[Federal Register Volume 66, Number 189 (Friday, September 28, 2001)]
[Rules and Regulations]
[Pages 49511-49513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24314]



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  Federal Register / Vol. 66, No. 189 / Friday, September 28, 2001 / 
Rules and Regulations  

[[Page 49511]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV01-948-1 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases exemptions to the handling regulation 
prescribed under the marketing order (order) for Colorado Area No. 3 
potatoes. The order regulates the handling of Colorado potatoes and is 
administered locally by the Colorado Potato Administrative Committee 
for Area No. 3 (Committee). This rule exempts 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 
provides 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.

EFFECTIVE DATE: This final rule becomes effective October 1, 2001.

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

SUPPLEMENTARY INFORMATION: This final 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 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 final 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 final rule increases exemptions to the handling regulation 
prescribed under the order. This rule exempts 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 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 for Area No. 3. 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 948.387(d) as special purpose shipments.
    To apply for the exemption, handlers will 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

[[Page 49512]]

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 and are 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. Prior to this rule, this was 
not possible because the potatoes did not meet the minimum grade 
requirement that a particular lot of potatoes must have ``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, thus benefiting the Colorado potato 
industry. Some of the new varieties have irregular shapes or are small 
in size, and did not meet minimum order requirements. This prevented 
them from being shipped except under the minimum quantity exemption of 
1,000 pounds specified in paragraph (f) of Sec. 948.387. Thus, handlers 
were 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 prior regulation, potatoes for manufacture 
or conversion into specified products were required to be inspected and 
certified as meeting the specified quality requirements prior to 
preparation for market.
    Prior to this final rule, the handling regulations required 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 did 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 exempts such shipments and relieves 
handlers of this regulatory burden.
    This relaxation of the Area No. 3 handling regulation is expected 
to encourage new product development that could lead to market 
expansion, benefiting 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.
    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 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 will have the effect of increasing shipments. Thus, 
this rule is expected to have little impact on handlers or the 
Committee's assessment income. And finally, this rule clarifies the 
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).

Final 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 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 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 $750,000.
    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, 
the average farm size was 53 acres, 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 final rule exempts 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

[[Page 49513]]

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's handling and assessment requirements is expected to 
encourage new product development, which benefits producers, handlers, 
buyers, and consumers by increasing the fresh utilization of Colorado 
potatoes. The changes are expected to have a positive economic impact 
on the Colorado potato industry.
    As with all special purpose shipments, handlers are 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. The intent of the 
Committee is 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 to 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. As noted in the 
initial regulatory flexibility analysis, the Department has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this final 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 public meetings and all 
entities, both large and small, were able to express their views on 
this issue.
    A proposed rule concerning this action was published in the Federal 
Register on August 2, 2001 (66 FR 40155). Copies of the rule were 
mailed or sent via facsimile to all Committee members and potato 
handlers. Finally, the rule was made available through the Internet by 
the Office of the Federal Register and the Department. A 20-day comment 
period ending August 22, 2001, was provided to allow interested persons 
to respond to the proposal. No comments were received. Accordingly, no 
changes are made to the rule as proposed.
    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.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are already shipping 
potatoes from the 2000-01 crop and handlers want to take advantage of 
the relaxed requirements as soon as possible. Further, handlers are 
aware of this rule, which was recommended at two public meetings. Also, 
a 20-day comment period was provided for in the proposed rule, and no 
comments were received.

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 
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) introductory text 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:
* * * * *
    (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: September 21, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-24314 Filed 9-27-01; 8:45 am]
BILLING CODE 3410-02-P