[Federal Register Volume 63, Number 193 (Tuesday, October 6, 1998)]
[Rules and Regulations]
[Pages 53543-53546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26763]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 193 / Tuesday, October 6, 1998 / 
Rules and Regulations  

[[Page 53543]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[FV-96-703FR]


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: Final rule.

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SUMMARY: The U.S. Department of Agriculture (USDA or the Department) is 
adopting without modification as a final rule an interim final rule 
which suspended portions of the Potato Research and Promotion Plan 
(Plan) that required National Potato Promotion Board (Board) members to 
be nominated at meetings, suspended obsolete provisions in the Plan, 
amended the rules and regulations issued under the Plan to provide for 
mail balloting as an alternative means of selecting nominees for 
appointment, permitted importer members of the Board to vote on the 
basis of the volume of imported potatoes, and provided 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.

EFFECTIVE DATE: November 5, 1998.

FOR FURTHER INFORMATION CONTACT: Michael I. Hankin, Research and 
Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244, 
1400 Independence Avenue, S.W., Washington, DC 20250-0244; telephone 
(202) 720-9915 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 (OMB).
    In accordance with the Regulatory Flexibility Act [5 U.S.C. 601 et 
seq.] (RFA), the Agency has examined the impact of this rule on small 
entities. Accordingly, we have performed this final 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.
    The 1997 U.S. potato crop is at 46.6 billion pounds, down 8 percent 
or approximately 3.9 billion pounds from 1996. For 1997, Idaho leads in 
the production of potatoes with 29 percent of the total, followed by 
Washington (19 percent). Colorado, Oregon, and Wisconsin each produced 
6 percent of the 1997 crop, and North Dakota contributed 5 percent to 
the total. Other major producing states in 1997 were Minnesota, Maine 
and California (4 percent each), and Michigan (3 percent). Nebraska, 
New York, and Florida each produced approximately 2 percent of the U.S. 
total; all other states produced less than 1 percent each. Per capita 
consumption of potatoes in the United States has increased from 125.2 
pounds in 1976 to 142.4 pounds in 1997.
    Using preliminary data from NASS that shows an average U.S. farm 
price for potatoes in 1997 was $5.68 per cwt., the value of the 1997 
U.S. potato crop is estimated at $2.60 billion.
    Exports of all types of potatoes and potato products during 1997 
totaled approximately 4.3 billion pounds on a fresh weight basis. East 
Asia and Pacific Rim countries are the largest markets 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 1997 totaled 2.7 billion pounds on a 
fresh weight basis. Tablestock, seed potatoes, and frozen potato 
products accounted for about 94 percent of the total value of potato 
imports, and over 99 percent of these items came from Canada. Starch 
for

[[Page 53544]]

human consumption accounted for about 4 percent of the total value of 
potato imports. Nearly all imports of potato starch for human 
consumption came from Europe, with The Netherlands accounting for 57 
percent, and Germany 34 percent of the total tonnage. The remaining two 
percent of the value of total potato imports was from flour, flakes, 
granules, and chips.
    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.
    On September 2, 1997 [62 FR 46175], an interim final rule suspended 
portions of the Plan and amended the rules and regulations issued under 
the Plan.
    The suspension of portions of the Plan eliminated 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.
    At the time, the Plan required nominations for producer and 
importer members to be submitted to the Department of Agriculture (USDA 
or the Department) 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.
    In addition, all importers have had to fly to Denver to attend a 1-
hour nomination meeting.
    For several years, the Board 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 provided 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 has been eliminated. 
Permitting an optional means of nominating importers members also 
eliminated the time and expense currently incurred for importers to 
participate in these meetings. Additionally, nomination activity no 
longer has 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 had not been made, producers and importers would 
have continued to incur financial and time loss to attend and 
participate in nomination meetings, and attendance at these meetings 
would have continued to suffer.
    The second amendment to the rules and regulations permitted 
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 
permitted producer members to call for a vote by the production of each 
State. In the 1990 Farm Bill, Congress amended the Act to include, 
along with other changes, 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 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.
    The interim final rule corrected the oversight and included 
provisions in the regulations to reflect the procedure currently in 
practice. Importers' votes carry the same proportional weight as 
producers' votes, resulting in equitable treatment of importers.
    The third amendment made by the interim final rule specified in the 
rules and regulations that 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.
    Previously, the regulations required 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. The rulemaking was 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 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.

[[Page 53545]]

    In addition, the interim final rule suspended 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 finalizes the action that permitted importer members of 
the Board to vote on the basis of the volume of imported potatoes. This 
revision does 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 finalize the suspension of 
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 enhance the efficiency of the operation of 
the potato research and promotion program and 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 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 is 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 permits 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 corrects an oversight and includes 
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 finalizes an interim final rule which suspended 
portions of the Plan and amended three sections of the rules and 
regulations issued under the Plan.
    The suspension of portions of the Plan eliminated 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 were also suspended. The rules issued under the Plan were also 
amended to provide an alternative means of selecting nominees for 
appointment such as by a mail ballot of the industry.
    Previously, the Plan required 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 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 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, the interim final rule suspended wording 
referring to meetings in Sec. 1207.322 of the Plan. Paragraph (a) of 
Sec. 1207.322 dealt only with nomination of the initial Board and was 
thus obsolete. Therefore, paragraph (a) was suspended in its entirety. 
References to meetings were suspended in paragraphs (b) and (c).
    Also, because no organizations of potato importers exist, 
references to importer organizations are unnecessary and were suspended 
in Sec. 1207.322(d).
    In addition, references in Sec. 1207.503 of the rules and 
regulations to meetings and importer organizations were removed and 
amendments made to this section to provide the option of mail balloting 
to nominate producers and importers for appointment to the Board.

[[Page 53546]]

    A second amendment to the rules and regulations dealt 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 provided 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 did 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 was 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, the interim final rule amended Sec. 1207.513 of the 
regulations to provide for this reporting.
    The interim final rule was issued on August 26, 1997, and published 
in the Federal Register [62 FR 46179] on September 2, 1997. The 
deadline for comments was November 3, 1997. No comments were received.
    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.

List of Subjects in 7 CFR Part 1207

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

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

    Accordingly, the interim final rule amending 7 CFR Part 1207 which 
was published at 62 FR 46175 on September 2, 1997, is adopted as a 
final rule without change.

    Dated: September 30, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-26763 Filed 10-5-98; 8:45 am]
BILLING CODE 3410-02-P