[Federal Register Volume 70, Number 175 (Monday, September 12, 2005)]
[Rules and Regulations]
[Pages 53723-53725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17964]



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  Federal Register / Vol. 70, No. 175 / Monday, September 12, 2005 / 
Rules and Regulations  

[[Page 53723]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 946

[Docket No. FV05-946-3 IFR]


Irish Potatoes Grown in Washington; Modification of Pack 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule modifies the pack requirements currently prescribed 
under the Washington potato marketing order. The marketing order 
regulates the handling of Irish potatoes grown in Washington, and is 
administered locally by the State of Washington Potato Committee 
(Committee). This rule relaxes the pack requirements to allow handlers 
to ship U.S. No. 2 grade potatoes in cartons to better meet buyer 
needs. Currently, only potatoes grading U.S. No. 1 or better, or 
potatoes failing to grade U.S. No. 1 only because of internal defects, 
may be shipped in cartons. The relaxation in pack requirements will 
help maximize producer returns.

DATES: Effective September 13, 2005; comments received by November 14, 
2005 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, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; E-mail: [email protected]; or 
Internet: http://www.regulations.gov. 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 Hutchinson, Marketing 
Specialist, Northwest Marketing Field Office, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA; 
Telephone: (503) 326-2724, Fax: (503) 326-7440; or George Kelhart, 
Technical Advisor, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 
0237, Washington, DC 20250-0237; 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, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-2491, Fax: (202) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 946, 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 (USDA) 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 USDA 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 USDA 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 USDA'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 relaxes pack requirements by allowing handlers to ship 
U.S. No. 2 grade potatoes in cartons provided the cartons are 
permanently and conspicuously marked as to grade. This change will 
enable handlers to ship U.S. No. 2 potatoes in cartons, thus meeting 
customer demands and maximizing producer returns. Currently, only 
potatoes grading U.S. No. 1 grade or better, or potatoes failing to 
grade U.S. No. 1 only because of internal defects, may be shipped in 
cartons.
    Section 946.52 of the order authorizes the establishment of grade, 
size, quality, or maturity regulations for any variety or varieties of 
potatoes grown in the production area. Section 946.52 also authorizes 
the regulation of the size, capacity, weight, dimensions, pack, and 
marking or labeling of the container, or containers, which may be used 
in the packing or handling of potatoes, or both (70 FR 41129; July 18, 
2005). Section 946.51 further authorizes the modification, suspension, 
or termination of regulations issued under Sec.  946.52. Section 946.60 
provides that whenever potatoes are regulated pursuant to Sec.  946.52 
such potatoes must be inspected by the Federal-State Inspection 
Service, and certified as meeting the applicable requirements of such 
regulations.
    Section 946.336 of the order's administrative rules prescribes the 
quality, size, maturity, cleanness, pack, and inspection requirements 
for fresh market Washington potatoes. Section 946.336(c) prescribes the 
pack requirements for domestic and export shipments of potatoes. Grade 
requirements are based on the U.S. Standards for Grades of Potatoes (7 
CFR part 51.1540-51.1566).
    At a telephone meeting on July 26, 2005, the Committee unanimously 
recommended the relaxation of pack requirements to allow handlers to 
ship U.S. No. 2 grade potatoes in cartons that are permanently and 
conspicuously

[[Page 53724]]

marked as to grade. Current requirements provide that all potatoes 
packed in cartons shall be U.S. No. 1 grade or better, except that 
potatoes failing to grade U.S. No. 1 only because of internal defects 
may be shipped in cartons. Lots of such potatoes cannot contain more 
than 10 percent damage by any internal defect or combination of 
internal defects, and not more than 5 percent serious damage by any 
internal defect or combination of internal defects.
    Customers have been requesting U.S. No. 2 grade potatoes in cartons 
because of difficulties encountered in handling the currently used 50-
pound burlap or paper bags. The burlap bags are messy, difficult to 
handle, and do not stack well on pallets. The paper bags often tear and 
are equally difficult to handle or stack. Warehouses that use 
electronic bar codes have reported less administration and 
recordkeeping problems with cartons than bags because the codes are 
more legible on cartons.
    Many customers now purchase potatoes from other areas where U.S. 
No. 2 potatoes are packed in cartons. The Committee would like to 
respond to these changing market conditions so that handlers remain 
competitive with other areas and not lose sales.
    The Committee also recognized the need to distinguish these U.S. 
No. 2 grade potatoes in cartons from the industry's traditional premium 
packs of potatoes that grade U.S. No. 1 and potatoes that fail to grade 
U.S. No. 1 only because of internal defects. Without such distinction, 
buyers might become confused and the U.S. No. 2 grade potatoes in 
cartons might have a price depressing effect on these premium packs. 
Therefore, the Committee included in their recommendation that cartons 
containing such potatoes be permanently and conspicuously marked to 
grade.

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, 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 51 handlers of Washington potatoes who are 
subject to regulation under the marketing order and approximately 272 
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 $6,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $750,000.
    During the 2003-2004 marketing year 10,652,495 hundredweight of 
Washington potatoes were inspected under the order and sold into the 
fresh market. Based on an estimated average f.o.b. price of $7.45 per 
hundredweight, the Committee estimates that 48 handlers, or about 94 
percent, had annual receipts of less than $6,000,000.
    In addition, based on information provided by the National 
Agricultural Statistics Service, the average producer price for 
Washington potatoes for the 2003 marketing year (the most recent period 
that final statistics are available) was $5.25 per hundredweight. The 
average annual producer revenue for each of the 272 Washington potato 
producers is therefore calculated to be approximately $205,609.
    In view of the foregoing, the majority of the Washington potato 
producers and handlers may be classified as small entities.
    This rule relaxes the pack requirements to allow handlers to ship 
U.S. No. 2 grade potatoes in cartons provided the cartons are 
permanently and conspicuously marked as to grade. This would enable 
handlers to ship U.S. No. 2 potatoes in cartons, thus meeting customer 
demands and maximizing producer returns.
    The authority for the pack and marking or labeling requirements is 
provided in Sec.  946.52 of the order (70 FR 41129; July 18, 2005). 
Section 946.336(c) of the order's administrative rules prescribes the 
pack requirements for domestic and export shipments of potatoes.
    The Committee believes that the recommendation should increase the 
sale of U.S. No. 2 grade potatoes. This action is expected to further 
increase shipments of U.S. No. 2 potatoes to the food service industry, 
and help the Washington potato industry benefit from the increased 
growth in the food service industry. These changes might require the 
purchase of new equipment to mark the cartons. However, these costs 
will be minimal and would be offset by the benefits of being able to 
ship U.S. No. 2 grade potatoes in cartons. The benefits of this rule 
are not expected to be disproportionately greater or lesser for small 
entities than large entities.
    The Committee discussed several alternatives to this 
recommendation, including not allowing U.S. No. 2 grade potatoes to be 
shipped in cartons. However, the Committee believed that it was 
important to be able to respond to changing market conditions and meet 
customer needs.
    The Committee considered restricting the size of carton, types of 
cartons as well as the size of the marking and location on the carton. 
However, the Committee decided not to specify size or type of container 
or size and location of the markings to allow handlers more flexibility 
in marketing U.S. No. 2 grade potatoes in cartons provided the cartons 
were marked permanently and conspicuously as to grade.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large potato handlers. 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, USDA 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 participate in Committee deliberations on all issues. All entities, 
both large and small, were able to express 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 relaxation to the pack requirements 
currently prescribed 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 Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will

[[Page 53725]]

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 exist for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) Any changes resulting from this rule should be effective 
as soon as practicable because the Washington potato shipping season 
began in July; (2) the Committee unanimously recommended these changes 
at a public meeting and all interested parties had an opportunity to 
provide input; (3) handlers are aware of this action and want to take 
advantage of this relaxation as soon as possible; 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.

0
For the reasons set forth in the preamble, 7 CFR part 946 is amended as 
follows:

PART 946--IRISH POTATOES GROWN IN WASHINGTON

0
1. The authority citation for 7 CFR part 946 continues to read as 
follows:

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

0
2. In Sec.  946.336, paragraph (c)(1) is revised to read as follows:


Sec.  946.336  Handling regulation.

* * * * *
    (c) Pack and marking:
    (1) Domestic: Potatoes packed in cartons shall be either:
    (i) U.S. No. 1 grade or better, except that potatoes which fail to 
meet the U.S. No. 1 grade only because of internal defects may be 
shipped without regard to this requirement provided the lot contains no 
more than 10 percent damage by any internal defect or combination of 
internal defects but not more than 5 percent serious damage by any 
internal defect or combination of internal defects.
    (ii) U.S. No. 2 grade, provided the cartons are permanently and 
conspicuously marked as to grade. This marking requirement does not 
apply to cartons containing potatoes meeting the requirements of 
(c)(1)(i).
* * * * *

    Dated: September 6, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-17964 Filed 9-9-05; 8:45 am]
BILLING CODE 3410-02-P