[Federal Register Volume 65, Number 227 (Friday, November 24, 2000)]
[Rules and Regulations]
[Pages 70461-70464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29944]



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 Rules and Regulations
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  Federal Register / Vol. 65, No. 227 / Friday, November 24, 2000 / 
Rules and Regulations  

[[Page 70461]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 946

[Docket No. FV00-946-1 IFR]


Irish Potatoes Grown in Washington; Exemption From Handling and 
Assessment Regulations for Potatoes Shipped for Experimental Purposes

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule exempts potatoes shipped for experimental purposes 
from the handling and assessment regulations of the Washington State 
potato marketing order. The marketing order regulates the handling of 
potatoes grown in Washington, and is administered locally by the State 
of Washington Potato Committee (Committee). Experimental shipments of 
potatoes by handlers utilizing new and innovative packaging, including 
the commingling of different varieties of potatoes in the same package, 
or shipments of non-traditional experimental varieties of potatoes will 
be exempt from the grade, size, maturity, pack, inspection, and 
assessment requirements of the marketing order. By relaxing the 
requirements on shipments of such potatoes, this rule provides the 
industry with greater marketing flexibility and with the ability to 
investigate new methods for increasing producer returns. It also is 
expected to provide consumers with more choices in buying fresh 
potatoes.

DATES: Effective November 27, 2000; comments received by January 23, 
2001 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-5698, or E-mail: [email protected]. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register and will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

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, suite 385, 
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: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 113 and Marketing Order No. 946, both as amended (7 CFR 
part 946), regulating the handling of Irish potatoes grown in 
Washington, 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 of Agriculture (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 exempts shipments of potatoes for experimentation from 
the grade, size, maturity, pack, inspection, and assessment 
requirements of the marketing order. By relaxing the requirements on 
new and innovative packaging and on non-traditional varieties of fresh 
potatoes, this rule provides the industry with greater marketing 
flexibility and the ability to investigate new methods for increasing 
producer returns, and provides consumers with more choices in buying 
fresh potatoes. The Committee unanimously recommended the exemption for 
experimental packs and varieties at its meeting held on June 8, 2000.
    Section 946.51 of the order provides authority for the Committee to 
recommend the implementation, modification, suspension or termination 
of regulations. Section 946.52 provides the necessary authority for the 
Department to issue regulations, and to modify, suspend, or terminate 
such regulations. Furthermore, Sec. 946.54 provides authority for the 
modification, suspension, or termination of handling regulations for 
the purpose of facilitating the handling of potatoes for special 
purposes, while Sec. 946.55 provides for adequate safeguards to prevent 
such special purpose shipments from entering unauthorized outlets. The 
order's handling regulations, Sec. 946.336, establish the grade, size, 
maturity, pack, and inspection requirements for potatoes grown in 
Washington. The

[[Page 70462]]

assessment rate for Washington potatoes is established in Sec. 946.248, 
pursuant to Sec. 946.41.
    Handlers have expressed a desire to experiment with shipping 
potatoes of different varieties in the same container. This has been a 
problem, however, since the order requires that all potato varieties, 
as a minimum, meet U.S. No. 2 grade as defined in the U.S. Standards 
for Grades of Potatoes. These standards specify that a particular lot 
of potatoes has ``similar'' varietal characteristics.
    Although the order's handling regulations do allow the mixing of 
any size and variety in a 3-pound or smaller container, handlers have 
been unable to ship a large enough quantity of the experimental packs 
to determine market feasibility. With this action, however, marketers 
will have the ability to experiment with various packs, including 
containers with a mixture of different potato varieties and sizes.
    Prior to this action, the order's regulations required that all 
potatoes shipped to the fresh market, with the exception of those 
meeting the minimum quantity and special purpose exemptions, be 
inspected and assessed. The handling regulations did not provide 
adequate relief for commercially viable shipments of non-traditional or 
experimental potato varieties that could not meet minimum inspection 
requirements. Several producers and handlers within the production area 
are attempting to develop and market new varieties of potatoes. Some of 
the new varieties have irregular shapes or are small in size and will 
not meet minimum order requirements. In order to market these unique 
potatoes, handlers were required to utilize the order's minimum 
quantity exemption, which allows shipments up to, but not in excess of, 
500 pounds of potatoes daily without regard to assessment and 
inspection requirements. This has prevented handlers from shipping 
larger quantities of these potatoes and from adequately determining 
their marketability and consumer acceptance. By allowing handlers to 
ship the quantities of new varieties they believe are necessary to 
determine marketability, this rule adequately addresses this issue.
    As is currently required for all special purpose shipments, 
handlers shipping experimental potato packs or experimental potato 
varieties will need to apply for and obtain a Special Purpose 
Certificate from the Committee. To help ensure compliance with the 
revised provisions and to statistically track the shipments of 
experimental potato packs and varieties, the Committee will require 
that shipments made pursuant to this action be reported on the Special 
Purpose Shipment Report, as modified to include potatoes shipped for 
experimental purposes. Such reports will help the Committee in 
determining whether applicable requirements have been met and whether 
proper disposition has occurred, and will be furnished to the Committee 
for each shipment made pursuant to the applicable Special Purpose 
Certificate. The Committee's intent is to keep reporting requirements 
at the minimum level necessary to monitor compliance while determining 
the viability and extent of any changes in the packaging and marketing 
of Washington potatoes.
    The Committee contends that the purpose of the order is to provide 
quality assurance and minimum grade standards for Washington potatoes 
and not to inhibit innovation. This rule thus provides the Washington 
potato industry with the ability to seek new and innovative ways to 
market its fresh potato crop without the costs and constraints of 
regulation that otherwise provide a necessary service to the industry. 
This rule provides the industry with the flexibility to explore new 
markets while enhancing product development, and helps in identifying 
niche markets which may benefit producers, handlers, buyers, and 
consumers of Washington State potatoes. Should a particular 
experimental pack or variety become commercially significant and some 
form of quality control or assessment reinstatement be needed, the 
Committee will consider further changes in the exemptions.
    As referenced earlier, the Committee currently utilizes two forms 
for special purpose shipments. These are the Shippers Application for 
Special Purpose Certificate and the Special Purpose Shipment Report. To 
conform to this terminology, this rule also replaces the term 
``Certificate of Privilege'' with the term ``Special Purpose 
Certificate'' wherever it appears in the Rules and Regulations and 
Handling Regulations established 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, AMS has 
prepared this initial 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 40 handlers of Washington potatoes who are 
subject to regulation under the marketing order and approximately 340 
Washington potato producers in the regulated area. Small agricultural 
service firms are defined by the Small Business Administration (13 CFR 
121.201) 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. A majority of these handlers and 
producers may be classified as small entities, excluding receipts from 
other sources.
    This rule exempts shipments of potatoes shipped for experimentation 
from the grade, size, maturity, pack, inspection, and assessment 
requirements prescribed under the regulations of the marketing order 
regulating the handling of potatoes grown in Washington. Pursuant to 
authority in Secs. 946.51, 946.52, and 946.54, at its meeting on June 
8, 2000, the Committee unanimously recommended that this exemption for 
experimental potato packs and varieties be added under Sec. 946.336(d), 
Special purpose shipments. By relaxing the regulations, this rule 
provides the Washington potato industry with the enhanced ability to 
seek new and innovative methods of marketing its fresh potato crop. 
This rule provides the industry with the flexibility to explore new 
markets while enhancing product development, and helps to identify 
niche markets which may benefit producers, handlers, buyers, and 
consumers of Washington State potatoes.
    The Committee believes that this rule will have a positive economic 
impact on the Washington potato industry. Producers and handlers will 
be able to concentrate on developing innovative new packaging and 
marketable new potato varieties without the costs associated with 
inspection and administrative assessments, as well as most of the costs 
associated with grading. Although not having specific information 
regarding the volume of potatoes that will be marketed through this 
exemption, the Committee estimates that the initial volume being 
shipped will be low and thus will have little negative impact on 
Committee assessment income. However, since one of the objectives of 
this action is to increase the utilization of fresh potatoes

[[Page 70463]]

produced in Washington, the Committee will consider changing the 
handling regulation and assessment requirements in the future, if 
needed, to help ensure quality control and adequate Committee income if 
the experimental shipments become commercially viable.
    The current assessment rate is $0.002 per hundredweight of potatoes 
handled. Also, the cost of inspection under the marketing order is 
$0.06 per hundred weight of potatoes inspected. Handlers, both small 
and large, shipping potatoes under the experimental shipment exemption 
will not incur these costs. Any savings accrued will be proportional to 
the quantities of potatoes shipped under the experimentation exemption.
    With regard to alternatives, we believe that this action best 
reflects the marketing and product development goals of the Washington 
potato industry.
    The Committee estimates that initially four or five handlers may 
each apply for and obtain a Special Purpose Certificate for the purpose 
of making shipments of experimental packs or varieties. In addition, 
such handlers will be required to furnish to the Committee a Special 
Purpose Shipment Report for each shipment made under the experimental 
purposes exemption. The Committee estimates that the additional 
paperwork burden on handlers for this action will total less than ten 
hours. Such time is currently approved under OMB No. 0581-0178 by the 
Office of Management and Budget in accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. Chapter 35).
    As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. In addition, 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 Washington potato industry and all interested persons were invited 
to attend the meeting and participate in Committee deliberations. Like 
all Committee meetings, the June 8, 2000, meeting was a public meeting 
and all entities, both large and small, were able to express their 
views on this issue. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 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.
    This rule invites comments on a change to the regulations 
prescribed for the production area under the Washington potato 
marketing order. Any comments received will be considered prior to 
finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also 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 rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes requirements on Washington potato 
handlers and provides additional marketing opportunities; (2) early 
September was the beginning of the 2000-2001 shipping season and this 
rule should be in place as promptly as possible so that handlers can 
take advantage of the benefits resulting from this relaxation; (3) this 
recommendation was unanimously approved by the Committee at a public 
meeting and interested parties had an opportunity to provide input; and 
(4) this rule provides a 60-day comment period and any comments 
received will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 946

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 946 is 
amended as follows:

PART 946--IRISH POTATOES GROWN IN WASHINGTON

    1. The authority citation for 7 CFR part 946 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Amend Part 946 as follows:
    (a) Revise the undesignated center heading following Sec. 946.104;
    (b) Revise paragraphs (a)(3) and (4) in Sec. 946.120; and
    (c) Add a new paragraph (a)(5) to Sec. 946.120 to read as follows:

Special Purpose Certificates


Sec. 946.120  Application.

    (a) * * *
    (3) Prepeeling outside the district where grown;
    (4) Grading or storing at any specified location in Morrow or 
Umatilla Counties in the State of Oregon; and
    (5) Experimentation.
* * * * *

    3. In Sec. 946.336, paragraphs (e)(3)(i), (iii), and (iv) are 
amended by removing the words ``Certificate of Privilege'' and adding 
the words ``Special Purpose Certificate'' in their place, the 
undesignated paragraph following paragraph (d)(7) is removed, paragraph 
(d) is revised, and a new paragraph (e)(6) is added to read as follows:
* * * * *


Sec. 946.336  Handling regulation.

* * * * *
    (d) Special purpose shipments. (1) The minimum grade, size, 
cleanness, maturity, and pack requirements set forth in paragraphs (a), 
(b), and (c) of this section shall not apply to shipments of potatoes 
for any of the following purposes:
    (i) Livestock feed;
    (ii) Charity;
    (iii) Seed;
    (iv) Prepeeling;
    (v) Canning, freezing, and ``other processing'' as hereinafter 
defined;
    (vi) Grading or storing at any specified location in Morrow or 
Umatilla Counties in the State of Oregon, in District 5, or in Spokane 
County in District 1;
    (vii) Export, except to Alaska and Hawaii and except as provided in 
paragraph (c)(2) of this section; or
    (viii) Experimentation.
    (2) Shipments of potatoes for the purposes specified in paragraphs 
(d)(1)(i) through (viii) of this section shall be exempt from 
inspection requirements specified in paragraph (g) of this section 
except shipments pursuant to paragraph (d)(6) of this section shall 
comply with inspection requirements of paragraph (e)(2) of this 
section. Shipments specified in paragraphs (d)(1)(i), (ii), (iii), (v) 
and (viii) of this section shall be exempt from assessment requirements 
as specified in Sec. 946.248 and established pursuant to Sec. 946.41.
* * * * *
    (a) * * *
    (6) Each handler desiring to make shipments of potatoes for 
experimentation shall:
    (i) First apply to the committee for and obtain a Special Purpose 
Certificate to make shipments for experimentation;

[[Page 70464]]

    (ii) Upon request by the committee, furnish reports of each 
shipment pursuant to the applicable Special Purpose Certificate.
* * * * *

    Dated: November 15, 2000.
Ronald L. Cioffi,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-29944 Filed 11-22-00; 8:45 am]
BILLING CODE 3410-02-P