filed within 20 
days after the date of entry of the ruling.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.
    In accordance with the Regulatory Flexibility Act [5 U.S.C. 601 et 
seq.]

[[Page 46176]]

(RFA), the Agency is required to examine the impact of this rule on 
small entities. Accordingly, we have performed this initial regulatory 
flexibility analysis.
    According to data from the 1992 Census of Agriculture, published by 
the Department of Commerce, there are approximately 6,744 potato 
producers who grow potatoes on 5 or more acres and are thus subject to 
the provisions of the Plan. Of these, approximately 4,817 potato 
producers may be classified as small agricultural producers. Small 
agricultural producers are defined by the Small Business Administration 
[13 CFR 121.601] as those having annual receipts of less than $500,000. 
Therefore, the majority of potato producers may be classified as small 
entities.
    According to data from the Board, there are an estimated 1,511 
potato handlers, 334 importers of potatoes and potato products for 
human consumption, and 27 importers of seed potatoes who are subject to 
the provisions of the Plan. Small agricultural service firms are 
defined by the Small Business Administration [13 CFR 121.601] as those 
whose annual receipts are less than $5 million. For the purpose of this 
analysis, it is concluded that the majority of potato handlers and 
importers are small entities.
    According to data from USDA's National Agricultural Statistics 
Service (NASS), potato production in the United States for 1996 totaled 
497 million hundredweight (cwt). Idaho leads the U.S. in the production 
of potatoes with 28.2 percent of this total, followed by Washington 
with 19.1 percent. Colorado, Oregon, Wisconsin, and North Dakota each 
produce about 6 percent of the total U.S. production. Other major 
producing states in 1996 were Minnesota (4.9 percent), Maine (4.3 
percent), Michigan (2.8 percent), and California (3.1 percent). 
Florida, New York, and Nebraska each produced between 1 and 2 percent 
of total U.S. production, and all other states produced less than 1 
percent each.
    Using preliminary data from NASS that shows an average U.S. farm 
price for potatoes in 1996 was $5.11 per cwt., the value of the 1996 
U.S. potato crop is estimated at $2.54 billion.
    Exports of all types of potatoes and potato products during 1996 
totaled approximately 39 million cwt. on a fresh-weight basis. East 
Asia and the Pacific Rim countries are the largest market for frozen 
potatoes and frozen french fries, while Canada is the largest market 
for exports of U.S. tablestock and seed potatoes.
    Imports of tablestock, seed potatoes, and processed potatoes 
(frozen, canned, chips, etc.) for 1996 totaled 24 million cwt. on a 
fresh-weight basis. Tablestock, seed potatoes, and frozen potato 
products accounted for about 93 percent of the total value of potato 
imports, and over 99 percent of these items came from Canada.
    The Board administers a national program of research, development, 
advertising, and promotion designed to strengthen potatoes' competitive 
position and to maintain and expand domestic and foreign markets for 
potatoes and potato products. The program is financed by assessments on 
producers of 5 or more acres of potatoes (collected by the first 
handler) and on all imported fresh or processed potatoes for human 
consumption and seed potatoes (collected by the U.S. Customs Service). 
The Secretary has oversight responsibility for the Board's activities. 
There are currently 107 Board members--102 producers; 4 importers; and 
1 public member--who are appointed by the Secretary to serve a 3-year 
term on the Board. Approximately one-third of the members' terms of 
office expire each year on the last day of February.
    This action will suspend portions of the Plan and amend the rules 
and regulations issued under the Plan.
    The suspension of portions of the Plan will eliminate the 
requirement that industry members be nominated for appointment to the 
Board only at meetings of producers or importers. The rules issued 
under the Plan are also being amended to provide mail balloting as an 
alternative means of selecting nominees for appointment.
    The Plan currently requires nominations for producer and importer 
members be submitted to USDA by November 1 of each year for 
appointments to be made by the Secretary by March 1 of the following 
year. In order to provide the largest number of producers an 
opportunity to participate, nomination meetings are typically held in 
conjunction with meetings of state or local potato or vegetable 
industry organizations, usually late in the fall after harvesting. 
However, in many cases, this places nomination meetings close to or 
after the November 1 deadline for submitting nominations to USDA. 
Additionally, in some states, potato production may be in widely 
separated locations, posing a hardship for growers to attend meetings. 
In some cases, growers must travel several hundred miles and incur the 
expense of an overnight stay in order to participate in a nomination 
meeting. In these cases, attendance at meetings has suffered.
    Nomination meetings for importer members have been conducted by the 
Board at its office in Denver, Colorado. Although Denver is a central 
location for this meeting, all importers have had to fly to Denver to 
attend a 1-hour meeting.
    For several years, the Board has discussed this problem with USDA. 
At its January 1997 meeting, the Board's Administrative Committee, 
acting on behalf of the Board, voted to recommend to USDA that action 
be taken to suspend portions of the Plan and to amend the rules and 
regulations to permit members of the potato industry the flexibility to 
choose the manner of nominating candidates for appointment. Providing 
the option of a mail ballot for nominating candidates will provide an 
opportunity for a greater number of industry members to participate in 
the nomination process. In some cases, the burden and expense for 
producers to travel long distances to attend a nomination meeting will 
be eliminated. Permitting an optional means of nominating importer 
members will also eliminate the time and expense currently incurred for 
importers to participate in these meetings. Additionally, nomination 
activity will not have to be coupled with industry meetings, thus 
permitting the nomination process to take place early enough that the 
nominees' applications for appointment can be forwarded to USDA well 
before the November 1 deadline.
    If these changes are not made, producers and importers will 
continue to incur financial and time loss to attend and participate in 
nomination meetings, and attendance at these meetings will continue to 
suffer.
    The second amendment to the rules and regulations will permit 
importer members of the Board to vote on the basis of the volume of 
imported potatoes, processed potato products, and seed potatoes in the 
same manner as producer members of the Board vote on the basis of 
domestic potato production. Since the program's inception, the Plan has 
permitted producer members to call for a vote by the production of each 
State. In the 1990 Farm Bill, Congress amended the Act to, along with 
other changes, include imported potatoes and potato products for human 
consumption and seed potatoes under the program's provisions. When the 
Plan and rules and regulations were amended to conform with the amended 
Act, a provision permitting importers to vote on the basis of the 
volume of imported

[[Page 46177]]

potatoes was inadvertently omitted. In production votes taken by the 
Board since imports were included in the program's provisions, 
importers have voted the volume of potato imports on a fresh-weight 
basis.
    This amendment will correct the oversight and include provisions in 
the regulations to reflect the procedure currently in practice. 
Importers' votes carry the same proportional weight as producers' votes 
and will result in equitable treatment of importers.
    The third amendment will specify in the rules and regulations that 
the designated handlers of potatoes must report to the Board those 
potatoes of their own production for which the assessment has been paid 
by another first handler.
    The regulations currently require designated handlers of potatoes 
to report and pay assessments on the potatoes of someone else's 
production that they handle. In some cases, designated handlers are 
also producers, and the assessment for their potato production may be 
paid by another designated handler. For example, a processor who 
purchases field-run potatoes is considered the designated handler and 
is responsible for reporting to the Board and paying assessments on 
those potatoes even though the producer may also be a designated 
handler who is also submitting reports and assessments to the Board. In 
order for the Board to assure that all handling has been reported and 
assessments have been paid and credited to the producer, the Board must 
be able to cross-reference the handling of potatoes on the reports of 
both designated handlers.
    The authority for this information collection exists in 
Sec. 1207.350 of the Plan. It is necessary to provide in the text of 
the regulation concerning designated handlers' reporting 
responsibilities that designated handlers must report to the Board 
those potatoes of their own production for which the assessment has 
been paid by another designated handler. The information collection 
burden and the form used to collect the information on handling of 
potatoes have been reviewed and approved by the Office of Management 
and Budget (OMB) under approval number 0581-0093. The 1-hour-per-
response burden currently approved includes the time necessary for 
designated handlers to provide information on assessments paid by 
another designated handler on the reporting form submitted no more 
often than monthly. This information is readily available from the 
confirmation each designated handler is required to provide to 
producers on the amount of assessments paid on their behalf.
    In addition, this rule suspends obsolete provisions in the Plan 
referring to meetings, nomination of the initial Board, and references 
to importer organizations.
    As with all Federal research and promotion programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    This rule permits importer members of the Board to vote on the 
basis of the volume of imported potatoes. This revision will not affect 
the estimated burden on potato growers or designated handlers.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    The changes contained in this action suspend obsolete provisions in 
the Plan, provide for alternative means of nominating candidates for 
appointment to the Board, provide importer members a vote by volume at 
meetings, and clarify handlers' reporting requirements. These changes 
will enhance the efficiency of the operation of the potato research and 
promotion program, and will reduce the financial burden on industry 
members when nominating candidates for appointment by the Secretary. 
Accordingly, we believe that these revisions are the best alternatives 
to facilitate the nomination process, provide for importer voting by 
production, and to clarify handlers' reporting requirements.

Paperwork Reduction Act

    This rule contains no new information collection or recordkeeping 
requirements under the Paperwork Reduction Act of 1995 [44 U.S.C. 3501 
et seq.]. The information collection and recordkeeping requirements 
related to this action were previously approved by the Office of 
Management and Budget (OMB) under number 0581-0093.
    Eliminating the requirement that industry members be nominated to 
serve on the Board at meetings and providing the alternative of mail 
balloting will be less burdensome, overall, for potato producers and 
importers, but the information collection burden remains the same. When 
nominations are conducted by mail ballot rather than at a meeting, the 
nomination ballot will be completed and mailed instead of being turned 
in at a meeting.
    The second amendment to the rules and regulations will permit 
importer members of the Board to vote on the basis of the volume of 
imported potatoes, processed potato products, and seed potatoes in the 
same manner as producer members of the Board vote on the basis of 
domestic potato production. This amendment will correct an oversight 
and include provisions in the regulations to reflect procedures 
currently in practice. Importers' votes carry the same proportional 
weight as producers' votes and will result in equitable treatment of 
importers. There is no burden associated with importers voting at board 
meetings.
    The third amendment provides in the rules and regulations that 
designated handlers must report to the Board those potatoes of their 
own production for which the assessments have been paid by another 
handler. The information collection burden and the form used to collect 
information on handling of potatoes have been reviewed and approved by 
the OMB under approval number 0581-0093. The 1-hour-per-response burden 
currently approved includes designated handlers providing information 
on assessments paid by another designated handler on the reporting form 
submitted no more often than monthly.
    The form requires the minimum information necessary to effectively 
carry out the requirements of the program, and its use is necessary to 
fulfill the intent of the Act. Such information can be supplied without 
data processing equipment or outside technical expertise. In addition, 
there are no additional training requirements for individuals filling 
out reports and remitting assessments to the promotion Board. The forms 
are simple, easy to understand, and place as small a burden as possible 
on the person required to file the information. This action will not 
impose any additional reporting or recordkeeping requirements on either 
small or large potato handlers.

Background

    This action suspends portions of the Plan and amends three sections 
of the rules and regulations issued under the Plan.
    The suspension of portions of the Plan will eliminate the 
requirement that industry members be nominated for appointment to the 
Board only at a meeting of producers or importers. Other obsolete 
provisions of the Plan will also be suspended. The rules issued under 
the Plan will also be amended to provide an alternative means of 
selecting nominees for appointment such as by a mail ballot of the 
industry.
    The Plan requires nominations for producer and importer members be

[[Page 46178]]

submitted to USDA by November 1 of each year for appointments to be 
made by the Secretary by March 1 of the following year. In order to 
provide the largest number of producers an opportunity to participate, 
nomination meetings are typically held in conjunction with meetings of 
state or local potato or vegetable industry organizations, usually 
after harvesting. However, this places nomination meetings close to or 
after the November 1 deadline for submitting nominations to USDA. 
Additionally, in some states, potato production may be in widely 
separated locations, posing a hardship for a grower--in some cases 
traveling several hours and incurring the cost of an overnight trip--in 
order to participate in a nomination meeting.
    In the case of importer nominations, the Plan provided that the 
Board could call upon organizations of potato, potato products, and/or 
seed potato importers to assist in nominating importers for appointment 
to the Board. This provision was intended to allow importers the 
opportunity to nominate importer members from their own membership. 
However, no such organizations have been found to exist, and the Board 
has conducted importer nomination meetings in Denver. Importers must 
therefore travel to Denver for nomination meetings.
    For several years, the Board has discussed this problem with USDA. 
At its January 1997 meeting, the Board's Administrative Committee, 
acting on behalf of the Board, voted to recommend to USDA that action 
be taken to suspend portions of the Plan and to amend the rules and 
regulations to permit members of the potato industry the flexibility to 
choose the manner of nominating candidates for appointment in a manner 
that would provide for the ability for a greater number of industry 
members to participate in the nomination process with less of a burden.
    In order to do this, this action suspends wording referring to 
meetings in Sec. 1207.322 of the Plan. Paragraph (a) of Sec. 1207.322 
deals only with nomination of the initial Board and is thus obsolete. 
Therefore, paragraph (a) is suspended in its entirety. References to 
meetings are suspended in paragraphs (b) and (c).
    Also, because no organizations of potato importers exist, 
references to importer organizations are unnecessary and will be 
suspended in Sec. 1207.322(d).
    In addition, references in Sec. 1207.503 of the rules and 
regulations to meetings and importer organizations have been removed 
and amendments made to this section to provide the option of mail 
balloting to nominate producers and importers for appointment to the 
Board.
    A second amendment to the rules and regulations deals with 
importers being able to vote on the basis of the volume of the fresh-
weight equivalent of imported potatoes and potato products for human 
consumption and seed potatoes in the same manner that producer members 
can vote on the basis of potato production within each State.
    One of the 1990 Farm Bill amendments to the Act [7 U.S.C. 2611 et 
seq.] extended the Act's coverage to imported potatoes, potato 
products, and seed potatoes and provided for importer representation on 
the Board. When the Plan and rules and regulations issued under the 
Plan were subsequently amended in 1991 to conform with the amended Act, 
a provision permitting importer members to vote on the basis of the 
volume of imported product was inadvertently overlooked. From the 
program's inception, Sec. 1207.325 of the Plan authorized producer 
members of the Board to call for a production vote in which the Board 
members from each State are allocated votes based on that State's fresh 
potato production (i.e., one vote for each 1 million hundredweight of 
potatoes).
    In production votes taken by the Board since imports were included 
in the program's provisions, importers have voted the volume of potato 
imports on a fresh-weight basis. At its March 1996 annual meeting, the 
Board voted to amend the rules and regulations to correct this 
oversight by amending Sec. 1207.505 to provide the same voting rights 
as afforded to producer members.
    The third amendment provides in the rules and regulations that 
designated handlers must report to the Board those potatoes of their 
own production for which the assessments have been paid by another 
designated handler.
    Section 1207.350(a) of the Plan provides authority for the Board to 
prescribe in the regulations the information designated handlers must 
report in order for the Board to perform its duties, and this 
information is set forth in Sec. 1207.513 of the regulations. Some 
designated handlers are also potato producers and, in some cases, the 
assessment for their potato production may be paid by another 
designated handler. For example, a processor who purchases field-run 
potatoes is considered the designated handler and is responsible for 
reporting to the Board and paying assessments on those potatoes even 
though the producer may also be a designated handler who is also 
submitting reports and paying assessments to the Board. In order for 
the Board to assure that all handling has been reported and assessments 
have been paid and credited to the producer, the Board must be able to 
cross-reference the handling of potatoes on the reports of both 
handlers. Since Sec. 1207.513 of the regulations does not specifically 
state that designated handlers must report to the Board those potatoes 
of their own production for which the assessments have been paid by 
another designated handler, it is necessary to amend this section to 
provide that handlers must report to the Board those potatoes of their 
own production for which the assessment has been paid by another first 
handler. Therefore, this action amends Sec. 1207.513 of the regulations 
to provide for this reporting.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Board, it is hereby 
found that the suspended sections of the plan no longer tend to 
effectuate the declared policy of the Act. In addition, it is found 
that the amendments to the rules and regulations are necessary for the 
appropriate administration of the Plan and the rules and regulations 
and that they are consistent with the intention of the Act.
    All written comments received in response to this rule by the date 
specified herein will be considered prior to finalizing this action.
    Pursuant to the provisions in 5 U.S.C. 553, it is found and 
determined upon good cause that it is impracticable, unnecessary, and 
contrary to the public interest to give preliminary notice prior to 
putting this rule into effect and that good cause exists for not 
postponing the effective date of this action until 30 days after 
publication in the Federal Register because: (1) This action suspends 
obsolete and unnecessary provisions of the Plan and clarifies 
provisions in the regulations; (2) in addition, a time and travel 
burden upon potato producers and importers will continue to be imposed 
if they are not provided the option to nominate candidates for 
appointment to the Board by mail ballots rather than only at meetings; 
(3) nominations for the term of office beginning on March 1, 1998, will 
begin soon; (4) a 60-day period is provided to allow interested parties 
to comment prior to finalization; and (5) no useful purpose would be 
served by a delay of the effective date.

List of Subjects in 7 CFR Part 1207

    Advertising, Agricultural research, Marketing agreements, Potatoes, 
Reporting and recordkeeping requirements.


[[Page 46179]]


    For the reasons set forth in the preamble, 7 CFR part 1207 is 
amended as follows:

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

    1. The authority citation for 7 CFR part 1207 continues to read as 
follows:

    Authority: 7 U.S.C. 2611-2627.


Sec. 1207.322  [Amended]

    2. Section 1207.322 is amended by suspending:
    (A) Paragraph (a) in its entirety,
    (B) In paragraph (b), the words ``at meetings'' in the first 
sentence and the entire last sentence,
    (C) In paragraph (c), the entire last sentence, and
    (D) In paragraph (d), the entire last two sentences of the 
introductory text and paragraphs (d)(1) through (5).
    3. In Sec. 1207.503, paragraphs (a), (b), and (c) are revised to 
read as follows:


Sec. 1207.503  Nominations.

    (a) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
producers in producing sections or States each year to nominate 
producer members for the Board. Such nominations may be conducted at 
meetings or by mail ballots. One individual shall be nominated for each 
position to become vacant. A list of nominees shall be submitted to the 
Secretary for consideration by November 1 of each year.
    (b) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
importers each year to nominate importer members for the Board. Such 
nominations may be conducted at meetings or by mail ballots.
    (c) Nomination meetings or mail balloting shall be well publicized 
with notice given to producers, importers, and the Secretary at least 
10 days prior to each meeting or mailing of ballots.
* * * * *
    4. Section 1207.505 is revised to read as follows:


Sec. 1207.505  Procedure.

    (a) The procedure for conducting the Board's meetings shall be in 
accordance with the bylaws adopted by the Board on June 7, 1972, and 
approved by the Secretary and any subsequent amendments adopted by the 
Board and approved by the Secretary.
    (b) Each importer member shall be entitled to not less than one 
vote. Importer members shall also be entitled to one additional vote 
for each 1 million hundredweight, or major fraction thereof, on a 
fresh-weight basis, of imported tablestock potatoes, potato products, 
or seed potatoes, as determined by data on imports provided by the U.S. 
Department of Agriculture. The casting of such votes shall be 
determined by the importer members.
    5. In Sec. 1207.513, paragraph (c)(2) is revised to read as 
follows:


Sec. 1207.513  Payment of assessments.

* * * * *
    (c) * * *
    (2) All designated handlers, including a designated handler whose 
own production is handled and assessments to the Board paid by another 
designated handler, shall report to the Board:
    (i) Date of report (which is also date of payment to the Board).
    (ii) The name and address of the designated handler;
    (iii) The period potatoes were handled;
    (iv) The total quantity of potatoes determined to be assessable 
during the period potatoes were handled, pursuant to Sec. 1207.511.
* * * * *
    Dated: August 26, 1997.
Lon Hatamiya,
Administrator, Agricultural Marketing Service.
[FR Doc. 97-23307 Filed 8-28-97; 12:10 p.m.]
BILLING CODE 3410-02-P