[Federal Register Volume 63, Number 232 (Thursday, December 3, 1998)]
[Rules and Regulations]
[Pages 66718-66720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32209]



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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV98-948-2 FIR]


Irish Potatoes Grown in Colorado; Exemption From Area No. 2 
Handling Regulation for Potatoes Shipped for Experimentation and the 
Manufacture or Conversion Into Specified Products

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which exempts shipments of potatoes handled for experimentation and the 
manufacture or conversion into specified products from the grade, size, 
maturity, and inspection requirements prescribed under the handling 
regulations of the Colorado Potato Marketing Order for Area No. 2 (San 
Luis Valley). This rule was unanimously recommended by the Colorado 
Potato Administrative Committee for Area No. 2 (Committee), the agency 
responsible for local administration of the marketing order. This rule 
continues in effect exemptions designed to expand markets for potatoes 
and to increase fresh utilization. These changes are expected to 
improve the marketing of Colorado potatoes and increase returns to 
producers.

EFFECTIVE DATE: January 4, 1999.

FOR FURTHER INFORMATION CONTACT: Dennis L. West, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204; telephone: (503) 326-2724, Fax: (503) 326-7440; 
or George J. Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 
205-6632. Small businesses may request information on complying with 
this regulation, or obtain a guide on complying with fruit, vegetable, 
and specialty crop marketing agreements and orders by contacting Jay 
Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-
6456; telephone: (202) 720-2491, Fax: (202) 205-6632, or E-mail: 
Jay__N__G[email protected]. You may view the marketing agreement and 
order small business compliance guide at the following web site: http:/
/www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 97 and Marketing Order No. 948 (7 CFR part 948), both as 
amended, regulating the handling of Irish potatoes grown in Colorado, 
hereinafter referred to as the ``order.'' The order is effective under 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act.''
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule 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 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 request 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 to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    This rule continues to exempt shipments of potatoes handled for the 
purposes of experimentation and the manufacture or conversion into 
specified products from the grade, size, maturity, and inspection 
requirements prescribed under the order's handling regulations for Area 
No. 2 (San Luis Valley).
    Section 948.22 authorizes the issuance of regulations for grade, 
size, quality, maturity, and pack for any variety or varieties of 
potatoes grown in different portions of the production area during any 
period. Section 948.23 authorizes the issuance of regulations that 
modify, suspend, or terminate requirements issued under Sec. 948.22 or 
to facilitate the handling of potatoes for special purposes. Section 
948.24 requires adequate safeguards to be prescribed to ensure that 
potatoes handled pursuant to Sec. 948.23 enter authorized trade 
channels. Safeguard procedures for special purpose shipments are 
specified in Secs. 948.120 through 948.125.
    At its meeting on June 18, 1998, the Committee unanimously 
recommended that handlers of potatoes shipped for experimentation and 
for the manufacture or conversion into specified products be exempted 
from the grade, size, maturity, and inspection requirements prescribed 
under the order's handling regulations for Area No. 2 in Sec. 948.386. 
The Committee recommended that experimentation and manufacture or 
conversion into specified products be added under Sec. 948.386(d)(2) as 
special purpose shipments.
    As required for all special purpose shipments, handlers desiring to 
handle potatoes for such purposes would apply for and obtain 
Certificates of Privilege and furnish the Committee such information as 
the Committee may require to track such shipments and to verify proper 
disposition.
    Several producers and handlers within the production area are 
attempting to develop new fresh uses for potatoes using experimental 
varieties and packs. The Committee also anticipates that some handlers 
may want to ship experimental varieties, or traditional varieties, for 
use in the manufacture or conversion into special products, or perform 
the manufacture or conversion themselves prior to shipment. Handlers 
are, for example, attempting to develop new special products such as 
fresh cut potatoes shipped in vacuum sealed bags. The Committee 
strongly encourages innovation that could result in the development of 
new varieties, markets, or opportunities for fresh potatoes that would 
be good for the Colorado potato industry. Some of the new varieties 
have irregular shapes or are small in size, and that prevents them from 
being shipped except under the minimum quantity exemption of 1,000 
pounds specified in paragraph (f) of Sec. 948.386. This has prevented 
handlers from shipping larger quantities. Handlers have also expressed 
a desire to experiment with the shipment of potatoes of different 
varieties in the same container. This is not currently possible because 
the potatoes do not meet the minimum grade requirement that a 
particular lot of potatoes have ``similar'' varietal characteristics.
    For the purpose of this action, the term ``manufacture or 
conversion into specified products'' means the

[[Page 66719]]

preparation of potatoes for market into products by peeling, slicing, 
dicing, applying material to prevent oxidation, or other means approved 
by the Committee, but not including other processing. Formerly, 
potatoes for manufacture or conversion into products had to be 
inspected and certified as meeting specified quality requirements prior 
to preparation for market. This action continues to exempt shipments 
handled for experimentation or the manufacture or conversion into 
products from these requirements, thus, relieving handlers of this 
regulatory burden.
    These changes to the Area No. 2 handling regulation are expected to 
encourage new product development and could lead to market expansion 
which would benefit producers, handlers, buyers, and consumers of 
Colorado potatoes.
    The special purpose shipments authorized by this action are fresh 
use markets so it is appropriate that the handlers taking advantage of 
the exemptions be assessed to defray the costs the Committee incurs in 
administering the program, tracking such shipments, in determining 
whether applicable requirements have been met, and in determining 
whether the potatoes ended up in the proper trade channel. This rule is 
designed to expand markets for potatoes and to increase fresh 
utilization. These changes are expected to improve the marketing of 
Colorado potatoes and increase returns to producers.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, the AMS 
has prepared this final regulatory flexibility analysis.
    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 of disproportionately burdened. Marketing orders issued 
pursuant to the Act, and the rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 100 handlers of Colorado Area No. 2 
potatoes who are subject to regulation under the marketing order and 
approximately 285 producers of Colorado potatoes in the regulated area. 
Small agricultural service firms have been defined by the Small 
Business Administration (13 CFR 121.601) as those having annual 
receipts of less than $5,000,000, and small agricultural producers are 
defined as those whose annual receipts are less than $500,000. The 
majority of potato producers and handlers regulated under the marketing 
agreement and order may be classified as small entities.
    This rule continues to exempt shipments of potatoes handled for 
experimentation and the manufacture or conversion into specified 
products from the grade, size, maturity, and inspection requirements 
that are prescribed under the order's handling regulations for Area No. 
2 in Sec. 948.386.
    At its meeting on June 18, 1998, the Committee unanimously 
recommended that potatoes shipped for the purposes of experimentation 
and for the manufacture or conversion into specified products be 
considered special purpose shipments and be exempt from the grade, 
size, maturity, and inspection requirements prescribed in Sec. 948.386. 
The Committee recommended that experimentation and manufacture or 
conversion into specified products be added under Sec. 948.386(d)(2) as 
special purpose shipments. As is required for all special purpose 
shipments, handlers desiring to handle potatoes for such purposes would 
apply for and obtain Certificates of Privilege and furnish the 
Committee such information as the Committee may require to track such 
shipments, determine whether applicable requirements have been met, and 
whether proper disposition has occurred.
    Several producers and handlers within the production area are 
attempting to develop new fresh uses for potatoes using experimental 
varieties and packs. The Committee also anticipates that some handlers 
may want to ship experimental varieties, or traditional varieties, for 
use in the manufacture or conversion into special products, or perform 
the manufacture or conversion themselves prior to shipment. Handlers 
are, for example, attempting to develop new special products such as 
fresh cut potatoes shipped in vacuum sealed bags. The Committee 
strongly encourages innovation that could result in the development of 
new varieties, markets, or opportunities for fresh potatoes that would 
be good for the Colorado potato industry. Some of the new varieties 
have characteristics, such as small size or misshape, that prevent them 
from being shipped fresh except under the minimum quantity exemption of 
1,000 pounds in paragraph (f) of Sec. 948.386. This has placed a burden 
on handlers desiring to ship larger quantities of such potatoes. 
Handlers have also expressed a desire to experiment with the shipment 
of potatoes of different varieties in the same container. This is not 
currently possible because the potatoes do not meet the minimum grade 
requirement that a particular lot of potatoes have ``similar'' varietal 
characteristics.
    For purpose of this action, the term ``manufacture or conversion 
into specified products'' means the preparation of potatoes for market 
into products by peeling, slicing, dicing, applying material to prevent 
oxidation, or other means approved by the Committee, but not including 
other processing.
    These changes to the handling regulation are expected to encourage 
new product development and could lead to market expansion which would 
benefit producers, handlers, buyers, and consumers of Colorado 
potatoes.
    The special purpose outlets authorized by this action are fresh use 
markets so it is appropriate that handlers taking advantage of the 
exemptions be assessed to defray the costs the Committee incurs in 
administering the program, tracking such shipments, determining whether 
applicable requirements have been met, and whether the potatoes end up 
in proper trade channels. Currently, the assessment rate is $0.0015 per 
hundredweight of potatoes handled. This rule is designed to expand 
markets for potatoes and to increase fresh utilization. The changes are 
expected to improve the marketing of Colorado potatoes and increase 
returns to producers.
    There is no available information detailing how many potatoes this 
relaxation will allow to be marketed. However, the Committee expects 
the quantities to be small.
    No viable alternatives to this action were identified that would 
ensure innovations in marketing and product development. Furthermore, 
the goals expressed by the committee could not be solved absent this 
action.
    The Committee estimates that three or four handlers may apply for 
and obtain Certificates of Privilege for the handling of potatoes for 
experimentation or for the manufacture or conversion into specified 
products. It is estimated that the time taken by the handlers who apply 
will total less than ten hours and this time is currently approved 
under OMB No. O581-0178 by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 
35). To date, three handlers have obtained Certificates of Privilege 
for these purposes.
    As with all Federal marketing order programs, reports and forms are

[[Page 66720]]

periodically reviewed to reduce information requirements and 
duplication by industry and public sectors. In addition, as noted in 
the initial regulatory flexibility analysis, the Department has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this rule.
    Further, the Committee's meeting was widely publicized throughout 
the Colorado potato industry and all interested persons were invited to 
attend the meeting and participate in Committee deliberations. Like all 
Committee meetings, the June 18, 1998, meeting was a public meeting and 
all entities, both large and small, were able to express their views on 
this issue. The Committee itself is composed of 12 members, of which 5 
are handlers and 7 are producers, the majority of whom are small 
entities.
    An interim final rule concerning this action was published in the 
Federal Register on August 11, 1998 (63 FR 42686. Copies of the rule 
were mailed by the Committee's staff to all Committee members and Area 
No. 2 potato handlers. In addition, the rule was made available through 
the Internet by the Office of the Federal Register. That rule provided 
for a 60-day comment period which ended October 13, 1998. No comments 
were received.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (63 FR 42686, August 11, 1998) will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 948

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

PART 948--IRISH POTATOES GROWN IN COLORADO

    Accordingly, the interim final rule amending 7 CFR part 948 which 
was published at 63 FR 42686 on August 11, 1998 is adopted as a final 
rule without change.

    Dated: November 27, 1998
Robert C. Keeney
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-32209 Filed 12-2-98; 8:45 am]
BILLING CODE 3410-02-P