[Federal Register Volume 83, Number 192 (Wednesday, October 3, 2018)]
[Rules and Regulations]
[Pages 49776-49780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21480]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 945

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements 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, this modification also applies to all imported 
long type Irish potatoes. This final rule also makes administrative 
revisions to the subpart headings to bring the language into 
conformance with the Office of Federal Register requirements.

DATES: Effective November 2, 2018.

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:

[[Page 49777]]

Barry.Broadbent@usda.gov or GaryD.Olson@usda.gov.
    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: Richard.Lower@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This final rule, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final rule is issued under Marketing Agreement No. 
98 and Order No. 945, as amended (7 CFR part 945), 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 final 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 final 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final 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.
    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 final rule revises the varietal classifications that 
determine the size requirements for potatoes handled under the Order. 
As required under section 8e of the Act, the revisions to the Order's 
varietal classifications will also be applied to imported long type 
potatoes.
    At its meeting on November 8, 2017, the Committee unanimously 
recommended revising the varietal 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. 
Prior to this action, 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 as ``all other 
varieties'' in Sec.  945.341(a)(2)(ii).
    This final rule removes 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 final rule changes 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. Prior to this final rule, the size requirements contained in 
the handling regulations did 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 existed 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 previous size requirement classifications in the handling 
regulations, some varieties of potatoes were being required to meet 
size requirements that did 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

[[Page 49778]]

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 will help 
facilitate the growth of the emerging market for unique potato 
varieties. This change is expected to improve the marketing of Idaho-
Eastern Oregon potatoes and enhance overall returns to handlers and 
producers.
    This final rule relaxes the current handling regulations for non-
round potatoes that are also not Russet type. Such potatoes will be 
subject to the smaller size requirements that have been, and will 
continue to be, applied to round varieties of potatoes. 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)(2) 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 action relaxes the minimum size 
requirements for imports of non-round U.S. No. 2 grade long type 
potatoes, other than Russet types, accordingly.
    This final rule also allows 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 will 
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.

Final 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 rule 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. 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 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, 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, 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 for which 
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 final rule revises the varietal classifications that determine 
the size requirements for U.S. No. 2 grade potatoes handled under the 
Order. Specifically, this action removes 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 final rule changes the 
designation for ``all other varieties'' in Sec.  945.341(a)(2)(ii) to 
``Russet types,'' maintaining the larger size requirements that have 
been applied to all non-round varieties, but will now only apply them 
to ``Russet types.''
    Pursuant to section 8(e) of the Act, this revision to the Order's 
varietal classifications that determine the size requirements for U.S. 
No. 2 grade potatoes will also be applied to imported long type Irish 
potatoes.
    This action was recommended by the Committee to ensure that the 
size profile of non-round, non-Russet type U.S. No. 2 grade potatoes 
will consistently be a size preferred by consumers. This change is 
expected to improve the marketability of Idaho-Eastern Oregon potatoes 
and increase returns to

[[Page 49779]]

handlers and producers. Authority for this final 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 change to the 
varietal classifications that determine the size requirements is a 
relaxation in regulation. The 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 change to the size requirements 
clarifies which size requirements are applicable to which potatoes.
    This change is expected to lead to increased revenue for handlers 
and producers. Prior to this action, 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. Better 
defining the distinct classifications of potatoes will 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 action are not expected to 
be disproportionately greater or less for small handlers or producers 
than for larger entities.
    The Committee discussed alternatives to this 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 changes 
effectuated by this action will 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.
    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, Vegetable 
and Specialty Crops. No changes in those requirements are necessary as 
a result of this action. Should any changes become necessary, they 
would be submitted to OMB for approval.
    This final rule imposes no 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.
    A proposed rule concerning this action was published in the Federal 
Register on May 9, 2018 (83 FR 21188). A copy of the proposed rule was 
provided to the handlers by the Committee. Finally, the proposal was 
made available through the internet by USDA and the Office of the 
Federal Register. A 60-day comment period ending July 9, 2018, was 
provided to allow interested persons to respond to the proposal.
    One comment was received. The commenter questioned why the proposed 
change would only apply to the Order's production area and not to all 
potato growing regions. Marketing orders only regulate the production 
area as defined in each respective order. Therefore, this change can 
only apply to the handling of potatoes in the Order's production area 
as defined in Sec.  945.4. The commenter did not otherwise address the 
merits of the proposal. Accordingly, no changes will be made to the 
rule as proposed, based on the comment 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.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this final rule.
    After consideration of all relevant material 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.

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 amended as 
follows:

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

0
1. The authority citation for 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) * * *
    (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.

[[Page 49780]]

    (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: September 27, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-21480 Filed 10-2-18; 8:45 am]
BILLING CODE 3410-02-P