[Federal Register Volume 74, Number 98 (Friday, May 22, 2009)]
[Proposed Rules]
[Pages 23958-23961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-11968]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 945

[Doc. No. AMS-FV-08-0062; FV08-945-1 PR]


Irish Potatoes Grown in Certain Designated Counties in Idaho, and 
Malheur County, OR and Imported Irish Potatoes; Relaxation of Size 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would relax the size requirements for 
potatoes handled under the marketing order for Idaho-Eastern Oregon 
potatoes and for long type potatoes imported into the United States. 
This rule would revise the size requirements to allow: Creamer size 
(\3/4\ inch to 1\5/8\ inches diameter) for all varieties of potatoes to 
be handled if the potatoes otherwise meet U.S. No. 1 grade; and round 
type potatoes to be handled without regard to size so long as the size 
is specified on the container in connection with the grade. The 
proposed changes are intended to improve the handling and marketing of 
Idaho-Eastern Oregon potatoes and increase returns to producers. The 
proposed changes would also allow the importation of Creamer size long 
type potatoes under regulations as authorized by section 8e of the 
Agricultural Marketing Agreement Act of 1937.

DATES: Comments must be received by July 21, 2009.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments should 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; or Internet: http://www.regulations.gov. All comments should reference the document number 
and the date and page number of this issue of the Federal Register and 
will be available for public inspection in the office of the Docket 
Clerk during regular business hours, or can be viewed at http://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent or Gary D. Olson, 
Northwest Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, 
Suite 385, Portland, OR 97204; 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].

[[Page 23959]]


SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Agreement and Marketing Order No. 945, both as amended (7 CFR part 
945), regulating the handling of Irish potatoes grown in certain 
designated counties in Idaho, and Malheur County, Oregon, 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 proposed 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.
    USDA is issuing this rule in conformance with Executive Order 
12866.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action is not intended to have retroactive 
effect. This proposed 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.
    Under the terms of the marketing order, fresh market shipments of 
Idaho-Eastern Oregon potatoes are required to be inspected and are 
subject to grade, size, quality, maturity, pack, and container 
requirements. This proposed rule invites comments on relaxing the 
current size requirements for potatoes handled under the order. As 
required under section 8e of the Act, the addition of the Creamer size 
allowance for U.S. No. 1 grade potatoes to the size requirements 
contained in the marketing order regulations would change the import 
regulations for imported long type potatoes.
    At its meeting on June 9, 2008, the Committee unanimously 
recommended relaxing the size requirements for all varieties of U.S. 
No. 1 grade potatoes. Additionally, the Committee recommended adding a 
provision to the current requirements that would allow handling of U.S. 
No. 2 or better grade round type potatoes without regard to size so 
long as the size is specified on the container in connection with the 
grade.
    Sections 945.51 and 945.52 of the order provide authority for the 
establishment and modification of grade, size, quality, and maturity 
regulations applicable to the handling of potatoes.
    Section 945.341 establishes minimum grade, size, and maturity 
requirements for potatoes handled subject to the order. Currently, the 
order's handling regulations specify the size requirement for round 
type potato varieties handled subject to the order to be 1\7/8\ inches 
minimum diameter. All other varieties of potatoes handled must be 2 
inches minimum diameter, or 4 ounce minimum weight, provided that at 
least 40 percent of the potatoes in each lot shall be 5 ounces or 
heavier. Additionally, the order's handling regulations allow the 
handling of Size B potatoes (1\1/2\ to 2\1/4\ inches diameter), as 
established in the United States Standards for Grades of Potatoes (7 
CFR 51.1540-51.1566), so long as the potatoes otherwise meet the 
requirements of U.S. No. 1 grade.
    This proposed rule would relax the size requirements of potatoes 
regulated under the order to allow the handling of Creamer size 
potatoes (\3/4\ to 1\5/8\ inches diameter, as defined in the United 
States Standards for Grades of Potatoes), if those potatoes otherwise 
meet the requirements of U.S. No. 1 grade. In addition, this rule would 
add a provision to the existing size requirements to allow U.S. No. 2 
grade or better round type potatoes to be handled without regard to 
size, so long as the size is specified on the container in connection 
with the grade. This change is consistent with the size requirements 
for U.S. No 1 and U.S. No. 2 grade potatoes as contained in the United 
States Standards for Grades of Potatoes.
    Committee members stated that consumer demand for small potatoes 
has been increasing in recent years and now makes up a significant 
percentage of total domestic potato consumption. The trend has also 
increased domestic market demand for potatoes smaller than currently 
allowed by the size requirements prescribed in the order. This shift in 
consumer preference has been recognized with the inclusion of the new 
Creamer size classification in the most recent update of the United 
States Standards for Grades of Potatoes, which became effective April 
21, 2008 (73 FR 15052). The market for smaller potatoes is currently 
being supplied by potato production areas outside the order's 
production area and through limited special purpose shipments 
authorized under Sec.  945.341(e)(iii).
    Committee members believe that it is important that the handling 
regulations be changed to recognize the significant increase in the 
demand for small size potatoes. They believe that relaxing the minimum 
size requirement for certain grades and packs of potatoes would enable 
handlers to market a larger portion of the potato crop in fresh market 
outlets, meet the supply needs of potato buyers, and satisfy the 
purchasing preferences of potato consumers.
    According to the Committee, quality assurance is very important to 
the industry and to its customers. Providing the public with acceptable 
quality produce that is appealing to the consumer on a consistent basis 
is necessary to maintain consumer confidence in the marketplace. The 
Committee believes that relaxing the size requirements, while 
maintaining all other regulatory requirements, will preserve their 
commitment to quality while allowing the industry to adapt to changing 
consumer preferences.
    The Committee reported that potato size is a significant 
consideration of potato buyers. Providing them the sizes desired by 
their customers is important to promoting potato sales. In addition, 
small size potatoes tend to command higher prices in the market, 
providing producers and handlers the opportunity to increase revenues. 
This proposed change is expected to improve the marketing of Idaho-
Eastern Oregon potatoes, increase the volume of potatoes handled, and 
enhance overall returns to producers.
    Section 8e provides the authority for the regulation of certain 
imported commodities whenever those same commodities are regulated by a 
domestic marketing order. Potatoes are one of the commodities 
specifically covered by section 8e in the Act. In

[[Page 23960]]

addition, section 8e provides that whenever two or more such marketing 
orders regulating the same agricultural commodity produced in different 
areas are concurrently in effect, imports must comply with the 
provisions of the order which regulates the commodity produced in the 
area with which the imported commodity is in the ``most direct 
competition.'' Section 980.1(a)(2)(iii) contains the determination that 
imports of long type potatoes during each month of the year are in most 
direct competition with potatoes of the same type produced in the area 
covered by the order.
    Minimum grade, size, quality, and maturity requirements for 
potatoes imported into the United States are currently in effect under 
Sec.  980.1. Section 980.1(b)(3) provides that, through the entire 
year, the grade, size, quality, and maturity requirements of Marketing 
Order No. 945 applicable to potatoes of all long types shall be the 
respective grade, size, quality, and maturity requirements for imported 
potatoes of all long types. This proposal would relax the size 
requirements for imports of U.S. No. 1 grade, long type potatoes. 
Currently, the minimum size requirement for imported long type U.S. No. 
1 grade potatoes is Size B (1\1/2\ to 2\1/4\ inches). The proposed 
change would allow importation of Creamer size (\3/4\ inch to 1\5/8\ 
inches) long type potatoes if the potatoes otherwise meet the 
requirements of the U.S. No. 1 grade standard.

Initial Regulatory Flexibility Analysis

    Pursuant to the 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.
    Import regulations issued under the Act are based on those 
established under Federal marketing orders which regulate the handling 
of domestically produced products.
    There are approximately 46 handlers of Idaho-Eastern Oregon 
potatoes who are subject to regulation under the order and about 900 
potato producers in the regulated area. In addition, there are 
approximately 255 importers of all types of potatoes, many of which 
import long types, who are subject to regulation under the Act. Small 
agricultural service firms, which include potato handlers and 
importers, are defined by the Small Business Administration (13 CFR 
121.201) as those having annual receipts of less than $7,000,000, and 
small agricultural producers are defined as those whose annual receipts 
are less than $750,000.
    Based on a 2005-2007 average fresh potato production of 32,242,467 
hundredweight as calculated from Committee records, a three-year 
average of producer prices of $6.95 per hundredweight reported by the 
National Agricultural Statistics Service (NASS), and 900 Idaho-Eastern 
Oregon potato producers, the average annual producer revenue is 
approximately $248,984. It can be concluded, therefore, that a majority 
of these producers would be classified as small entities.
    In addition, based on Committee records and 2005-2007 f.o.b. 
shipping point prices predominantly ranging from $5.00 to $26.00 per 
hundredweight reported by USDA's Market News Service (Market News), 
many of the Idaho-Eastern Oregon potato handlers do not ship over 
$7,000,000 worth of potatoes. In view of the foregoing, it can be 
concluded that a majority of the handlers would be classified as small 
entities as defined by the SBA. The majority of potato importers may be 
classified as small entities as well.
    This proposed rule would relax the size requirements of potatoes 
regulated under the order to allow the handling of Creamer size 
potatoes, if those potatoes otherwise meet the requirements of U.S. No. 
1 grade. Additionally, this rule would add a provision to the existing 
size requirements that would allow round type potatoes to be handled 
without regard to size, so long as the size is specified on the 
container in connection with the grade.
    Pursuant to section 8(e), this rule would also relax the size 
requirements of the import regulations to allow importation of Creamer 
size, long type potatoes if the potatoes otherwise meet the 
requirements of U.S. No. 1 grade. This rule would not affect the 
current import requirements for red-skinned, round type or all other 
round type potatoes and would not require any language changes to Sec.  
980.1 of the vegetable import regulations.
    Committee members believe it is important to modify the handling 
regulations to recognize the significant increase in the demand for 
smaller size potatoes. They believe that relaxing the minimum size 
requirements would enable handlers to market a larger portion of the 
crop in fresh market outlets and to meet the needs of consumers and 
produce buyers. Market mechanisms have indicated that smaller minimum 
diameter potatoes are desirable, as evidenced by the increasing demand 
for such potatoes, and consistently command higher prices in relation 
to larger diameter potatoes. This action is being proposed to ensure 
that the growing market for smaller sized potatoes continues to be 
adequately supplied. This proposed change is expected to improve the 
marketing of Idaho-Eastern Oregon potatoes and increase returns to 
producers.
    Authority for this proposed rule is provided in Sec. Sec.  945.51 
and 945.52 of the order. Section 945.341(a)(2) of the order's handling 
regulations prescribes the size requirements. Relevant import 
regulations are contained in Sec. Sec.  980.1 and 980.501.
    At the June 9, 2008, meeting, the Committee discussed the impact of 
this change on handlers and producers. The proposal is a relaxation of 
current regulation and, as such, should either generate a positive 
impact or no impact on industry participants. The Committee did not 
foresee a situation in which this proposed change would negatively 
impact either handlers or producers.
    Neither the Committee nor NASS compile statistics exclusively 
relating to the production of small size potatoes. The Committee has 
relied on the opinions of the producers and the handlers familiar with 
that market to draw its conclusions. Information presented in the June 
9 meeting suggests that there is increasing domestic consumer demand 
for small size potatoes. There also appears to be a trend in domestic 
consumer preference toward increasingly smaller diameter potatoes. This 
is in contrast to the demand for larger size potatoes, which has been 
essentially static for several years.
    The addition of the Creamer size designation to the United States 
Standards for Grades of Potatoes by the USDA Fresh Products Branch 
(Fresh Products) supports the Committee's position that market demand 
for small size potatoes is increasing. Prior to the recent changes made 
in the United States Standards for Grades of Potatoes, the smallest 
potato size designation was Size B, with a minimum diameter of 1\1/2\ 
inches. Fresh Products determined that a smaller potato size 
designation was necessary to accommodate emerging marketing trends in 
the potato industry. The addition of the Creamer size

[[Page 23961]]

designation reduced the minimum potato size, as determined in the 
United States Standards for Grades of Potatoes, to \3/4\ inches 
diameter.
    The Committee reported that smaller size potatoes of good quality 
receive premium prices. While USDA Market News does not report on round 
type potatoes or on small size, long type potatoes in the Idaho-E. 
Oregon area, but does report on activity in other regions producing 
both round types and smaller sizes of potatoes, reports from other 
areas do show that the higher grade, small size round type potatoes 
consistently command higher prices than larger potatoes. It would be 
reasonable to expect price trends between production areas to move 
together, given that the regions would compete with each other for 
sales in the domestic market.
    Relaxing the size requirement would allow producers and handlers of 
potatoes under the order to ship a greater percentage of their crop to 
the fresh market. In addition, shipments of the smaller size potatoes 
that would be allowed after this change should command higher prices, 
which would be expected to increase total net returns for those firms 
who chose to ship. The benefits derived from this rule change are not 
expected to be disproportionately more or less for small handlers or 
producers than for larger entities.
    Additionally, this rule would allow potato importers to respond to 
the changing demand of the domestic consumers. The market's increasing 
preference for small size potatoes applies to imported potatoes as well 
as domestic potatoes. Thus, importers would benefit by increasing sales 
to an emerging domestic market segment.
    The Committee discussed alternatives to this proposed change. One 
alternative included making no change at all to the current regulation. 
The Committee did not believe that maintaining the current requirements 
would serve to meet the needs of consumers or buyers, and would not 
ultimately be of any benefit to the industry. Another alternative 
discussed was to allow smaller size potatoes to continue to be handled 
exempt from regulation under the special purpose shipment provisions 
provided within the order. This option was also rejected because it 
could potentially allow lower quality potatoes to be shipped into the 
fresh market. Lastly, the Committee considered further relaxing the 
size requirement for potatoes beyond what is proposed in this rule. The 
discussion centered on whether to extend the relaxation to U.S. No. 2 
grade potatoes as well. The Committee believed that the proposed 
relaxation is sufficient to adequately supply the growing market demand 
for smaller size potatoes while still maintaining high quality 
standards for such potatoes. After consideration of all the 
alternatives, the Committee believes that the proposed changes 
contained herein would provide the greatest amount of benefit to the 
industry with the least amount of cost.
    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 would not impose any additional reporting or 
recordkeeping requirements on either small or large potato handlers and 
importers. 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 proposed rule.
    Further, the Committee's meeting was widely publicized throughout 
the potato industry, and all interested persons were invited to attend 
the meeting and participate in Committee deliberations. Like all 
Committee meetings, the June 9, 2008, meeting was a public meeting and 
all entities, both large and small, were able to express their views on 
this issue. Finally, interested persons are invited to submit comments 
on this proposed rule, including 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/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 proposed rule.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 945

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

    For the reasons set forth above, 7 CFR part 945 is proposed to be 
amended as follows:

PART 945--IRISH POTATOES GROWN IN CERTAIN DESIGNATED COUNTIES IN 
IDAHO, AND MALHEUR COUNTY, OREGON

    1. The authority citation for 7 CFR part 945 continues to read as 
follows:

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

    2. In Sec.  945.341, paragraphs (a)(2)(i) and (a)(2)(iii) are 
revised to read as follows:


Sec.  945.341  Handling regulation.

* * * * *
    (a) * * *
* * * * *
    (2) * * *
    (i) Round varieties. 1\7/8\ inches minimum diameter, unless 
otherwise specified on the container in connection with the grade.
    (ii) * * *
    (iii) All varieties, U.S. No. 1 grade or better. (A) Size B (1\1/2\ 
to 2\1/4\ inches diameter).
    (B) Creamer (\3/4\ to 1\5/8\ inches diameter).
* * * * *

    Dated: May 18, 2009.
Robert C. Keeney,
Acting Associate Administrator.
[FR Doc. E9-11968 Filed 5-21-09; 8:45 am]
BILLING CODE 3410-02-P