[Federal Register Volume 66, Number 72 (Friday, April 13, 2001)]
[Proposed Rules]
[Pages 19099-19102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9261]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 66, No. 72 / Friday, April 13, 2001 / 
Proposed Rules  

[[Page 19099]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 80

[FV-01-80-01]


Regulations Governing the Fresh Russet Potato Diversion Program, 
2000 Crop

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: This proposed rule invites comments on the procedures setting 
forth the terms of the Fresh Russet Potato Diversion Program for the 
2000 crop pursuant to clause (2) of section 32 of the Act of August 24, 
1935, as amended. The proposed program will assist fresh Russet potato 
growers faced with oversupplies and low prices by diverting potatoes to 
charitable institutions, for livestock feed, to convert them to 
ethanol, and to render them nonmarketable and dispose of in accordance 
with federal, state and local regulations.

DATES: Comments received by May 13, 2001, will be considered prior to 
issuance of the final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action to: Susan Proden, Chief, Commodity Procurement 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, Room 
2546-South Building, Washington, D.C. 20090-6456; Fax: (202) 720-2782, 
or visit the website at: http://www.ams.usda.gov/fv/fvcomm.htm. All 
written submissions made pursuant to this rule will be made available 
for public inspection in Room 2546--South Building, USDA, between the 
hours of 8:00 a.m. and 4:30 p.m. Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Susan Proden, Branch Chief, Room 
2546--South Building, USDA or call (202) 720-4517. Information may also 
be obtained at the website: http://www.ams.usda.gov/fv/fvcomm.htm
    For the Nearest Federal Inspection Offices Contact: 1-800-811-2373 
or visit the website at: http://www.ams.usda.gov/fv/fpboffices.html

SUPPLEMENTARY INFORMATION:

Regulatory Requirements

    This proposed rule has been reviewed under USDA procedures 
established in accordance with Executive Order 12291 and Departmental 
Regulation No. 1512-1 and has been designated as ``nonmajor.'' It has 
been determined that this rule will not result in: (1) An annual effect 
on the economy of $100 million or more; (2) A major increase in costs 
or prices for consumers, individual industries, federal, state or local 
governments, or geographical regions; or (3) significant adverse effect 
or competition, employment, investment, productivity, innovation, or 
the ability of United States-based enterprises in domestic or export 
markets.

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866. Therefore, it has not been reviewed by the 
Office of Management and Budget (OMB).

Public Law 104-4

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State and local governments and 
the private sector. Under section 202 of the UMRA, the Agricultural 
Marketing Service (AMS) generally must prepare a written statement, 
including a cost-benefit analysis, for proposed and final rules with 
``Federal mandates'' that may result in expenditures by State and local 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. When such a statement is needed for a 
rule, Section 205 of the UMRA generally requires the AMS to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State and local governments or 
the private sector of $100 million or more in any one year. Therefore, 
this rule is not subject to the requirements of Sections 202 and 205 of 
the UMRA.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. The rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions, or which would otherwise impede its full 
implementation. Prior to any judicial challenge to the provisions of 
this rule or the application of its provisions, all applicable 
administrative procedures must be exhausted.

Paperwork Reduction Act

    Information collection requirements required by this rule are not 
required before the regulations may be effective. However, the 30-day 
public comment period and OMB approval under the provisions of 44 
U.S.C. Chapter 35 are still required after the rule is published, and 
the Information Collection Package and request for approval will be 
submitted to OMB.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has determined that this action will not have a significant 
economic impact on a substantial number of small entities. 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 disproportionally burdened. The Small Business Administration 
(13 CFR 121.1) has defined small agricultural procedures as those 
having annual gross revenue for the last three years of less than 
$500,000, and small agricultural service firms are defined as those 
whose gross annual receipts are less than $5,000,000.
    Because there is a preponderance of entities shipping fresh Russet 
potatoes that meet these gross revenue limitations it is anticipated 
that the majority of the program participants could be classified as 
small entities without substantial regulatory restriction. Therefore 
the provisions of the RFA are not applicable and no

[[Page 19100]]

Regulatory Flexibility analysis is required.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with state and 
local officials. See the Notice related to 7 CFR part 3015, subpart V 
published at 48 FR 29115 (June 24, 1983).

Executive Order 12612

    It has been determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on States or their political subdivisions or 
on the distribution of power and responsibilities among the various 
levels of government.

Background

    Clause (2) of section 32 of the Act of August 24, 1935, as amended 
(7 U.S.C. 612c) (``section 32'') authorizes the Secretary of 
Agriculture to ``encourage the domestic consumption of such 
[agricultural] commodities of products by diverting them, by the 
payment of benefits or indemnities or by other means, from the normal 
channels of trade and commerce''. Section 32 also authorizes the 
Secretary to use section 32 funds ``at such times, in such manner, and 
in such amounts as the Secretary of Agriculture finds will effectuate 
substantial accomplishment by any one or more of the purposes of this 
section''. Furthermore, ``determinations by the Secretary as to what 
constitutes diversion, and what constitutes normal channels to trade 
and commerce, and what constitutes normal production for domestic 
consumption shall be final''.
    According to crop storage reports, on March 1, 2001, all potatoes 
stored in 15 states were 17 percent above the stocks on March 1, 2000 
(most recent data available). Storage reports for March 1, 2001, 
indicate that the production of russet potatoes is up 15 percent from a 
year earlier and up 9 percent from the prior record set in 1997. Based 
on these statistics and other market factors, the Secretary has 
determined that the russet potato 2000 crop is in surplus supply and 
that the domestic consumption of such potatoes will be encouraged by 
using section 32 funds to divert the russet potatoes from the normal 
channels of trade and commerce under a Russet Potato Diversion Program. 
This potato diversion program would encompass russet varieties of 
potatoes (except sweet potatoes) of U.S. Grade No. 2 (fairly clean) and 
U.S. Grade No. 2 Processing, including varieties commonly used for 
processing and table stock. Due to a need for expediency in 
implementing the Russet Potato Diversion Program and concern about 
undue delay in conducting environmental analysis and impact studies on 
composting, this program would be limited to charitable institutions, 
animal feed, ethanol production, and rendering nonmarketable disposal 
through spraying, disking and/or burial.
    The price established for russet potatoes destined for charitable 
institutions, animal feed ethanol production and nonmarketable disposal 
through spraying, disking, and/or burial would cover all costs, 
including transportation.

List of Subjects in 7 CFR Part 80

    Administrative practice and procedures, Agriculture, Potatoes, 
Reporting and record keeping requirements, Surplus agricultural 
commodities.
    For the reasons set forth in the preamble, it is proposed that 
Title 7 Chapter I be amended as follows:
    1. In Subchapter D, Part 80 is revised to read as follows:

PART 80--FRESH RUSSET POTATO DIVERSION PROGRAM

Sec.
80.1  Applicability.
80.2  Administration.
80.3  Definitions.
80.4  Length of program.
80.5  Rate of payment.
80.6  Eligibility for payment.
80.7  Application and approval for participation.
80.8  Inspection and certification of diversion.
80.9  Claim for payment.
80.10  Compliance with program provisions.
80.11  Inspection of premises.
80.12  Records and accounts.
80.13  Offset, assignment, and prompt payment.
80.14  Appeals.
80.15  Refunds; joint and several liability.
80.16  Death, incompetency or disappearance.

    Authority: 7 U.S.C. 612c.


Sec. 80.1  Applicability.

    In order to encourage the domestic consumption of the 2000 crop of 
fresh Russet potatoes by diverting them from normal channels of trade 
and commerce, the Secretary of Agriculture, pursuant to the authority 
conferred by Section 32, will make payment to producers who divert 
fresh russet potatoes that they produced, by donating them to 
charitable institutions for human consumption or by using such fresh 
russet potatoes as livestock feed, converting them into ethanol or 
rendering them nonmarketable and disposing of them in accordance with 
the terms and conditions set forth herein.


Sec. 80.2  Administration.

    The program will be administered under the general direction and 
supervision of the Deputy Administrator, Fruit and Vegetable Programs, 
Agricultural Marketing Service (AMS), United States Department of 
Agriculture (USDA), and will be implemented by the Farm Service Agency 
(FSA). AMS, FSA, or their authorized representatives do not have 
authority to modify or waive any of the provisions of this subpart.


Sec. 80.3  Definitions.

    Application means Form FSA-117.
    Charitable institutions means those organizations which offer food, 
housing, and other necessities to low income, homeless, or other 
persons in need of assistance in obtaining basic sustenance.
    Diversion means the delivery of potatoes to an eligible outlet.
    Eligible outlet means charitable institutions, livestock feeding 
operations, ethanol production or rendering them nonmarketable and 
disposed of in conformance with federal, state and local regulations.
    Fresh Russet potatoes means the 2000 crop of all types and 
varieties of potatoes (except sweet potatoes) which meet the US 
standard for russets fit for human consumption and produced and stored 
in the United States.
    Invoice and certification of inspection means Form FV-184 or FV-
301.
    Producer means an individual, partnership, association, or 
corporation located in the United States who grows potatoes for market 
and is in possession of such potatoes as of April 13, 2001.


Sec. 80.4  Length of program.

    This program is effective April 13, 2001. Producers diverting 
potatoes to charitable institutions, livestock feed, ethanol 
production, or rendering them nonmarketable must complete the diversion 
of the 2000 crop potatoes no later than May 13, 2001.


Sec. 80.5  Rate of payment.

    (a) The rate of payment for potatoes for charitable institutions 
will be $1.00 per hundredweight for fresh Russet potatoes. All eligible 
fresh Russet potatoes intended for donation to charitable institutions 
must meet U.S. Grade No. 2 (fairly clean) requirements as certified by 
the federal or federal-state inspection service.

[[Page 19101]]

    (b) The rate of payments diverted for livestock feed, and those for 
ethanol production or for rendering nonmarketable will be $1.00 per 
hundredweight for U.S. Grade No. 2 Processing potatoes when whole, as 
certified by the federal government.
    (c) Payment under paragraphs (a) and (b) of this section will not 
be for any fractional part of a hundredweight or for any potatoes not 
meeting grade requirements. Producers who divert potatoes pursuant to 
this regulation are responsible for arrangements and costs for U.S. 
grading.
    (d) The $1.00 per hundredweight payment covers all costs, including 
but not limited to processing, transportation, and inspection costs. 
USDA will make no other payment with respect to such potatoes.


Sec. 80.6  Eligibility for payment.

    (a) To the extent applications for payment do not exceed 
$10,250,000 in total, payments will be made under this program to any 
producer of fresh russet potatoes who:
    (1) Provides fresh russet potatoes that are free from any water 
damage and:
    (i) If intended for human consumption, meet the requirements of 7 
CFR 51.1540 through 51.3006 U.S. Grade No. 2 (fairly clean); or
    (ii) If intended for livestock feed, ethanol production, or 
rendering nonmarketable, meet the requirements of 7 CFR 51.3410 through 
51.3418 U.S. Grade No. 2 Processing when whole, and are cut, chopped, 
sliced, gouged, crushed, ensiled, frozen, or cooked to the degree that 
the potatoes are readily and obviously identifiable as having been 
rendered unsuitable to enter into normal channels of trade and commerce 
as determined by FSA or its representative;
    (2) Completes Form FSA-117 by certifying to the diverted 
hundredweight at the county FSA office where the producer's farm is 
located for FSA program purposes;
    (3) Complies with all other terms and conditions in this subpart.
    (b) In the event applications for participation in the program 
authorized by this subpart exceed $10,250,000, less administrative 
funds, USDA will determine a uniform hundredweight deduction, if 
necessary, so that the total outlays will not exceed the $10,250,000 in 
funds available under this program.


Sec. 80.7  Application and approval for participation.

    (a) The applications will be reviewed for program compliance and 
approved or disapproved by the county FSA office personnel;
    (b) Copies of the applicable U.S. grade standards are accessible on 
the internet at http://www.ams.usda.gov/standards and the application 
for participation in the Fresh Russet Potato Diversion Program can be 
obtained from the internet at http://www.sc.egov.usda.gov and/or from 
the local county FSA office after the application period is announced.


Sec. 80.8  Inspection and certification of diversion.

    Prior to diversion of potatoes to a charitable institution, the 
fresh Russet potatoes must be inspected by an inspector authorized or 
licensed by the USDA to inspect and certify the grade, quality, and 
condition of the potatoes. The producer will be responsible for 
requesting, arranging, and paying for this inspection. For charitable 
institutions, the product must be certified by federal or federal-state 
grading personnel upon arrival at destination. With respect to potatoes 
diverted for livestock feed, ethanol production, or rendering 
nonmarketable, point of origin inspections must be obtained. 
Certification will be reported on forms FV-184 or FV-301. The producer 
must furnish to FSA such scale tickets, weighing facilities, or volume 
measurements as determined by the federal or federal-state inspection 
service to be necessary for certifying the net weight of the potatoes 
being diverted.


Sec. 80.9  Claim for payment.

    (a) In order to obtain payment for shipments to charitable 
institutions, the producer must submit to the county FSA office between 
May 14 and June 13, 2001, a certified FV-184 or FV-301 inspection 
certificate, a completed Form FSA-117, and a bill of lading showing 
shipment was made.
    (b) To obtain payment for potatoes diverted to livestock feed, 
ethanol production or rendering nonmarketable the producer must submit 
to the county FSA office between May 14 and June 13, 2001, a properly 
executed Form FSA-117, an inspection certificate (FV-184 or FV-301), a 
livestock feed recipient, and an ethanol production or disposal 
delivery receipt (issued by livestock feed lot, ethanol plant or 
federal-state inspector) indicating hundredweight received, the date, 
name, address and telephone number of the recipient.


Sec. 80.10  Compliance with program provisions.

    If USDA determines that any provisions of the application or of 
these regulations has not been complied with, whether by the producer, 
charitable institution, livestock feeder, ethanol producer, or disposal 
entity, or that any quantity of fresh Russet potatoes diverted under 
this program was not used exclusively for donation to charitable 
institutions or livestock feeders or ethanol production or acceptable 
disposal (whether such failure was caused directly by the producer or 
by any other person or persons), the producer will not be entitled to 
diversion payments in connection with such fresh Russet potatoes, must 
refund any USDA payment made in connection with such fresh Russet 
potatoes, and will also be liable to USDA for any other damages 
incurred as a result of such failure to use the fresh Russet potatoes 
exclusively for donation to charitable institutions or for use as 
livestock feed, ethanol production or acceptable disposal. The USDA may 
deny any producer the right to participate in this program or the right 
to receive payments in connection with any diversion previously made 
under this program, or both, if USDA determines that:
    (a) The producer has failed to use or caused to be used any 
quantity of fresh Russet potatoes diverted under this program 
exclusively for donation to charitable institutions or livestock feed 
ethanol production or acceptable disposal regardless of whether such 
failure was caused directly by the producer or by any other person or 
persons;
    (b) The producer has not acted in good faith in connection with any 
transaction under this program; or
    (c) The producer has failed to discharge fully any obligation 
assumed by him under this program.


Sec. 80.11  Inspection of premises.

    The producer, charitable institution, livestock feeder, ethanol 
producer, or acceptable disposal entity must permit authorized 
representatives of USDA, at any reasonable time, to have access to 
their premises to inspect and examine such fresh Russet potatoes as are 
being diverted or stored for diversion and to inspect and examine the 
facilities for diverting fresh Russet potatoes to determine compliance 
with the provisions of this program.


Sec. 80.12  Records and accounts.

    (a) The producer, charitable institution, livestock feeder, ethanol 
producer, or acceptable disposal entity participating in this program 
must keep accurate records and accounts showing the details relative to 
the diversion and livestock feeding, ethanol production, or

[[Page 19102]]

acceptable disposal of the fresh Russet potatoes.
    (b) The producer, charitable institution, livestock feeder, ethanol 
producer, or acceptable disposal entity must permit authorized 
representatives of USDA and the General Accounting Office at any 
reasonable time to inspect, examine, and make copies of such records 
and accounts to determine compliance with provisions of this program; 
such records and accounts must be retained for three years after the 
date of last payment to the producer under the program, or for two 
years after date or audit of records by USDA as provided herein, 
whichever is the later.


Sec. 80.13  Offset, assignment, and prompt payment.

    (a) Any payment or portion thereof due any person under this 
subpart shall be allowed without regard to questions of title under 
State law, and without regard to any claim or lien against the crop 
proceeds thereof in favor of the producer or any other creditors except 
agencies of the U.S. Government. The regulations governing offsets and 
withholdings found at 7 CFR Part 1403 shall not be applicable to this 
subpart.
    (b) Payments which are earned by a producer under this program may 
be assigned in accordance with the provisions of 7 CFR part 1404.
    (c) Prompt Payment Interest will not be applicable.


Sec. 80.14  Appeals.

    Any producer who is dissatisfied with a determination made pursuant 
to this part may make a request for reconsideration or appeal of such 
determination in accordance with the appeal regulations set forth at 7 
CFR parts 11 and 780.


Sec. 80.15  Refunds; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment arising under the application of 
this subpart, and if any refund of a payment to FSA shall otherwise 
become due in connection with the application of this subpart, all 
payments made under this subpart to any producer shall be refunded to 
FSA together with interest as determined in accordance with paragraph 
(c) of this section and late payment charges as provided for in part 
1403 of this title.
    (b) All producers signing an application for payment as having an 
interest in such payment shall be jointly and severally liable for any 
refund, including related charges, that is determined to be due for any 
reason under the terms and conditions of the application of this 
subpart.
    (c) Interest shall be applicable to refunds required of any 
producer under this subpart if FSA determines that payments or other 
assistance were provided to a producer who was not eligible for such 
assistance. Such interest shall be charged at the rate of interest that 
the United States Treasury charges the Commodity Credit Corporation 
(CCC) for funds, as of the date FSA made benefits available. Such 
interest shall accrue from the date of repayment or the date interest 
increases as determined in accordance with applicable regulations. FSA 
may waive the accrual of interest if FSA determines that the cause of 
the erroneous determination was not due to any action of the producer.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived on refunds required of the producer when there 
was no intentional misaction on the part of the producer, as determined 
by FSA.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in, 7 CFR part 792.
    (f) Producers must refund to FSA any excess payments, as determined 
by FSA, with respect to such application.
    (g) In the event that a benefit under this subpart was provided as 
the result of erroneous information provided by the producer, the 
benefit must be repaid with any applicable interest.


Sec. 80.16  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance, or dissolution 
of a potato producer that is eligible to receive benefits in accordance 
with this subpart, such person or persons specified in part 707 of this 
title may receive such benefits, as determined appropriate by FSA.

    Dated: April 10, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-9261 Filed 4-11-01; 10:14 am]
BILLING CODE 3410-02-P