[Federal Register Volume 73, Number 241 (Monday, December 15, 2008)]
[Rules and Regulations]
[Pages 75929-75931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-29600]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 946

[Docket No. AMS-FV-08-0036; FV08-946-1 FIR]


Irish Potatoes Grown in Washington; Relaxation of Handling and 
Import Regulations

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 relaxing the size 
requirement 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 relaxed the minimum size required for all fresh market red, yellow 
fleshed, and white types of potatoes from 1 inch (25.4 mm) to \3/4\ 
inch (19.1 mm) in diameter, if the potatoes otherwise meet the 
requirements of U.S. No. 1 grade. This rule also continues in effect 
the action that relaxed the minimum size requirement from July 1 
through September 30 of each year for imported red-skinned, round type 
potatoes under the import regulations as required by section 8e of the 
Agricultural Marketing Agreement Act of 1937. The Committee recommended 
this change in response to the recently revised U.S. Standards for 
Grades of Potatoes which added a definition for Creamer potatoes. This 
change is intended to provide potato handlers with greater marketing 
flexibility, growers with increased returns, consumers with a greater 
supply of small potatoes, and to bring the section 8e potato import 
regulation into conformity with the marketing order.

DATES: Effective Date: January 14, 2009.

FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson or Gary Olson, 
Northwest Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, Telephone: (503) 326-
2724, Fax: (503) 326-7440, or e-mail: [email protected] or 
[email protected].
    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.''
    This rule is also issued under section 8e of the Act, which 
provides that whenever certain specified commodities, including 
potatoes, are regulated under a Federal marketing order, imports of 
these commodities into the United States are prohibited unless they 
meet the same or comparable grade, size, quality, or maturity 
requirements as those in effect for the domestically produced 
commodities. Section 8e also provides that whenever two or more 
marketing orders regulating the same commodity produced in different 
areas of the United States are concurrently in effect, a determination 
must be made as to which of the areas produces the commodity in most 
direct competition with the imported commodity. Imports must meet the 
same or comparable requirements established for that particular area. 
The requirements for red-skinned, round type potatoes imported from 
July 1 through September 30 are based on the Washington potato 
marketing order requirements.
    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.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    This rule continues in effect the action that relaxed the size 
required for all fresh market red, yellow fleshed, and white types of 
potatoes produced in Washington State from 1 inch (25.4 mm) to \3/4\ 
inch (19.1 mm) minimum, if the potatoes otherwise meet the requirements 
of U.S. No. 1 grade. This change is intended to provide potato handlers 
with greater marketing flexibility, growers with increased returns, and 
consumers with a greater supply of small potatoes. This rule also 
continues in effect the action that relaxed the minimum size 
requirement from July 1 through September 30 of each year for imported 
red-skinned, round type potatoes under the import regulations as 
required by section 8e of the Agricultural Marketing Agreement Act of 
1937. This rule will not affect the current import requirements for all 
other round type or long type potatoes.
    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

[[Page 75930]]

containers, which may be used in the packing or handling of potatoes, 
or both. 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 or 
Federal-State Inspection Service, and certified as meeting the 
applicable requirements of such regulations.
    Section 946.336 of the order's administrative rules and regulations 
prescribes the quality, size, maturity, cleanness, pack, and inspection 
requirements for fresh market Washington potatoes. Section 
946.336(a)(2) prescribes the size requirements. Relevant import 
regulations are contained in Sec.  980.1 and Sec.  980.501 of the 
vegetable import regulations.
    During a video conference meeting held on April 16, 2008, with a 
follow-up mail vote, the Committee unanimously recommended changing the 
minimum size requirement for all U.S. No. 1 grade fresh market red, 
yellow fleshed, and white types of potatoes produced under the order 
from 1 inch to \3/4\ inch in diameter.
    The Committee recommended this change in response to the recently 
revised U.S. Standards for Grades of Potatoes (Standards) which became 
effective on April 21, 2008 (73 FR 15051, March 21, 2008). The revised 
Standards added a definition for Creamer potatoes. The revised 
Standards define the Creamer size designation as \3/4\ inch minimum 
diameter and 1\5/8\ inch maximum diameter with no minimum or maximum 
weight.
    Before the Standards were revised to include a Creamer size 
designation, various states developed their own standards for Creamer 
potatoes in an attempt to meet the increasing consumer demand for small 
potatoes. The Washington potato industry had previously considered 
Creamer potatoes to have a 1 inch minimum diameter. The Committee 
recommended reducing the minimum diameter to \3/4\ inch so that the 
handling regulation would correspond with the revised Standards and to 
ensure that the industry was being responsive to the desires of 
consumers. The Committee also believes that inconsistency between what 
was marketed in Washington as Creamer potatoes and what the Standards 
specify as Creamer potatoes would have caused confusion in the 
marketplace.
    Within the past several years, consumer demand has increased for 
small potatoes which often command premium prices. Decreasing the 
minimum size requirement from 1 inch to \3/4\ inch will help handlers 
in Washington meet the needs of their customers.
    Committee statistics show that approximately 25 percent (2,483,219 
hundredweight) of fresh market Washington potatoes (9,932,874 
hundredweight) are red, yellow fleshed and white types of potatoes. The 
relaxation in the size requirement is expected to increase the volume 
of red, yellow fleshed, and white types of potatoes that meet minimum 
size requirements. Shipping a larger portion of the crop to market 
would help meet consumer demand and is expected to increase returns to 
growers.
    As mentioned earlier, section 8e of the Act provides that when 
certain domestically produced commodities, including potatoes, are 
regulated under a Federal marketing order, imports of that commodity 
must meet the same or comparable grade, size, quality, and maturity 
requirements. Section 8e also provides that whenever two or more 
marketing orders regulating the same commodity produced in different 
areas of the United States are concurrently in effect, a determination 
must be made as to which of the areas produces the commodity in most 
direct competition with the imported commodity. Imports must meet the 
requirements established for that particular area.
    Grade, size, quality, and maturity regulations have been issued 
regularly under marketing orders No. 945 (Idaho-Eastern Oregon 
potatoes), No. 948 (Colorado potatoes, Area No. 2 and Area No. 3), No. 
946 (Washington potatoes), and No. 953 (Southeastern potatoes) since 
the marketing orders were established. Section 980.1 of the vegetable 
import regulations specifies that import requirements for potatoes are 
to be based on the seasonal categories of potatoes produced in all 
marketing order areas. In that regard, imported red-skinned, round type 
potatoes must meet the requirements of the Washington potato marketing 
order during the months of July through September and the Area No. 2 
Colorado potato marketing order during the months of October through 
the following June. This rule will not affect the current import 
requirements for all other round type or long type potatoes.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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.
    Import regulations issued under the Act are based on regulations 
established under Federal marketing orders which regulate the handling 
of domestically produced products.
    Currently, there are approximately 45 handlers of Washington 
potatoes who are subject to regulation under the marketing order and 
approximately 267 potato producers in the regulated area. Small 
agricultural service firms are defined by the Small Business 
Administration (SBA) (13 CFR 121.201) as those having annual receipts 
of less than $7,000,000, and small agricultural producers are defined 
as those having annual receipts of less than $750,000.
    During the 2006-2007 marketing year, 9,932,874 hundredweight of 
Washington potatoes were inspected under the order and sold into the 
fresh market by 43 handlers, according to Committee data. The Committee 
reports that an industry consensus estimate of an average fresh potato 
f.o.b. price is $8.45 per hundredweight. Multiplying the 2006-2007 
fresh shipments of 9,932,874 hundredweight by the average f.o.b. price 
of $8.45 yields a handler-level fresh market crop value of $83.933 
million. Dividing $83.933 million by 43 handlers gives an average 
annual sales value per handler estimate of about $1.952 million. The 
Committee estimates that 41, or about 95 percent of these 43 handlers, 
had annual receipts of less than $7,000,000.
    A comparable computation can be made to estimate annual average 
revenue per producer. Based on information provided by the National 
Agricultural Statistics Service, the 2006 season average producer price 
for Washington potatoes was $6.25 per hundredweight. Multiplying the 
2006-2007 fresh shipments of 9,932,874 hundredweight by the average 
producer price of $6.25 provides a producer-level fresh market crop 
value of $62.08 million. Dividing $62.08 million by 267 Washington 
potato producers yields an average annual fresh market sales value per 
producer of approximately $232,500.
    In view of the foregoing, it can be concluded that the majority of 
the

[[Page 75931]]

Washington potato producers and handlers may be classified as small 
entities. Although it is not known how many importers of potatoes may 
be classified as small entities, we believe that many of the importers 
of potatoes can be classified as such.
    This rule continues in effect the action that decreased the minimum 
size required for all fresh market red, yellow fleshed, and white types 
of potatoes produced under the order from 1 inch to \3/4\ inch in 
diameter, if they otherwise meet the requirements of U.S. No. 1 grade. 
This change enables handlers with the ability to respond to the 
consumer demand for small potatoes. As provided under section 8e of the 
Act, this change will also apply to all imported red-skinned, round 
type potatoes between July 1 through September 30 of each year. While 
no change will be required in the language of Sec.  980.1, all imported 
red-skinned, round type potatoes from July 1 through September 30 will 
be required to meet the minimum size requirement of \3/4\ inch in 
diameter.
    The authority for the grade and size requirements is provided in 
Sec.  946.52 of the order. Section 946.336(a)(2) of the order's 
administrative rules and regulations prescribes the size requirement. 
Relevant import regulations are contained in Sec.  980.1 and Sec.  
980.501 of the vegetable import regulations.
    Regarding the impact of this rule on affected entities, relaxing 
the size required for these potatoes is expected to benefit handlers, 
importers and growers. There should be no extra cost to producers or 
handlers because current harvesting and handling methods can 
accommodate the sorting of these smaller potatoes. By relaxing the 
minimum size required for these potatoes, a greater quantity of 
potatoes will meet the order's handling regulations and the import 
regulations. This could translate into an increased market for small 
potatoes and greater returns for handlers, importers, and growers.
    As small potatoes have grown in popularity with consumers, the 
market demand has outpaced the quantity of small, high quality potatoes 
available from Washington. The Committee believes that a relaxation in 
the size requirement will increase the available supply of small 
potatoes. The small potato market is a minor segment of the Washington 
potato market. As such, the Committee believes that these small 
potatoes do not compete directly with most of the fresh market potatoes 
and that this action will not adversely affect the overall Washington 
potato market.
    By providing Washington handlers the flexibility to pack the 
smaller red, yellow fleshed, and white types of potatoes, the Committee 
believes the industry will remain competitive in the marketplace. The 
Creamer potato market is a premium market and this action is expected 
to further increase sales of Washington Creamer potatoes to benefit the 
Washington potato industry. 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 changing the minimum size requirement. 
However, the Committee believes that it is important that the 
Washington potato handling regulations be consistent with the revised 
Standards to reduce confusion during the inspection and marketing of 
these types of potatoes. The Committee also determined that relaxing 
the minimum size requirement for these potatoes will provide the 
greatest benefit to the industry by augmenting the developing market 
for small potatoes and increasing grower returns.
    AMS is committed to complying with the E-government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    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 meeting was widely publicized throughout 
the Washington potato industry and all interested persons were invited 
to participate in Committee deliberations. Like all Committee meetings, 
the April 16, 2008, meeting was a public meeting and all entities, both 
large and small, were able to express views on this issue. In addition, 
the World Trade Organization and known importers of potatoes will be 
notified of this action.
    An interim final rule concerning this action was published in the 
Federal Register on September 10, 2008. Copies of this rule were mailed 
by Committee staff to all Committee members and 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 10, 2008. 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/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to 
Jay Guerber at the previously mentioned address in the FOR FURTHER 
INFORMATION CONTACT section.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this rule.
    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 (73 FR 52573, September 10, 2008) 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 73 FR 52573 on September 10, 2008, is adopted as a final 
rule without change.

    Dated: December 8, 2008.
James E. Link,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-29600 Filed 12-12-08; 8:45 am]
BILLING CODE 3410-02-P