[Federal Register Volume 71, Number 165 (Friday, August 25, 2006)]
[Rules and Regulations]
[Pages 50328-50331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14108]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[Doc. No. FV-05-702 FR]


Amendments to the Potato Research and Promotion Plan

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, with correcting changes, an interim final rule to increase the 
assessment rate on handlers and importers of potatoes from 2 cents to 
2.5 cents per hundredweight. The increase is authorized under the 
Potato Research and Promotion Plan (Plan). The Plan is authorized by 
the Potato Research and Promotion Act (Act). In order to sustain the 
three major programs currently conducted by the National Potato 
Promotion Board (Board), International Marketing, Domestic Marketing 
(which includes retail marketing), and a nutrition campaign at their 
present levels beyond June 2006, additional revenue is required.

DATES: This rule is effective September 25, 2006.

FOR FURTHER INFORMATION CONTACT: Jeanette Palmer, Research and 
Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 
Independence Avenue SW., Stop 0244, Washington, DC 20250-0244; 
telephone (202) 720-5976 or fax (202) 205-2800.

SUPPLEMENTARY INFORMATION: This rule is issued under the Potato 
Research and Promotion Plan (Plan) [7 CFR Part 1207], as amended. This 
rule will increase the assessment rate by \1/2\ cent for handlers and 
importers. The Plan is authorized by the Potato Research and Promotion 
Act (Act) [7 U.S.C. 2611-2627].

Executive Order 12988

    This rule has been reviewed under the 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

[[Page 50329]]

this rule. The Act provides that administrative proceedings must be 
exhausted before parties may file suit in court.
    Under the Act, a person subject to the plan may file a petition 
with the Secretary of Agriculture (Secretary) stating that such plan, 
any provision of such plan, or any obligation imposed in connection 
with such plan is not in accordance with law; and requesting a 
modification of the plan or an exemption from the plan. Such person is 
afforded the opportunity for a hearing on the petition. After the 
hearing, the Secretary will rule on the petition. The Act provides that 
the district court of the United States in any district in which such 
person is an inhabitant, or has principal place of business, has 
jurisdiction to review the Secretary's ruling on the petition, provided 
that a complaint is filed within 20 days after the date of entry of the 
ruling.

Executive Order 12866

    The Office of Management and Budget (OMB) has waived the review 
process required by Executive Order 12866 for this action.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 
601 et seq.], the Agricultural Marketing Service has considered the 
economic impact of this action on small entities and has certified that 
this rule 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 scale of businesses subject to such action so that small 
businesses will not be disproportionately burdened.
    There are approximately 1,353 handlers, 5,223 producers, and 300 
importers of potatoes and potato products who are subject to the 
provisions of the Plan. The Small Business Administration (SBA) defines 
small agricultural businesses, which includes handlers and importers, 
as those whose annual receipts are less than $6.5 million, and small 
agricultural producers are defined as those having annual receipts of 
no more than $750,000 annually. Most of the producers and handlers, and 
some of the importers would be classified as small businesses under the 
criteria established by the SBA 13 CFR 121.201].
    Currently, potato handlers and importers pay a mandatory assessment 
of 2 cents per hundredweight. Assessments under the program are used to 
fund promotional campaigns and to conduct research in the areas of U.S. 
marketing, and international marketing and to enable the Board to 
exercise its duties in accordance with the Plan. The 2 cents assessment 
generates about $8.5 million in annual revenues. The current assessment 
became effective when the Plan was amended in May 1984, to increase the 
maximum assessment rate from 1 cent per hundredweight to 0.5 percent of 
the previous 10-year average price received by growers. The Plan is 
administered by the National Potato Promotion Board (Board) under USDA 
supervision.
    In order to sustain the three major programs currently conducted by 
the Board, International Marketing, Domestic Marketing (which includes 
retail marketing), and a nutrition campaign at their present levels 
beyond June 2006, additional revenue is required. The Board approved 
this increase in the assessment rate at its March 19, 2005, annual 
meeting. This increase is consistent with section 1207.342(a) of the 
Plan, which provides such assessments shall be levied at a rate fixed 
by the Secretary which shall not exceed one-half of one per centum of 
the immediate past ten calendar years United States average price 
received for potatoes by growers as reported by the Department of 
Agriculture. Further, not more than one such assessment may be 
collected on any potatoes.
    The \1/2\ cent assessment rate increase will bring in an estimated 
$1.5 to $2 million in new revenue, depending upon production levels. 
For 2005, domestic production was 420,879,000 hundredweight and imports 
represented 59,683,000 hundredweight. The new rate would allow the 
Board to maintain its investment in the nutrition campaign and 
marketing programs. It is estimated that the Board would collect 
approximately $10 million in assessments with a 2.5 cent per 
hundredweight assessment rate. Any additional costs should be offset by 
the benefits to be derived from the research and promotion programs. 
The Board has determined that the \1/2\ cent increase in assessments 
would cost potato growers less than one-half of one percent (0.005%) of 
total production costs or approximately $1.75 per acre based on average 
yields.
    Alternatives were also considered by the Board, which included 
cutting back funding of marketing programs and the nutrition campaign, 
or eliminating the nutrition campaign altogether. All of the 
alternatives were rejected by the Board because it was determined that 
continued funding of the marketing programs and the nutrition campaign 
were necessary to increase the demand for potatoes.
    There are no relevant Federal rules that duplicate, overlap, or 
conflict with this rule.
    In accordance with the OMB regulation [5 CFR Part 1320] which 
implements the Paperwork Reduction Act of 1995 [44 U.S.C. Chapter 35], 
the information collection and recordkeeping requirements that are 
imposed by the Plan have been previously approved under OMB control 
number 0581-0093. This rule does not result in a change to the 
information collection and recordkeeping requirements.

Background

    The Plan became effective on March 9, 1972, after a national 
referendum among producers. Under the Plan, handlers and importers are 
assessed 2 cents per hundredweight. No assessment shall be levied on 
potatoes grown in the 50 States of the United States by producers of 
less than 5 acres of potatoes. Importers pay assessments on all 
tablestock potatoes imported for ultimate human consumption and on all 
imported seed potatoes. The program currently generates about $8.5 
million in annual revenues, which is administered by the Board under 
USDA supervision. The Board administers a national program of research 
development, advertising, and promotion designed to strengthen 
potatoes' competitive position and to maintain and expand domestic and 
foreign markets for potatoes and potato products.
    In order to sustain the three major programs being conducted by the 
Board, International Marketing, Domestic Marketing (which includes 
retail marketing), and a nutrition campaign at their present levels 
beyond June 2006, additional revenue to the Board is required. The \1/
2\ cent assessment rate increase will bring in an estimated $1.5 to $2 
million in new revenue, depending upon production levels. For 2005, 
domestic production was 420,879,000 hundredweight and imports 
represented 59,683,000 hundredweight. The new rate would allow the 
Board to maintain its investment in the nutrition campaign and 
marketing programs. It is estimated that the Board would collect 
approximately $10 million in assessments with a 2.5 cents per 
hundredweight assessment rate. Any additional cost should be offset by 
the benefits to be derived from research and promotion programs.
    The Board, whose members represent all potato producing states as 
well as

[[Page 50330]]

importers, voted to increase the assessment rate at its March 19, 2005, 
annual meeting. Eighty-eight percent of the Board voted to increase the 
assessment rate. The majority of those that opposed the increase in 
assessment rate had a number of reasons, including a view that a State 
program is preferable over a national program and concern about the 
impact on growers.
    This action will amend the rules and regulations issued under the 
Plan. The rate increase from 2 cents to 2.5 cents per hundredweight is 
within the formula allowed by section 1207.342 (a) of the Plan, which 
states the funds to cover the Board's expenses shall be acquired by the 
levying of assessments upon handler and importers as designated in 
regulations recommended by the Board and issued by the Secretary. Such 
assessments shall be levied at a rate fixed by the Secretary which 
shall not exceed one-half of one per centum of the immediate past ten 
calendar years United States average price received for potatoes by 
growers as reported by the Department of Agriculture. Further, not more 
than one such assessment may be collected on any potatoes. The average 
price was determined to be $5.88 using the years 1994-2003 and one-half 
of one per centum is 2.94 cents.
    An interim final rule concerning this action was published in the 
Federal Register on March 8, 2006. Copies of the rule were made 
available through the Internet by USDA and the Office of the Federal 
Register. That rule provided a 60-day comment period which ended May 8, 
2006. Eight comments were received.
    Six favorable comments were received. The commenters' support the 
rule for an assessment increase to sustain the Board's three major 
program areas--International Marketing, Domestic Marketing (which 
includes retail marketing), and a nutrition campaign. The commenters' 
supported the implementation of the interim final rule as it was 
presented.
    One unfavorable comment was received. The commenter recommends a 
reduction in spending and not to increase the assessment rate. The 
commenter indicated opposition to any increase in bureaucratic costs; 
however, the Board is industry-funded and no taxpayers' dollars are 
expended on this program.
    Finally, one comment received did not address the assessment issue.
    After consideration of all relevant material presented including 
comments, the Board's recommendation, and other information, the 
interim final rule, as published in the Federal Register (71 FR 11294) 
on March 8, 2006, is adopted as a final rule, with changes. In this 
final rule, two corrections are made to the harmonized tariff schedule 
codes in Sec.  1207.510(b)(3) of the table and the authority citation 
also is corrected.

List of Subjects in 7 CFR Part 1207

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Potatoes, Promotion, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, 7 CFR part 1207 is amended 
as follows:
0
1. The authority citation for part 1207 continues to read as follows:

    Authority: 7 U.S.C. 2611-2627 and 7 U.S.C. 7401.

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

0
2. In Sec.  1207.510, paragraphs (a)(1), (b)(1) and the table 
immediately following paragraph (b)(3) are revised to read as follows:


Sec.  1207.510  Levy of assessments.

    (a) * * *
    (1) An assessment rate of 2.5 cents per hundredweight shall be 
levied on all potatoes produced within the 50 States of the United 
States.
* * * * *
    (b) * * *
    (1) An assessment rate of 2.5 cents per hundredweight shall be 
levied on all tablestock potatoes imported into the United States for 
ultimate consumption by humans and all seed potatoes imported into the 
United States. An assessment rate of 2.5 cents per hundredweight shall 
be levied on the fresh weight equivalents of imported frozen or 
processed potatoes for ultimate consumption by humans. The importer of 
imported tablestock potatoes, potato products, or seed potatoes shall 
pay the assessment to the Board through the U.S. Customs Service and 
Border Protection at the time of entry or withdrawal for consumption of 
such potatoes and potato products into the United States.
* * * * *
    (3) * * *

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                                                       Assessment
   Tablestock potatoes, frozen or processed    -------------------------
          potatoes, and seed potatoes            cents/cwt     cents/kg
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0701.10.0020..................................         2.50       0.0551
0701.10.0040..................................         2.50       0.0551
0701.90.1000..................................         2.50       0.0551
0701.90.5010..................................         2.50       0.0551
0701.90.5020..................................         2.50       0.0551
0701.90.5030..................................         2.50       0.0551
0701.90.5040..................................         2.50       0.0551
0710.10.0000..................................         5.00       0.1103
2004.10.4000..................................         5.00       0.1103
2004.10.8020..................................         5.00       0.1103
2004.10.8040..................................         5.00       0.1103
2005.20.0070..................................         3.93       0.0866
0712.90.3000..................................        17.86       0.3936
1105.10.0000..................................        17.86       0.3936
1105.20.0000..................................        17.86       0.3936
2005.20.0040..................................        17.86       0.3936
2005.20.0020..................................        10.20       0.2250
1108.13.0010..................................        22.50       0.4961
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* * * * *

    Dated: August 21, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E6-14108 Filed 8-24-06; 8:45 am]
BILLING CODE 3410-02-P