[Federal Register Volume 83, Number 90 (Wednesday, May 9, 2018)]
[Proposed Rules]
[Pages 21188-21191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09820]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 83, No. 90 / Wednesday, May 9, 2018 / 
Proposed Rules  

[[Page 21188]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 945

[Doc. No. AMS-SC-17-0077; SC18-945-1 PR]


Irish Potatoes Grown in Certain Designated Counties in Idaho, and 
Malheur County, Oregon; Modification of Handling Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would implement a recommendation from the 
Idaho-Eastern Oregon Potato Committee (Committee) to revise the 
varietal classifications that determine the size requirements for Irish 
potatoes grown in certain designated counties of Idaho, and Malheur 
County, Oregon. As provided under section 8e of the Agricultural 
Marketing Agreement Act of 1937, the proposed modification would also 
apply to all imported long type Irish potatoes. This proposed rule 
would also make administrative revisions to the subpart headings to 
bring the language into conformance with the Office of Federal Register 
requirements.

DATES: Comments must be received by July 9, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or internet: http://www.regulations.gov. 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 
proposed 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, Marketing Specialist, 
or Gary D. Olson, Regional Manager, 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 action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Order No. 945 (7 CFR part 945), as amended, regulating the 
handling of Irish potatoes grown in certain designated counties in 
Idaho, and Malheur County, Oregon. Part 945 (referred to as 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.'' The Committee locally administers the Order and is comprised 
of potato producers and handlers operating within the production area.
    Section 8e of the Act 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.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed rule does not meet the definition 
of a significant regulatory action it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs'[thinsp]'' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action 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.
    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 Order, fresh market shipments of Idaho-
Eastern Oregon potatoes are required to be inspected and are subject to 
minimum grade, size, quality, maturity, pack, and container 
requirements. This proposed rule would revise the varietal 
classifications that determine the size requirements for potatoes 
handled under the Order. As required under section 8e of the Act, the 
proposed revisions to the Order's varietal classifications would also 
be applied to imported long type potatoes.
    At its meeting on November 8, 2017, the Committee unanimously 
recommended revising the varietal

[[Page 21189]]

classifications that determine the size requirements for U.S. No. 2 
grade potatoes. Sections 945.51 and 945.52 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, quality, maturity, 
pack, and container requirements for potatoes handled subject to the 
Order. The Order's handling regulations currently have two different 
size requirements for U.S. No. 2 grade potatoes. The requirements are 
applied based upon the varietal classification of the subject potato. 
Currently, the varietal classifications that determine which of the 
different size requirements are applicable are designated as ``round 
varieties'' in Sec.  945.341(a)(2)(i), and ``all other varieties'' in 
Sec.  945.341(a)(2)(ii).
    This proposed rule would remove the designation ``round varieties'' 
in Sec.  945.341(a)(2)(i) to make the size requirements in that 
paragraph applicable to all U.S. No. 2 grade potatoes, unless otherwise 
specified. In addition, this proposed rule would change the designation 
for ``all other varieties'' in Sec.  945.341(a)(2)(ii) to ``Russet 
types,'' maintaining the larger size requirements for ``Russet types'' 
only.
    Committee members reported that the Idaho-Eastern Oregon potato 
industry has been producing and shipping an increasing number of non-
traditional potato varieties, such as oblong, fingerling, and banana 
potatoes. The current size requirements contained in the handling 
regulations do not adequately differentiate between the various types 
of potatoes to effectively regulate the unique varieties that are now 
being marketed from the production area. Without a clear distinction, 
there exists the potential to inhibit orderly marketing of such 
potatoes by requiring them to adhere to size requirements that were 
never intended to be applied to that type or variety. Designating 
potatoes as ``round varieties'' and ``all other varieties'' was 
appropriate when the regulations were initially established but 
potatoes from the production area are now segmented into two different 
market sectors, Russet type potatoes and all other non-Russet 
varieties. The characteristics of each of these market sectors 
continues to need different minimum size requirements. However, with 
the current size requirement classifications in the handling 
regulations, some varieties of potatoes are being required to meet size 
requirements that do not match their natural characteristics or their 
intended market outlet.
    For example, Russet varieties are primarily utilized as baked 
potatoes or are peeled and further prepared by the consumer as products 
such as french fries, potato salad, or mashed potatoes. The Committee 
intends for the size requirements for these potatoes to be greater than 
for other varieties of potatoes and those size requirements match the 
likely utilization of such potatoes. Non-Russet type potatoes are 
typically marketed fresh and are prepared and consumed whole. These 
types, while predominantly round varieties, include unique varieties 
that could not be described as ``round'' but are also not comparable to 
Russet types. Requiring non-Russet type potatoes to meet size 
requirements intended for potatoes used for baking or french fries puts 
those potatoes at a marketing disadvantage.
    The Committee believes that potato size is a significant 
consideration of potato buyers. Providing potato buyers with the sizes 
desired by their customers for the type of potato that is being 
marketed is important to promoting potato sales. The size requirements 
intended to facilitate orderly marketing should not unintentionally 
inhibit a market segment, even if that segment is a minor one. 
Modifying the size requirement classifications to meet the intent of 
the Committee would help facilitate the growth of the emerging market 
for unique potato varieties. This proposed change is expected to 
improve the marketing of Idaho-Eastern Oregon potatoes and enhance 
overall returns to handlers and producers.
    This proposed rule would relax the current handling regulations for 
non-round potatoes that are also not Russet type. Such potatoes would 
be subject to the smaller size requirements that are currently applied 
to round varieties. The Committee believes that, while these potatoes 
represent a small market segment relative to the total output from the 
production area, the market is expected to grow and the Order's 
handling regulations should be responsive to it.
    Section 8e mandates the regulation of certain imported commodities 
whenever those same commodities are regulated by a domestic marketing 
order. Irish potatoes are one of the commodities specifically covered 
by section 8e in the Act. In addition, section 8e stipulates 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.'' 7 CFR 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) stipulates that, through the entire 
year, the grade, size, quality, and maturity requirements of the Order 
applicable to potatoes of all long types shall be the respective grade, 
size, quality, and maturity requirements for imported potatoes of all 
long types. Therefore, this proposed action would relax the minimum 
size requirements for imports of non-round U.S. No. 2 grade long type 
potatoes, other than Russet types, accordingly.
    This rule would also allow potato importers to respond to the 
changing demands of domestic consumers. The domestic market's 
increasing preference for unique potato varieties applies to imported 
potatoes as well as to domestically produced potatoes. In addition, the 
higher prices that the unique potatoes are expected to command would 
also apply to imported product. Thus, importers are expected to benefit 
along with domestic producers and handlers by increased sales of U.S. 
No. 2 grade potatoes and increased total revenue.

Initial Regulatory Flexibility Analysis

    Pursuant to the 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 proposed rule 
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 
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. Import regulations issued under 
the Act are based on those established under Federal marketing orders.
    There are approximately 32 handlers of Idaho-Eastern Oregon 
potatoes who are subject to regulation under the Order and about 450 
potato producers in the regulated area. In addition, there are 
approximately 255 importers of all types of potatoes, many of which 
import long

[[Page 21190]]

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 (SBA) as those having annual 
receipts of less than $7,500,000, and small agricultural producers are 
defined as those whose annual receipts are less than $750,000 (13 CFR 
121.201).
    During the 2016-2017 fiscal period, the most recent full year of 
statistics available, 37,449,300 hundredweight of Idaho-Eastern Oregon 
potatoes were inspected under the Order and sold into the fresh market. 
Based on information provided by the National Agricultural Statistics 
Service (NASS), the average producer price for the 2016 Idaho potato 
crop was $6.75 per hundredweight. Multiplying $6.75 by the shipment 
quantity of 37,449,300 hundredweight yields an annual crop revenue 
estimate of $252,782,775. The average annual fresh potato revenue for 
each of the 450 producers is therefore calculated to be $561,740 
($252,782,775 divided by 450), which is less than the SBA threshold of 
$750,000. Consequently, on average, most of the Idaho-Eastern Oregon 
potato producers may be classified as small entities.
    In addition, based on information reported by USDA's Market News 
Service (Market News), the average f.o.b. shipping point price for the 
2016-2017 Idaho potato crop was $11.79 per hundredweight. Multiplying 
$11.79 by the shipment quantity of 37,449,300 hundredweight yields an 
annual crop revenue estimate of $441,527,247. The average annual fresh 
potato revenue for each of the 32 handlers is therefore calculated to 
be $13,797,726 ($441,527,247 divided by 32), which is above the SBA 
threshold of $7,500,000 for agricultural service firms. Therefore, most 
of the Idaho-Eastern Oregon potato handlers would be classified as 
large entities.
    Further, based on information from USDA's Foreign Agricultural 
Service (FAS), potato importers imported 11,157,190 hundredweight of 
potatoes into the U.S. in 2016 (the most recent full year that 
statistics are available). FAS also reported the total value of potato 
imports for 2016 to be $212,331,000. The average annual revenue of the 
estimated 255 potato importers is therefore calculated to be $832,670 
($212,331,000 divided by 255), which is significantly less than the SBA 
threshold of $7,500,000. Consequently, on average, most of the entities 
importing potatoes into the U.S. may be classified as small entities.
    This proposed rule would revise the varietal classifications that 
determine the size requirements for U.S. No. 2 grade potatoes handled 
under the Order. Specifically, this action would remove the designation 
``round varieties'' in Sec.  945.341(a)(2)(i) to make the size 
requirements in that paragraph applicable to all U.S. No. 2 grade 
potatoes, unless otherwise specified. In addition, this proposed rule 
would change the designation for ``all other varieties'' in Sec.  
945.341(a)(2)(ii) to ``Russet types,'' maintaining the larger size 
requirements that were previously applied to all non-round varieties, 
but would only apply them to ``Russet types.''
    Pursuant to section 8(e) of the Act, this proposed revision to the 
Order's varietal classifications that determine the size requirements 
for U.S. No. 2 grade potatoes would also be applied to imported long 
type Irish potatoes.
    This proposed action was recommended by the Committee to ensure 
that the size profile of non-round, non-Russet type U.S. No. 2 grade 
potatoes would consistently be a size preferred by consumers. This 
proposed change is expected to improve the marketability of Idaho-
Eastern Oregon potatoes and increase returns to handlers and producers. 
Authority for this proposed rule is provided in Sec. Sec.  945.51 and 
945.52 of the Order.
    At the November 8, 2017, meeting, the Committee discussed the 
impact of this change on handlers and producers. The proposed change to 
the varietal classifications that determine the size requirements is a 
relaxation in regulation. The proposed regulatory change is expected to 
have a positive, or neutral, impact on industry participants.
    The Committee relied on the opinions of producers and handlers 
familiar with the industry to draw its conclusions regarding the 
recommended handling regulation change. The Committee received 
anecdotal evidence from industry members at the November 8, 2017, 
meeting that there is some confusion in the industry with regards to 
which size requirements apply to which varieties of potatoes and that 
some varieties are being inspected and sized to requirements that were 
not intended by the Committee. The proposed change to the size 
requirements would clarify which size requirements are applicable to 
which potatoes.
    If implemented, this proposed change is expected to lead to 
increased revenue for handlers and producers. Currently, non-round 
potato varieties that are not Russet type are required to conform to 
the larger size requirements, even though the Committee does not 
believe that this meets its intent with regards to the handling 
regulation. Defining the distinct classifications would allow more of 
the non-round, non-Russet type potatoes to enter the market, thereby 
allowing the sale of potatoes that would have otherwise been 
restricted. The benefits derived from this proposed action are not 
expected to be disproportionately more or less for small handlers or 
producers than for larger entities.
    The Committee discussed alternatives to this proposed change. One 
consideration was making no change at all to the current regulation. 
Another alternative was to further differentiate between various 
varieties and types of potatoes in the handling regulations. There was 
some discussion of adding another classification. After consideration 
of all the alternatives, the Committee decided that the proposed 
changes would provide the greatest amount of benefit to the industry 
with the least amount of burden to producers and handlers.
    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 November 8, 2017, 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.
    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 OMB and assigned OMB No. 0581-0178, Generic 
Vegetable and Specialty Crops. No changes in those requirements would 
be necessary as a result of this proposed rule. Should any changes 
become necessary, they would be submitted to OMB for approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on 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.
    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.

[[Page 21191]]

    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    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.
    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

0
1. The authority citation for 7 CFR part 945 continues to read as 
follows:

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

[Subpart Redesignated as Subpart A]

0
2. Redesignate ``Subpart--Order Regulating Handling'' as ``Subpart A--
Order Regulating Handling''.

[Subpart Redesignated as Subpart B and Amended]

0
3. Redesignate ``Subpart--Rules and Regulations'' as subpart B and 
revise the heading to read as follows:

Subpart B--Administrative Requirements

[Subpart Redesignated as Subpart C]

0
4. Redesignate ``Subpart--Assessment Rates'' as ``Subpart C--Assessment 
Rates''.

[Subpart Redesignated as Subpart D and Amended]

0
5. Redesignate ``Subpart--Handling Regulations'' as subpart D and 
revise the heading to read as follows:

Subpart D--Handling Requirements

0
6. In Sec.  945.341, revise paragraphs (a)(2)(i) and (ii) to read as 
follows:


Sec.  945.341  Handling regulation.

* * * * *
    (a) * * *
    (1) * * *
    (2) Size--(i) All varieties, except Russet types. 1\7/8\ inches 
minimum diameter, unless otherwise specified on the container in 
connection with the grade.
    (ii) Russet types. 2 inches minimum diameter, or 4 ounces minimum 
weight: Provided, That at least 40 percent of the potatoes in each lot 
shall be 5 ounces or heavier.
* * * * *

    Dated: May 3, 2018.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2018-09820 Filed 5-8-18; 8:45 am]
 BILLING CODE 3410-02-P