[Federal Register Volume 81, Number 227 (Friday, November 25, 2016)]
[Rules and Regulations]
[Pages 85108-85110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28252]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Doc. No. AMS-SC-16-0042; SC16-948-1 FR]


Irish Potatoes Grown in Colorado; Modification of the Handling 
Regulation for Area No. 2

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Colorado Potato 
Administrative Committee, Area No. 2 (Committee) to revise the grade 
requirement currently prescribed for 1\1/2\-inch minimum to 2\1/4\-inch 
maximum diameter (Size B) potatoes under the Colorado potato marketing 
order (order). The Committee locally administers the order and is 
comprised of producers and handlers of potatoes operating within the 
area of production. This rule relaxes the current minimum grade 
requirement for Size B red potatoes from U.S. Commercial grade or 
better to U.S. No. 2 grade or better. Relaxing this grade requirement 
will allow area handlers to supply new markets with U.S. No. 2 grade 
Size B red potatoes and is expected to benefit producers, handlers, and 
consumers.

DATES: Effective November 28, 2016.

FOR FURTHER INFORMATION CONTACT: Sue Coleman, Marketing Specialist, or 
Gary D. Olson, Regional Director, Northwest Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email: 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement No. 97 and Marketing Order No. 948, both as amended (7 CFR 
part 948), regulating the handling of Irish potatoes grown in Colorado, 
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.''

[[Page 85109]]

    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect.
    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 final rule revises the grade requirement currently prescribed 
for Size B potatoes under the order. This rule relaxes the current 
minimum grade requirement for Size B red potatoes from U.S. Commercial 
grade to U.S. No. 2 grade. This change was unanimously recommended by 
the Committee at a meeting held on March 17, 2016.
    Section 948.22 of the order authorizes the issuance of grade, size, 
quality, maturity, pack, and container regulations for potatoes grown 
in the order's production area. Section 948.21 authorizes the 
modification, suspension, or termination of regulations issued pursuant 
to Sec.  948.22.
    Under the Colorado potato marketing order, the State of Colorado is 
divided into three areas of regulation for marketing order purposes. 
These include: Area 1, commonly known as the Western Slope; Area 2, 
commonly known as San Luis Valley; and Area 3, which consists of the 
remaining producing areas within the State of Colorado not included in 
the definitions of Area 1 or Area 2. Currently, the order only 
regulates the handling of potatoes produced in Area 2 and Area 3. 
Regulation for Area 1 has been suspended.
    The grade, size, and maturity requirements specific to the handling 
of potatoes grown in Area 2 are contained in Sec.  948.386 of the 
order. The current handling regulation requires that, for all 
varieties, Size B potatoes (1\1/2\-inch minimum to 2\1/4\-inch maximum 
diameter, as designated in the U.S. Standards for Grades of Potatoes) 
may be handled under the order, if such potatoes meet or exceed the 
requirements of the U.S. Commercial grade.
    At the March 17, 2016, Committee meeting, industry participants 
indicated to the Committee that there is demand in several markets, 
including the food service market, for Size B, U.S. No. 2 grade red 
potatoes. They further stated that the order's current grade 
requirement for Size B potatoes (U.S. Commercial grade or better) 
precludes handlers from supplying this growing and profitable market. 
Relaxing the grade requirement for Size B red potatoes will allow area 
handlers to compete with other domestic potato producing regions. This 
change will effectively lower the allowable grade for red varieties of 
Size B potatoes from U.S. Commercial grade or better to U.S. No. 2 
grade or better.
    Relaxing the grade requirement to allow shipments of U.S. No. 2 
grade Size B red potatoes should make more potatoes available to 
consumers and should allow Area 2 handlers to move more of the area's 
potato production into the fresh market. This change is expected to 
benefit producers, handlers, and consumers of 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 
businesses 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.
    There are approximately 66 handlers of Colorado Area No. 2 potatoes 
subject to regulation under the order and approximately 150 producers 
in the regulated production area. Small agricultural service firms are 
defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $7,500,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000 (13 CFR 121.201).
    During the 2014-2015 marketing year, the most recent full marketing 
year for which statistics are available, 14,075,876 hundredweight of 
Colorado Area No. 2 potatoes were inspected under the order and sold 
into the fresh market. Based on information reported by USDA's Market 
News Service, the average f.o.b. shipping point price for the 2014-2015 
Colorado potato crop was $8.60 per hundredweight. Multiplying $8.60 by 
the shipment quantity of 14,075,876 hundredweight yields an annual crop 
revenue estimate of $121,052,534. The average annual fresh potato 
revenue for each of the 66 handlers is therefore calculated to be 
$1,834,129 ($121,052,534 divided by 66), which is less than the SBA 
threshold of $7,500,000. Consequently, on average, most of the Colorado 
Area No. 2 potato handlers may be classified as small entities.
    In addition, based on information provided by the National 
Agricultural Statistics Service, the average producer price for the 
2014 Colorado fall potato crop was $8.25 per hundredweight. Multiplying 
$8.25 by the shipment quantity of 14,075,876 hundredweight yields an 
annual crop revenue estimate of $116,125,977. The average annual fresh 
potato revenue for each of the 150 Colorado Area No. 2 potato producers 
is therefore calculated to be approximately $774,173 ($116,125,977 
divided by 150), which is greater than the SBA threshold of $750,000. 
Consequently, on average, many of the Area No. 2 Colorado potato 
producers may not be classified as small entities.
    This final rule relaxes the minimum grade requirement prescribed 
for 1\1/2\-inch minimum diameter to 2\1/4\-inch maximum diameter (Size 
B) red potatoes under the order. Currently, the handling of Size B 
potatoes is allowed if the potatoes otherwise meet or exceed the 
requirements of the U.S. Commercial grade standard. This change will 
effectively lower the minimum grade requirement for Size B red potatoes 
from U.S. Commercial grade or better to U.S. No. 2 grade or better. 
Relaxing the grade requirement will allow Colorado Area 2 handlers to 
supply markets with U.S. No. 2 grade Size B red potatoes and enable 
them to better compete with the other domestic potato producing 
regions. This change in the handling regulations is expected to benefit 
producers, handlers, and consumers. All other requirements in the 
order's handling regulations would remain unchanged. Authority for this 
action is contained in Sec. Sec.  948.21 and 948.22 of the order.
    This relaxation is expected to benefit producers, handlers, and 
consumers of Colorado Area 2 potatoes by allowing a greater quantity of 
potatoes from the

[[Page 85110]]

production area to enter the fresh market. The anticipated increase in 
volume is expected to translate into greater returns for handlers and 
producers, and more purchasing options for consumers.
    After discussing possible alternatives to this change, the 
Committee determined that a relaxation in the grade requirement for 
Size B red potatoes should meet the industry's current needs while 
maintaining the integrity of the order's quality objectives. During its 
deliberations, the Committee considered making no changes to the 
handling regulation, as well as relaxing the grade requirement for all 
Size B potatoes. The Committee believes that a relaxation in the 
handling regulation for Size B red potatoes is necessary to allow 
handlers to pursue new markets, but lowering the grade requirement for 
all other types and varieties of Size B potatoes to U.S. No. 2 grade or 
better could erode the quality reputation of the area's production. 
Therefore, the Committee found that there were no other viable 
alternatives to the proposal as recommended.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178, (Generic Vegetable and Specialty Crops). No 
changes in those requirements as a result of this action are necessary. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    This final rule relaxes the minimum grade requirements under the 
Colorado Area 2 potato marketing order. Accordingly, this action 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.
    As noted in the initial regulatory flexibility analysis, USDA has 
not identified any relevant Federal rules that duplicate, overlap or 
conflict with this final rule.
    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.
    In addition, the Committee's meeting was widely publicized 
throughout the Colorado potato industry, and all interested persons 
were invited to attend the meeting and participate in Committee 
deliberations on all issues. Like all Committee meetings, the March 17, 
2016, meeting was a public meeting, and all entities, both large and 
small, were able to express views on this issue.
    A proposed rule concerning this action was published in the Federal 
Register on August 1, 2016 (81 FR 50406). Copies of the rule were made 
available to all interested Colorado potato producers and handlers. 
Finally, the rule was made available through the internet by USDA and 
the Office of the Federal Register. A 60-day comment period ending 
September 30, 2016, was provided to allow interested persons to respond 
to the proposal. 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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are already shipping 
potatoes from the 2016 crop, and handlers want to take advantage of the 
relaxation as soon as possible. Further, handlers are aware of this 
rule, which was recommended at a public meeting. Also, a 60-day comment 
period was provided for in the proposed rule.

List of Subjects in 7 CFR Part 948

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 948 is 
amended as follows:

PART 948--IRISH POTATOES GROWN IN COLORADO

0
1. The authority citation for 7 CFR part 948 continues to read as 
follows:

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


0
2. In Sec.  948.386, paragraph (a)(3) is revised to read as follows:


Sec.  948.386  Handling regulation.

* * * * *
    (a) * * *
    (3) 1\1/2\-inch minimum to 2\1/4\-inch maximum diameter (Size B). 
U.S. Commercial grade or better, except that red varieties may be U.S. 
No. 2 grade or better.
* * * * *

    Dated: November 18, 2016.
Bruce Summers,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2016-28252 Filed 11-23-16; 8:45 am]
 BILLING CODE 3410-02-P