[Federal Register Volume 64, Number 176 (Monday, September 13, 1999)]
[Rules and Regulations]
[Pages 49352-49355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23792]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 947

[Docket No. FV99-947-1 FIR]


Irish Potatoes Grown in Modoc and Siskiyou Counties, California, 
and in All Counties in Oregon, Except Malheur County; Temporary 
Suspension of Handling Regulations and Establishment of Reporting 
Requirements

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 
suspending, for the 1999-2000 season only, the minimum grade, size, 
quality, maturity, pack, and inspection requirements currently 
prescribed under the Oregon-California potato marketing order. The 
marketing order regulates the handling of Irish potatoes grown in Modoc 
and Siskiyou Counties, California, and in all Counties in Oregon, 
except Malheur County, and is administered locally by the Oregon-
California Potato Committee (Committee). During this suspension of the 
handling regulations, reports from handlers will be required to obtain 
information necessary to administer the marketing order. This rule is 
expected to reduce industry expenses.

EFFECTIVE DATE: October 13, 1999.

FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Northwest 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, room 369, 
Portland, Oregon 97204-2807; telephone: (503) 326-2724, Fax: (503) 326-
7440 or George 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) 720-5698. Small businesses may request information 
on complying with this regulation by contacting Jay Guerber, Marketing 
Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 
P.O. Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 
720-2491, Fax: (202) 720-5698, or E-mail: Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 114 and Marketing Order No. 947, both as amended (7 CFR 
part 947), regulating the handling of Irish potatoes grown in Modoc and 
Siskiyou Counties in California, and in all counties in Oregon, except 
Malheur County, hereinafter referred to as the ``order.'' The marketing 
agreement and order are 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 date of the entry of the ruling.
    This rule continues in effect the suspension of the handling 
regulations currently prescribed under the order from July 1, 1999, to 
June 30, 2000. This rule allows the Oregon-California potato industry 
to market potatoes without minimum grade, size, quality, maturity, 
pack, and inspection requirements. The handling regulations will resume 
July 1, 2000, for the 2000-2001 season and future seasons. This rule 
also establishes handler reporting requirements during the same time 
period. Reporting requirements will allow the Committee to obtain 
information from handlers necessary to administer the order.
    Section 947.52 of the order authorizes the issuance of regulations 
for grade, size, quality, maturity, and pack for any variety of 
potatoes grown in the production area during any period. Section 947.51 
authorizes the modification, suspension, or termination of regulations 
issued under Sec. 947.52.
    Section 947.60 provides that whenever potatoes are regulated 
pursuant to Sec. 947.52, such potatoes must be inspected by the 
Federal-State Inspection Service, and certified as meeting the 
applicable requirements of such regulations. The cost of inspection and 
certification is borne by handlers.
    Section 947.80 authorizes the Committee, with the approval of the 
Secretary, to require reports and other information from handlers that 
are necessary for the Committee to perform its duties.
    Minimum grade, size, quality, maturity, and pack requirements for 
potatoes regulated under the order are specified in Sec. 947.340 
Handling Regulation [7 CFR 947.340]. This regulation, with 
modifications and exemptions for different varieties and types of 
shipments, provides that all potatoes grade at least U.S. No. 2; be at 
least 2 inches in diameter or weigh at least 4 ounces; and be not more 
than moderately skinned. Additionally, potatoes packed in cartons must 
be U.S. No. 1 grade or better, with an additional

[[Page 49353]]

tolerance allowed for internal defects, or U.S. No. 2 grade weighing at 
least 10 ounces. Section 947.340 also includes waivers of inspection 
procedures, reporting and safeguard requirements for special purpose 
shipments, and a minimum quantity exemption of 19 hundredweight per 
day.
    The Committee meets prior to and during each season to consider 
recommendations for modification, suspension, or termination of the 
regulatory requirements for Oregon-California potatoes which have been 
issued on a continuing basis. Committee meetings are open to the public 
and interested persons may express their views at these meetings. The 
Department reviews Committee recommendations and information submitted 
by the Committee and other available information, and determines 
whether modification, suspension, or termination of the regulatory 
requirements would tend to effectuate the declared policy of the Act.
    At its February 23, 1999, meeting, the Committee unanimously 
recommended suspending the handling regulations and establishing 
handler reporting requirements for the 1999-2000 season. The Committee 
met again on May 14, 1999, to review the recommendation made at the 
earlier meeting. After extensive discussion, the Committee decided not 
to rescind or modify their earlier recommendation to suspend handling 
regulations. The Committee requested that this rule be effective for 
the fiscal period beginning July 1, 1999, which is also the date 
shipments of the 1999 Oregon-California potato crop began.
    The objective of the handling requirements is to ensure that only 
acceptable quality potatoes enter fresh market channels, thereby 
ensuring consumer satisfaction, increasing sales, and improving returns 
to producers. While the industry continues to believe that quality is 
an important factor in maintaining sales, the Committee believes the 
cost of inspection and certification (mandated when minimum 
requirements are in effect) may exceed the benefits derived.
    Potato prices have been at low levels in recent seasons, and many 
producers have faced difficulty covering their production costs. 
Therefore, the Committee has been discussing the possibility of 
reducing costs through the elimination of mandatory inspection. The 
Committee is concerned, however, that the elimination of current 
handling and inspection requirements could possibly result in lower 
quality potatoes being shipped to fresh markets. Also, there is some 
concern that the Oregon-California potato industry could lose sales to 
other potato producing areas that are covered by quality and inspection 
requirements. For these reasons, the Committee recommended that the 
suspension of handling requirements be effective for the 1999-2000 
season only. This will enable the Committee to study the impacts of the 
suspension and consider appropriate actions for ensuing seasons.
    This rule will enable handlers to ship potatoes without regard to 
the minimum grade, size, quality, maturity, pack, and inspection 
requirements for the 1999-2000 season only. This rule will allow 
handlers to decrease costs by eliminating the costs associated with 
inspection. This rule will not restrict handlers from seeking 
inspection on a voluntary basis. The Committee will evaluate the 
effects of removing the minimum requirements on marketing and on 
producer returns at its meeting next spring.
    The suspension of the handling regulations will result in the 
elimination of the monthly inspection report from the Federal-State 
Inspection Service which the Committee used as a basis for the 
collection of assessments from handlers. This inspection report was 
compiled by the Federal-State Inspection Service from inspection 
certificates. During the suspension of the handling regulations, 
reports from handlers will be needed for the Committee to obtain 
information on which to collect assessments. Therefore, a new 
Sec. 947.180 Reports is established which requires each handler to 
submit a monthly assessment report to the Committee containing the 
following information: (a) The date and quantity of fresh potatoes sold 
including identification numbers; (b) the name and address of the 
producers; (c) the assessment payment due; and (d) the name and address 
of the handler. Authorization to assess handlers enables the Committee 
to incur expenses that are reasonable and necessary to administer the 
program. Although adding reporting requirements, this rule through the 
elimination of inspection and certification requirements is expected to 
reduce industry expenses.
    Consistent with the suspension of Sec. 947.340, this rule also 
suspends Secs. 947.120, 947.123, 947.130, 947.132, 947.133, and 947.134 
of the rules and regulations in effect under the order. Sections 
947.120 and 947.123 provide authority for hardship exemptions from 
inspection and certification, and establish reporting and recordkeeping 
requirements when such exemptions are in place. Sections 947.130, 
947.132, 947.133, and 947.134 are safeguard and reporting provisions of 
the order that are applicable to special purpose shipments when 
inspection and certification requirements are in place.
    Contained within Sec. 947.340(i) of the current handling 
regulations is a minimum quantity exemption under which a handler may 
ship not more than 19 hundredweight of potatoes on any day without 
regard to the inspection and assessment requirements issued under the 
order. The suspension of the handling regulations removes all 
inspection requirements. To continue the current minimum quantity 
exemption for assessments, a new Sec. 947.125 Minimum quantity 
exemption is established. This section simply continues the current 
minimum quantity exemption under which a handler may ship not more than 
19 hundredweight of potatoes on any day without regard to the 
assessment requirements issued under the order.
    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 or 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 30 handlers of Oregon-California potatoes 
who are subject to regulation under the marketing order and 
approximately 450 potato producers 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 
having annual receipts of less than $500,000.
    Currently, about 83 percent of the Oregon-California potato 
handlers ship less that $5,000,000 worth of potatoes and 17 percent 
ship more than $5,000,000 worth on an annual basis. In addition, based 
on acreage, production, and producer prices reported by the National 
Agricultural Statistics Service, and the total number of Oregon-
California potato producers, average annual producer receipts are 
approximately $285,000. In view of the foregoing, it can be concluded 
that the majority of handlers and producers of

[[Page 49354]]

Oregon-California potatoes may be classified as small entities.
    This rule suspends the handling regulations and establishes 
reporting requirements from July 1, 1999, through June 30, 2000. This 
rule will allow the Oregon-California potato industry to market 
potatoes without minimum grade, size, quality, maturity, pack, and 
inspection requirements. The handling regulations currently specified 
in Sec. 947.340 will resume July 1, 2000, for the 2000-2001 season and 
future seasons. Reporting requirements will allow the Committee to 
obtain information from handlers necessary to collect assessments.
    At its February 23, 1999, meeting, the Committee unanimously 
recommended suspending the handling regulations and establishing 
reporting requirements for the 1999-2000 season. The Committee met 
again on May 14, 1999, to review the recommendation made at the earlier 
meeting. After extensive discussion, the Committee decided not to 
rescind or modify their earlier recommendation to suspend handling 
regulations. The Committee requested that this rule be effective for 
the fiscal period beginning July 1, 1999, which is also the date 
shipments of the 1999 Oregon-California potato crop began.
    The objective of the handling requirements is to ensure that only 
acceptable quality potatoes enter fresh market channels, thereby 
ensuring consumer satisfaction, increasing sales, and improving returns 
to producers. While the industry continues to believe that quality is 
an important factor in maintaining sales, the Committee believes the 
cost of inspection and certification (mandated when minimum 
requirements are in effect) may exceed the benefits derived.
    Potato prices have been at low levels in recent seasons, and many 
producers have faced difficulty covering their production costs. 
Therefore, the Committee has been discussing the possibility of 
reducing costs through the elimination of mandatory inspection. The 
Committee is concerned, however, that the elimination of current 
handling and inspection requirements could possibly result in lower 
quality potatoes being shipped to fresh markets. Also, there is some 
concern that the Oregon-California potato industry could lose sales to 
other potato producing areas that are covered by quality and inspection 
requirements. For these reasons, the Committee recommended that the 
suspension of handling requirements be effective for the 1999-2000 
season only. This will enable the Committee to study the impacts of the 
suspension and consider appropriate actions for ensuing seasons.
    This rule will enable handlers to ship potatoes without regard to 
the minimum grade, size, quality, maturity, pack, and inspection 
requirements for the 1999-2000 season only. This rule will allow 
handlers to decrease costs by eliminating the costs associated with 
inspection. This rule will not restrict handlers from seeking 
inspection on a voluntary basis. The Committee will evaluate the 
effects of removing the minimum requirements on marketing and on 
producer returns at its meeting next spring.
    The suspension of the handling regulations will result in the 
elimination of the monthly inspection report from the Federal-State 
Inspection Service which the Committee used for billing purposes. This 
inspection report was compiled by the Federal-State Inspection Service 
from inspection certificates. During this suspension of the handling 
regulations, reports from handlers will be necessary for the Committee 
to obtain information on which to collect assessments. This rule 
establishes a new Sec. 947.180 Reports which requires each handler to 
submit a monthly assessment report to the Committee containing the 
following information: (a) The date and quantity of fresh potatoes sold 
including identification numbers; (b) the name and address of the 
producers; (c) the assessment payment due; and (d) the name and address 
of the handler. Authorization to assess handlers enables the Committee 
to incur expenses that are reasonable and necessary to administer the 
program. Although adding reporting requirements, this rule through the 
elimination of inspection and certification requirements is expected to 
reduce industry expenses.
    Contained within Sec. 947.340(i) of the current handling 
regulations is a minimum quantity exemption under which a handler may 
ship not more than 19 hundredweight of potatoes on any day without 
regard to the inspection and assessment requirements issued under the 
order. The suspension of the handling regulations removes all 
inspection requirements. To continue the current minimum quantity 
exemption for assessments, a new 947.125 Minimum quantity exemption is 
established. This section simply continues the current minimum quantity 
exemption under which a handler may ship not more than 19 hundredweight 
of potatoes on any day without regard to the assessment requirements 
issued under the order.
    The Committee anticipates that this rule will not negatively impact 
small businesses. This rule will suspend minimum grade, size, quality, 
maturity, pack, and inspection requirements. Further, this rule will 
allow handlers and producers the choice to obtain inspection for 
potatoes, as needed, thereby reducing cost to producers and handlers. 
The total cost of inspection and certification for fresh shipments of 
Oregon-California potatoes during the 1998-99 marketing season is 
estimated at $600,000. This is approximately $20,000 per handler. The 
Committee expects, however, that most handlers will continue to have 
some of their potatoes inspected and certified by the Federal-State 
Inspection Service.
    The Committee investigated the use of other types of inspection 
programs as another option to reduce the cost of inspection, but 
believed they were not viable at this time. With the suspension of 
handling regulations, there are no alternatives to reporting 
requirements to ensure the collection of assessments needed to 
administer the order.
    This rule will require monthly reports from handlers to obtain 
information necessary to collect assessments. Although this rule 
establishes new reporting requirements, the suspension of the handling 
regulations eliminates the more frequent reporting requirements that 
were included under the safeguard provisions of the order.
    Therefore, any additional reporting or recordkeeping requirements 
on either small or large potato handlers are expected to be offset by 
the elimination of reporting requirements currently in effect. In 
addition, the elimination of inspection and certification requirements 
is expected to further reduce industry expenses. Finally, as with all 
Federal marketing order programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public sectors.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements that are contained 
in this rule have been approved by the Office of Management and Budget 
(OMB) and have been assigned OMB No. 0581-0178. It is estimated that it 
will take a handler 20 minutes to complete a monthly assessment report, 
and that each handler will fill out 12 monthly assessment reports each 
year. This creates an estimated total industry burden of approximately 
120 hours. It is estimated that it currently takes a handler 5 minutes 
to complete a safeguard reporting form. With an estimated 2,000 
safeguard reports completed each year, the estimated

[[Page 49355]]

decrease in burden because of the elimination of safeguard reporting 
requirements is estimated to be 167 hours.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this rule. Further, the Committee's 
meetings were widely publicized throughout the Oregon-California potato 
industry and all interested persons were invited to attend the meetings 
and participate in Committee deliberations. Like all Committee 
meetings, the February 23, 1999, and May 14, 1999, meetings were public 
meetings and all entities, both large and small, were able to express 
their views on this issue. The Committee itself is composed of 14 
members, of which 5 are handlers and 9 are producers. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    An interim final rule concerning this action was published in the 
Federal Register on June 25, 1999. A copy of the rule was mailed to the 
Committee's administrative office for distribution to producers and 
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 August 24, 1999. No comments were received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    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 (64 FR 34113, June 25, 1999) will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 947

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

PART 947--IRISH POTATOES GROWN IN MODOC AND SISKIYOU COUNTIES, 
CALIFORNIA, AND IN ALL COUNTIES IN OREGON, EXCEPT MALHEUR COUNTY

    Accordingly, the interim final rule amending 7 CFR part 947 which 
was published at 64 FR 34113 on June 25, 1999, is adopted as a final 
rule without change.

    Dated: September 7, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-23792 Filed 9-10-99; 8:45 am]
BILLING CODE 3410-02-P