[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Proposed Rules]
[Pages 40155-40158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19264]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV01-948-1 PR]


Irish Potatoes Grown in Colorado; Modification of Area No. 3 
Handling Regulation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on proposed exemptions to the 
handling regulation prescribed under the marketing order (order) for 
Colorado Area No. 3 potatoes. These relaxations were unanimously 
recommended by the Colorado Potato Administrative Committee for Area 
No. 3 (Committee), the agency responsible for local administration of 
the order. This rule would exempt potatoes shipped for the purpose of 
experimentation and the manufacture or conversion into specified 
products from the grade, size, maturity, inspection and assessment 
requirements of the order. Relaxing handling requirements is expected 
to provide handlers with greater marketing flexibility, producers with 
increased returns, and consumers with more choices in buying fresh 
potatoes. This rule also clarifies the regulatory text by specifying 
that potatoes shipped for livestock feed, charity, and certified seed 
are exempt from assessment requirements.

DATES: Comments must be received by August 22, 2001.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. 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) 720-8938, 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: Dennis L. West, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, room 385, 
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) 
720-8938.
    Small businesses may request information on complying with this 
regulation 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)

[[Page 40156]]

720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This proposal 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 authorized by 
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 proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This proposal 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 invites comments on proposed exemptions to the handling 
regulation prescribed under the order. This rule would exempt potatoes 
shipped for the purpose of experimentation and the manufacture or 
conversion into specified products from the grade, size, maturity, 
inspection and assessment requirements of the order. These proposed 
exemptions were unanimously recommended by the Committee. This rule 
also clarifies the regulatory text by specifying that potatoes shipped 
for livestock feed, charity, and certified seed are exempt from 
assessment requirements.
    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 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. Section 948.387 of the 
order's handling regulations establishes the grade, size, maturity, and 
inspection requirements. The Committee's assessment rate is established 
under Sec. 948.215.
    At its meeting on December 14, 2000, the Committee unanimously 
recommended that potatoes shipped for the purpose of experimentation 
and the manufacture or conversion into specified products be exempt 
from the grade, size, maturity, and inspection requirements provided 
under the order's regulations for Area No. 3. The Committee recommended 
that experimentation and the manufacture or conversion into specified 
products be added under Sec. 948.387(d) as special purpose shipments.
    As is currently required for all special purpose shipments, 
handlers would apply for and obtain a Certificate of Privilege for 
handling such potatoes and furnish the Committee such information as it 
may require to track shipments, determine whether applicable 
requirements have been met, and verify whether proper disposition has 
occurred.
    At a subsequent meeting on March 8, 2001, the Committee reconfirmed 
its earlier action and, in addition, unanimously recommended that 
shipments for livestock feed, charity, certified seed, and for the 
purpose of experimentation and the manufacture or conversion into 
specified products be exempt from assessment requirements. Shipments of 
potatoes for livestock feed, charity, and certified seed are specified 
as special purpose shipments are currently exempt from grade, size, 
maturity, and inspection requirements.
    Some producers and handlers within the production area are 
interested in developing new uses for fresh potatoes using experimental 
varieties and packs. The Committee also anticipates that some handlers 
may want to ship traditional varieties, or experimental 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. 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 has ``similar'' varietal 
characteristics.
    The Committee strongly encourages innovation that could result in 
the development of new varieties, markets, or opportunities for the 
expanded use of fresh forms of potato products, such as fresh cut 
potatoes in vacuum-sealed bags, that would benefit the Colorado potato 
industry. Some of the new varieties have irregular shapes or are small 
in size, and will not meet minimum order requirements. This prevents 
them from being shipped except under the minimum quantity exemption of 
1,000 pounds specified in paragraph (f) of Sec. 948.387. Thus, handlers 
are prevented from shipping larger quantities.
    For the purpose of this rule, 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. Under the current regulation, potatoes for 
manufacture or conversion into specified products are required to be 
inspected and certified as meeting the specified quality requirements 
prior to preparation for market.
    The current regulation requires that all potatoes shipped to fresh 
market, with the exception of those meeting minimum quantity and 
special purpose exemptions, be inspected and assessed. These 
regulations do not provide adequate relief for commercially viable 
shipments of non-traditional varieties, potatoes for experimentation, 
or the shipment of potatoes for the manufacture or conversion into 
products. This rule would exempt such shipments and relieve handlers of 
this regulatory burden.
    This proposed relaxation of the Area No. 3 handling regulation is 
expected to encourage new product development that could lead to market 
expansion, which would benefit producers, handlers, buyers, and 
consumers. By relaxing the handling requirements on traditional and 
experimental varieties and on new and innovative fresh potato products, 
additional opportunities should be available to increase the fresh 
utilization of Colorado potatoes.

[[Page 40157]]

    The Committee also unanimously recommended that shipments of 
potatoes for livestock feed, charity, and certified seed potatoes be 
exempt from assessment requirements. This Committee recommendation was 
made with the intent of treating all special purpose shipments in the 
same manner. As explained previously, shipments to these fresh outlets 
are currently exempt from the grade, size, maturity, and inspection 
requirements. The order only regulates, however, the shipment of 
potatoes outside the State of Colorado. It is very uncommon for Area 
No. 3 potatoes to be shipped for livestock feed, charity, or certified 
seed outside of the State of Colorado. It is not expected that 
exempting such shipments from assessments would have any effect of 
increasing shipments. Thus, this recommendation is expected to have 
little impact on handlers or the Committee's assessment income. And 
finally, this rule would clarify the current handling regulation to 
indicate that special purpose shipments for canning, freezing, and 
``other processing'' are exempt from assessments. Such shipments are 
exempt from regulation under federal marketing orders in conformity 
with an amendment to the Act (Public Law No. 92-233, Feb. 15, 1972).

Initial Regulatory Flexibility Analysis

    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 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 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 13 handlers of Colorado Area No. 3 potatoes 
who are subject to regulation under the marketing order and 
approximately 31 producers of Colorado potatoes 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 
whose annual receipts are less than $500,000.
    Based upon information provided by the Committee, all handlers of 
Area No. 3 potatoes have shipped under $5,000,000 worth of potatoes 
during the most recent season for which numbers are available. In 
addition, information reported by the National Agricultural Statistics 
Service was considered in determining the number of large and small 
producers by acreage, production, and producer prices. According to the 
information provided, the average yield per acre was 340 hundredweight, 
and the season average producer price was $5.95 per hundredweight for 
1999 crop. This equates to average gross receipts to producers of 
approximately $107,200. Based on the foregoing, it can be concluded 
that all handlers and the majority of producers of Area 3 potatoes may 
be classified as small entities, excluding receipts from other sources.
    This proposed rule would exempt special purpose shipments of 
potatoes from the grade, size, maturity, inspection and assessment 
requirements prescribed under the order's handling regulations for 
Colorado Area No. 3 potatoes. Based on authority in Secs. 948.22, 
948.23, and 948.24 of the order, the Committee at its meeting on 
December 14, 2000, unanimously recommended that potatoes shipped for 
the purpose of experimentation and the manufacture or conversion into 
specified products be exempt from the grade, size, maturity, and 
inspection requirements of the order. The Committee at its meeting on 
March 8, 2001, recommended that potatoes for experimentation and the 
manufacture or conversion into specified products be exempt from 
assessment requirements. It also recommended that the regulatory text 
of the applicable provisions be clarified by specifying that potatoes 
shipped for livestock feed, charity, and certified seed are exempt from 
assessment requirements.
    Producers and handlers within the production area are interested in 
developing innovative uses for fresh potatoes. The Committee 
anticipates that some handlers may want to ship traditional or 
experimental varieties for the manufacture or conversion of potatoes 
into fresh forms such as fresh cut french fries using experimental 
packaging and preservation methods. The Committee strongly encourages 
innovation that could result in the development of new varieties and 
market opportunities for the expanded use of fresh forms of potato 
products, such as those packaged in vacuum-sealed bags. The relaxation 
of Area No. 3 handling and assessment requirements is expected to 
encourage new product development which would benefit producers, 
handlers, buyers, and consumers and increase the fresh utilization of 
Colorado potatoes. The proposed changes are expected to have a positive 
economic impact on the Colorado potato industry.
    As with all special purpose shipments, handlers are currently 
required to apply and obtain a Certificate of Privilege for handling 
such potatoes and furnish the Committee such information as they may 
require to track shipments, determine whether applicable requirements 
have been met, and verify whether proper disposition has occurred. It 
is the intent of the Committee to keep reporting requirements to a 
minimum level necessary to monitor compliance while determining the 
viability and extent of any changes in the marketing of the area 
potatoes. There is no available information detailing how many potatoes 
this relaxation will allow to be marketed. During the previous growing 
season, one producer planted less than 20 acres of the non-traditional, 
experimental type varieties on a trial basis. 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 two or three handlers may apply for 
and obtain a Certificate 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. 0581-0178 by the Office of Management and Budget (OMB) 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. The Department has 
not identified any relevant Federal rules that duplicate, overlap or 
conflict with this rule.
    In addition, the Committee's meetings were widely publicized 
throughout the Colorado potato industry and all interested persons were 
invited to attend the meetings and participate in Committee 
deliberations on all issues. Like all Committee meetings, those held on 
December 14, 2000, and March 8, 2001, were open to the public and all 
entities, both large and small, were able to express their views on 
this issue. Finally, interested persons are invited to

[[Page 40158]]

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.
    A 20-day comment period is provided to allow interested persons to 
respond to this proposal. Twenty days is deemed appropriate because 
handlers should be able to take advantage of the relaxed requirements 
as soon as possible. The shipping season began on July 1, 2001. All 
written comments timely received will be considered before a final 
determination is made on this matter.

List of Subjects in 7 CFR Part 948

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 948 is 
proposed to be amended as follows:

PART 948--IRISH POTATOES GROWN IN COLORADO

    1. The authority citation for 7 CFR part 948 continues to read as 
follows:

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

    2. In Sec. 948.387, paragraph (d)(1) is revised, a new paragraph 
(d)(1)(v) is added, and in paragraph (g) a new sentence is added before 
the last sentence to read as follows:


Sec. 948.387  Handling regulation.

* * * * *
    (d) * * *
    (1) The grade, size, maturity and inspection requirements of 
paragraphs (a), (b), and (c) of this section and the assessment 
requirements of this part shall not be applicable to shipments of 
potatoes for:
    (i) * * *
    (v) Experimentation and the manufacture or conversion into 
specified products.
* * * * *
    (g) Definitions. * * * 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. * * *
* * * * *

    Dated: July 27, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-19264 Filed 8-1-01; 8:45 am]
BILLING CODE 3410-02-P