[Federal Register Volume 71, Number 8 (Thursday, January 12, 2006)]
[Rules and Regulations]
[Pages 1919-1921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-274]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 946

[Docket No. FV05-946-3 FIR]


Irish Potatoes Grown in Washington; Modification of Pack 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule that modified the pack 
requirements 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 continues in effect the action 
that modified the pack requirements to allow handlers to ship U.S. No. 
2 grade potatoes in cartons to better meet buyer needs. Prior to this 
action, only potatoes grading U.S. No. 1 or better, or potatoes failing 
to grade U.S. No. 1 only because of internal defects, were allowed to 
be shipped in

[[Page 1920]]

cartons. The relaxation in pack requirements will help maximize 
producer returns.

EFFECTIVE DATE: February 13, 2006.

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.''
    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 continues in effect the action that modified the 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. Prior to this action, only potatoes grading U.S. No. 
1 grade or better, or potatoes failing to grade U.S. No. 1 only because 
of internal defects, were allowed to 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 marked as to grade. Requirements in effect prior to this 
action provided 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 potatoes 
failing U.S. No. 1 only account of internal defects 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 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 grade 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 its recommendation 
that cartons containing such potatoes be permanently and conspicuously 
marked to grade.

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, 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 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

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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 continues in effect the action that modified 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 change enables 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 
sales 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 carton size, carton types, as 
well as the size and location of the marking 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, as noted in the initial regulatory flexibility 
analysis, USDA has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this rule.
    Further, the Committee's July 26, 2005, meeting was widely 
publicized throughout the Washington potato industry and all interested 
persons were invited to participate in Committee deliberations on all 
issues. Like all Committee meetings, all entities, both large and 
small, were able to express views on this issue.
    An interim final rule concerning this action was published in the 
Federal Register on September 12, 2005. Copies of the rule were mailed 
by Committee staff to all Committee members and Washington potato 
handlers. In addition, the rule was made available through the Internet 
by USDA and the Office of the Federal Register. That rule provided for 
a 60-day comment period which ended November 14, 2005. No comments were 
received.
    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 material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (70 FR 53723, September 12, 2005) will tend to 
effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 946

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

PART 946--IRISH POTATOES GROWN IN WASHINGTON

0
Accordingly, the interim final rule amending 7 CFR part 946 which was 
published at 70 FR 53723 on September 12, 2005, is adopted as a final 
rule without change.

    Dated: January 6, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-274 Filed 1-11-06; 8:45 am]
BILLING CODE 3410-02-P