[Federal Register Volume 88, Number 170 (Tuesday, September 5, 2023)]
[Proposed Rules]
[Pages 60599-60603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19003]


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 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. 88, No. 170 / Tuesday, September 5, 2023 / 
Proposed Rules  

[[Page 60599]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[Doc. No. AMS-SC-22-0041]


Potato Research and Promotion Plan; Changes to Board Membership 
and Administrative Committee

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would implement recommendations from the 
National Potato Promotion Board (Board) to change its membership and 
organization by revising the formula used to determine the number of 
producer and importer seats on the Board, reducing the maximum number 
of importer seats on the Board, and indefinitely suspending the 
Administrative Committee. In addition to these Board-recommended 
changes, the U.S. Department of Agriculture (USDA) would make several 
non-substantive changes to clarify the start of the term of office for 
Board members and modernize the Board's procedures. The Board 
administers the Potato Research and Promotion Plan (Plan) with 
oversight by the Agricultural Marketing Service (AMS).

DATES: Comments must be received by October 5, 2023.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments may be mailed to the Docket 
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA, 
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Fax: 
(202) 720-8938; or submitted electronically by Email: 
[email protected]; or via internet at https://www.regulations.gov. 
Comments should reference the document number and the date and page 
number of this issue of the Federal Register. All comments will be made 
available for public inspection in the Office of the Docket Clerk 
during regular business hours or can be viewed at https://www.regulations.gov. Comments submitted in response to this proposed 
rule will be included in the rulemaking 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.

FOR FURTHER INFORMATION CONTACT: Alexandra Caryl, Branch Chief, Mid-
Atlantic Region Branch, Market Development Division, Specialty Crop 
Program, AMS, USDA, STOP 0244, 1400 Independence Avenue SW, Room 1406-
S, Washington, DC 20250-0244; Telephone: (202) 720-8805; or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed rule affecting the Plan (7 CFR 
part 1207) is authorized under the Potato Research and Promotion Act of 
1971 (Act) (7 U.S.C. 2611-2627).

Executive Orders 12866, 13563, and 14094

    USDA is issuing this proposed rule in conformance with Executive 
Orders 12866, 13563, and 14094. Executive Orders 12866 and 13563 direct 
agencies to assess all costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, reducing costs, harmonizing rules, 
and promoting flexibility. Executive Order 14094 reaffirms, 
supplements, and updates Executive Order 12866 and further directs 
agencies to solicit and consider input from a wide range of affected 
and interested parties through a variety of means. This proposed rule 
is not a significant regulatory action within the meaning of Executive 
Order 12866. Accordingly, this action has not been reviewed by the 
Office of Management and Budget under section 6 of the Executive Order.

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. AMS has assessed the impact of this proposed rule 
on Indian Tribes and determined that this rule would not have Tribal 
implications that require consultation under Executive Order 13175. AMS 
hosts a quarterly teleconference with Tribal leaders where matters of 
mutual interest regarding the marketing of agricultural products are 
discussed. Information about the proposed changes to the regulations 
will be shared during an upcoming quarterly call, and Tribal leaders 
will be informed about the proposed revisions to the regulation and the 
opportunity to submit comments. AMS will work with the USDA Office of 
Tribal Relations to ensure meaningful consultation is provided as 
needed with regard to these proposed changes to the Plan.

Executive Order 12988

    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under sec. 311 of the Act (7 
U.S.C. 2620), a person subject to the Plan may file a petition with 
USDA stating that the Plan, any provision of the Plan, or any 
obligation imposed in connection with the Plan, is not in accordance 
with law and requesting a modification of the Plan or to be exempted 
therefrom. Such person is afforded the opportunity for a hearing on the 
petition. Thereafter, USDA will issue a ruling on the petition. The Act 
provides that the district courts of the United States for any district 
in which the petitioner resides or conducts business shall have 
jurisdiction to review a final ruling on the petition, if the 
petitioner files a complaint for that purpose not later than 20 days 
after the date of the entry of USDA's final ruling.

Background

    Under the Plan, which became effective on March 9, 1972, the Board 
administers a nationally coordinated program of research, development, 
advertising, and promotion designed to strengthen potatoes' competitive 
position and expand domestic and foreign markets for potatoes and 
potato products. This program is financed by assessments on handlers 
and importers of potatoes and potato products.

[[Page 60600]]

    This proposed rule would modify the membership of the Board by 
revising the formula to determine the number of producer and importer 
seats on the Board. This action would increase the current threshold 
from one member seat per five million hundredweight pounds of potatoes 
produced or imported to one seat per 10 million hundredweight for both 
producer and importer seats. This action would further revise importer 
membership by reducing the maximum number of importer seats from five 
to two. Additionally, the action would indefinitely suspend the 
Administrative Committee. Finally, this proposed rule would clarify the 
start date of the term of office for Board members and modernize 
certain Board procedures relating to the submission of votes and 
ballots.
    The Board unanimously recommended the proposed changes to its 
membership and the indefinite suspension of the Administrative 
Committee at a public meeting on March 9, 2022. Board members present 
for the vote represented domestic producers, importers, and the public, 
and the recommendations incorporated industry feedback collected by the 
Board over a three-year period.

Board Recommendation To Change Membership Rules

    Section 1207.320(b) and (c) of the Plan provides the formula used 
to determine the number of producer and importer seats on the Board. 
Under this formula, one seat is created for every five million 
hundredweight of potatoes produced or imported. Therefore, as more 
potatoes are produced and imported, the Board has more seats.
    The Board has encountered significant challenges in filling Board 
member seats. First, since the Board's inception, the potato industry 
has experienced both increased production and consolidation. Since the 
1970s when the Board was created, production of potatoes in the U.S. as 
well as imports from Canada and other countries have increased 
substantially. At the same time, the number of commercial potato 
farmers and importers has decreased significantly. Accordingly, the 
number of seats has grown but there are fewer eligible producers and 
importers to fill them. Second, Board members are volunteers, nominated 
by peers to represent their State or importer sector. To be a member, 
domestic producers and importers use time otherwise spent with their 
businesses to travel to meetings and participate in committees and 
decision making. Board members are also expected to communicate the 
activities of the Board to their constituencies and recruit future 
Board members. While service as Board members is important, it is time-
consuming.
    As a result of these challenges, the Board in recent years has 
typically had approximately 125 total seats, of which only about 100 
have been filled. Therefore, the Board has experienced roughly 25 
vacancies each year. The proposal would increase the threshold from one 
member seat per five million hundredweight pounds of potatoes produced 
or imported to one seat per 10 million hundredweight for both producer 
and importer seats. With the proposed changes, the Board expects the 
number of member seats to reduce to 80.
    Section 308 of the Act (7 U.S.C. 2617(b)) and Sec. Sec.  
1207.320(c) and 1207.322(d) of the Plan currently allow for a maximum 
of five importer seats on the Board. Since importers started paying 
assessments in 1991, the Board has always included the maximum of five 
importer member seats. Like their domestic producer counterparts, 
however, potato importers continue to experience industry 
consolidation. According to Customs and Border Protection data, in 2022 
there were only 10 importers with annual receipts above the Small 
Business Administration's (SBA) threshold of $34 million. The Board has 
not filled all five positions in the last 10 years because of the small 
number of continuously active importers. Given that members serve 
three-year terms and cannot serve more than two consecutive terms, 
along with the small number of importers, it is reasonable to decrease 
the maximum number of importers from five to two. Additionally, the 
Board conducted extensive outreach to affected stakeholders and 
received their support for the change, as evidenced by the unanimous 
vote for this change.
    The initial request for these proposed changes came from domestic 
producers and importers. Since 2020, the Board has met with various 
State organizations across the country to discuss the proposed changes. 
USDA and members of industry also participated in numerous public 
meetings conducted by the Board to discuss the chronic vacancies 
experienced by the Board as a result of its current size and structure. 
The proposed solution developed by the Board reflects the input from 
these stakeholders.

Board Recommendation To Suspend the Administrative Committee

    Section 1207.507 of the Plan establishes an Administrative 
Committee composed of 38 producer members, one importer member, and the 
public member, as provided for in the Board's bylaws. The 
Administrative Committee is selected annually. The Administrative 
Committee acts for the Board in implementing marketing research, 
development, advertising, and/or promotion activities as directed by 
the Board and is charged with developing and submitting to USDA for 
approval specific programs or projects. The Administrative Committee 
also acts for the Board in authorizing contracts or agreements for the 
development and carrying out of such programs or projects and the 
payment of the costs thereof with funds collected pursuant to the Plan. 
Finally, the Administrative Committee acts for the Board in contracting 
with cooperating agencies for the collection of assessments pursuant to 
the Plan.
    Due to the proposed changes to the Board's membership, which would 
reduce membership seats to approximately 80, the Board believes the 
Administrative Committee is no longer needed. Currently, the Board uses 
the Administrative Committee like a smaller Board that meets twice a 
year, while the full Board only meets once. It is easier and cheaper 
for the Administrative Committee to convene and conduct business 
because of its reduced size. While the Board, with the proposed 
changes, would still be larger than the current Administrative 
Committee, the reduced membership under the proposed changes allows the 
full Board to meet in lieu of the Administrative Committee. Meeting 
more frequently addresses a major industry concern that only members of 
committees, which make up the Administrative Committee, have sufficient 
interaction with staff to fully understand the programs and activities 
the Board implements. Although meeting more frequently may require a 
greater time commitment from Board members, the Board believes the 
benefits of this change would outweigh any additional burden on 
members. Furthermore, as explained in the next section, USDA proposes 
to amend the regulations to permit voting and balloting via electronic 
methods, which is expected to increase the efficiency of the Board's 
operations and make it easier for members to participate. By reducing 
the Board size to a more reasonable number of members, the Board hopes 
to include all members on committees to promote Board member 
interaction and involvement. Therefore, the proposed changes would 
indefinitely suspend the Administrative Committee.

[[Page 60601]]

USDA Proposed Changes

    Under Sec.  1207.321(a), the term of office of Board members starts 
on July 1, or such other date as may be specified in the regulations. 
In 1973, USDA added Sec.  1207.504, which provided that the term of 
office would instead start on April 1. In 1984, Sec.  1207.504 was 
amended to require the term of office to start on March 1. Since then, 
each member's term has started on March 1. USDA proposes to change the 
start date in Sec.  1207.321(a) from July 1 to March 1 to match Sec.  
1207.504 and be consistent with the current practice of the Board.
    In Sec.  1207.325(c), the Plan provides that Board members may vote 
on non-controversial matters and matters of an emergency nature when 
there is not enough time to call an assembled meeting by mail, 
telegraph, or telephone. USDA proposes changing this language to remove 
the reference to telegraph as a means for voting and to allow for 
voting by mail, electronic mail, facsimile, or any other means of 
communication. In Sec.  1207.503(a), (b), and (c), the Plan provides 
that producers and importers may nominate Board members at meetings or 
by mail ballots. USDA proposes changing this language to allow ballots 
to be submitted by mail, electronic mail, facsimile, or any other means 
of communication. These proposed changes would modernize the sections 
and increase accessibility to the voting and balloting processes by 
providing additional options.

Initial Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601-612), 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 businesses subject 
to such actions so that small businesses will not be unduly or 
disproportionately burdened. The RFA requires, where feasible, an 
estimate of the number of small businesses affected by the rule. This 
regulatory flexibility analysis estimates a proportion of small 
businesses where it is not feasible to estimate a number.
    The Small Business Administration (SBA) has established size 
standards that determine whether a business entity is a small business. 
The size standards are based on the entity's economic activity, or 
industry, and generally use the North American Industry Classification 
System (NAICS). The size standards are expressed in annual receipts in 
millions of dollars or in number of employees, and indicate the maximum 
allowed for an entity to be considered a small business.
    The SBA defines small potato producers as those having annual 
receipts equal to or less than $4.25 million (Potato Farming, NAICS 
code 111211). Small agricultural service firms (handlers and importers) 
are defined as those having annual receipts equal to or less than $34 
million (Postharvest Crop Activities, NAICS code 115114) (13 CFR 
121.201). These were the numbers in effect when this initial regulatory 
flexibility analysis was prepared in May 2023.
    According to the Board, in 2021 there were approximately 1,500 
producers and 955 handlers of potatoes. Since data was not available on 
the number of producers that are small businesses according to the SBA 
standard, this analysis computes an estimate of the number of small 
farms using census data from the USDA's National Agricultural 
Statistics Service (NASS). Producers that pay Board assessments have a 
minimum of five acres of potatoes. The 2017 Agricultural Census (the 
most recent census data available) reported 2,420 farms with five or 
more harvested acres of potatoes, which is reasonably close to the 
Board estimate of 1,500 producers that paid assessments in 2021.
    NASS reported a 2022 U.S. potato crop value of $5,069,511,000 and 
895,600 harvested acres (the most recent annual data available). The 
estimated average value per harvested acre is $5,660 (obtained by 
dividing the crop value of $5,069,511,000 by the number of acres, 
895,600). Thus, on average, a farm would have to harvest 751 or fewer 
acres of potatoes to meet the SBA's definition of a small business 
(obtained by dividing the SBA threshold of $4.25 million by the 
estimated 2022 average value per acre, $5,660).
    According to the 2017 Agricultural Census, out of the 2,420 potato 
farms with five or more harvested acres, 2,030 farms (84 percent) 
harvested 749 or fewer acres, very close to the 751 or fewer acres in 
the previous computation. Based on these computations, and assuming a 
normal distribution, a large majority of potato farms paying 
assessments to the Board are small businesses according to SBA 
criteria.
    As noted above, the SBA threshold size for a small agricultural 
service business is $34 million in annual sales. The Board estimate of 
the number of potato handlers in 2021 was 955. Dividing the $5.07 
billion NASS crop revenue estimate by 955 yields an annual estimate of 
potato sales per handler of approximately $5.3 million (farm level 
value), which is well below $34 million, the SBA threshold size for a 
small agricultural service business.
    Potato handlers perform various procedures to get the potatoes to 
market, including grading, sorting, packaging, and shipment. What 
handlers are paid can be estimated by obtaining an annual average 
shipping point price for potatoes from AMS Market News. AMS shipping 
point prices capture the prices received by shippers (handlers) after 
buying potatoes from growers, and then grading, sorting, packaging, and 
shipping. The 2022 average AMS shipping point price received for 
potatoes ($0.20 per pound) is 55 percent higher than the 2022 average 
annual NASS price of $0.129 per pound received by growers. Adding 55 
percent to the $5.3 million potato sales per handler at the farm level 
yields an estimate of $8.2 million average annual sales at the handler 
level, which is also well below the SBA small business threshold size 
of $34 million or less in annual sales. Assuming a normal distribution, 
a majority of potato handlers are small agricultural service 
businesses, according to SBA criteria.
    Based on a review of 2022 potato import data from U.S. Customs and 
Border Protection, there were approximately 140 importers. Of those 140 
importers, 130 (93 percent) had potato imports valued at $34 million or 
less, the SBA size threshold for small agricultural service firms. 
Therefore, 130 potato importers are small businesses in terms of potato 
import value, using SBA business size criteria.
    This proposal would amend Sec. Sec.  1207.320, 1207.321, 1207.322, 
1207.325, and 1207.503, and suspend Sec.  1207.507. The changes would 
modify the membership of the Board by revising the formula to determine 
the number of seats on the Board and reducing the maximum number of 
importer seats on the Board. The changes would also indefinitely 
suspend the Administrative Committee, clarify the start date of the 
term of office of Board members, and modernize the Board's voting and 
balloting procedures.
    This proposed rule would not impose any new costs on producers, 
handlers, or importers. This proposal would also not impose any 
additional reporting, recordkeeping, or information collection 
requirements on affected entities. The proposed changes are 
administrative in nature and would allow the Board to more effectively 
carry out the requirements of the Plan while potentially reducing costs 
and increasing participation. With these

[[Page 60602]]

changes, fewer individuals would be required to attend meetings, 
reducing the time burden and costs associated with traveling and 
attending meetings. Further, modernizing the Board's procedures to 
authorize additional methods for casting votes and ballots could help 
increase participation.
    The Board considered taking no action and continuing to experience 
significant membership vacancies. The Board decided against this option 
because vacancies have become pervasive. Therefore, these alternatives 
were rejected.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. USDA has not 
identified any relevant Federal rules that duplicate, overlap, or 
conflict with this proposed 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.
    Regarding outreach efforts, all the Board's meetings, including the 
March 9, 2022, meeting during which the Board recommendations relevant 
to this action were discussed, are open to the public and interested 
persons are invited to participate and express their views. No concerns 
were raised in these meetings about the changes proposed in this 
document.
    We have performed this initial regulatory flexibility analysis 
regarding the impact of this proposed action on small entities, and we 
invite comments concerning potential effects of this action on small 
businesses.
    While this proposed rule as set forth below has not yet received 
the approval of USDA, it has been determined that it is consistent with 
and would effectuate the purposes of the Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received in response to 
this proposed rule will be considered prior to finalizing this action.

List of Subjects in 7 CFR Part 1207

    Advertising, Agricultural research, Potatoes, Reporting and 
recordkeeping requirements.

    For the reasons stated in the preamble, the Agricultural Marketing 
Service proposes to amend 7 CFR part 1207 as follows:

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

0
1. The authority citation for 7 CFR part 1207 continues to read as 
follows:

    Authority:  7 U.S.C. 2611-2627; 7 U.S.C. 7401.

0
2. Amend Sec.  1207.320 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  1207.320  Establishment and membership.

* * * * *
    (b) Producer membership upon the Board shall be determined on the 
basis of the potato production reported in the latest Crop Production 
Annual Summary Report issued by the National Agricultural Statistics 
Service of the U.S. Department of Agriculture. If a State's potato 
production data is not provided by the National Agricultural Statistics 
Service, the Board may use an alternative data source that reliably 
reflects potato production in the United States. Unless the Secretary, 
upon recommendation of the Board, determines an alternate basis, for 
each 10 million hundredweight of such production, or major fraction 
thereof, produced within each State, such State shall be entitled to 
one member. However, each State shall initially be entitled to at least 
one member.
    (c) The number of importer member positions on the Board shall be 
based on the hundredweights of potatoes, potato products equivalent to 
fresh potatoes, and seed potatoes imported into the United States but 
shall not exceed two importer members. Unless the Secretary, upon 
recommendation of the Board, determines an alternate basis, there shall 
be one importer member position for each 10 million hundredweight, or 
major fraction thereof, of potatoes, potato product equivalents, and 
seed potatoes imported into the United States.
* * * * *
0
3. Amend Sec.  1207.321 by revising paragraph (a) to read as follows:


Sec.  1207.321  Term of office.

    (a) The term of office of Board members shall be 3 years, beginning 
March 1, or such other beginning date as may be approved pursuant to 
regulations.
* * * * *
0
4. Amend Sec.  1207.322 by revising paragraph (d) to read as follows:


Sec.  1207.322  Nominations and appointment.

* * * * *
    (d) The importer members shall be nominated by importers of 
potatoes, potato products and/or seed potatoes. The number of importer 
members on the Board shall be announced by the Secretary and shall not 
exceed two members. The Board may call upon organizations of potato, 
potato products and/or seed potato importers to assist in nominating 
importers for membership on the Board. If such organizations fail to 
submit nominees or are determined by the Board to not adequately 
represent importers, then the Board may conduct meetings of importers 
to nominate eligible importers for Board member positions. In 
determining if importer organizations adequately represent importers, 
the Board shall consider:
    (1) How many importers belong to the association;
    (2) What percentage of the total number of importers is represented 
by the association;
    (3) Is the association representative of the potato, potato 
product, and seed potato import industry;
    (4) Does the association speak for potato, potato product, and seed 
potato importers; and
    (5) Other relevant information as may be warranted.
* * * * *
0
5. Amend Sec.  1207.325 by revising paragraph (c) to read as follows:


Sec.  1207.325  Procedure.

* * * * *
    (c) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and for matters of an emergency 
nature when there is not enough time to call an assembled meeting, the 
Board may act upon a majority of concurring votes of its members cast 
by mail, telephone, electronic mail, facsimile, or any other means of 
communication. Any vote cast by telephone shall be confirmed promptly 
in writing.
0
6. Amend Sec.  1207.503 by revising paragraphs (a), (b), and (c) to 
read as follows:


Sec.  1207.503  Nominations.

    (a) Pursuant to Sec.  1207.322 of the plan, the Board shall assist 
producers in producing sections or States each year to nominate 
producer members for the Board. Such nominations may be conducted at 
meetings or with ballots submitted by mail, electronic mail, facsimile, 
or any other means of communication. One individual shall be nominated 
for each position to become vacant. A list of nominees shall be 
submitted to the Secretary for consideration by November 1 of each 
year.
    (b) Pursuant to Sec.  1207.322 of the plan, the Board shall assist 
importers each year to nominate importer members for

[[Page 60603]]

the Board. Such nominations may be conducted at meetings or with 
ballots submitted by mail, electronic mail, facsimile, or any other 
means of communication.
    (c) Nomination meetings or balloting by mail, electronic mail, 
facsimile, or any other means of communication shall be well publicized 
with notice given to producers, importers, and the Secretary at least 
10 days prior to each meeting or distribution of ballots.
* * * * *


Sec.  1207.507  [Stayed]

0
7. Stay Sec.  1207.507 indefinitely.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-19003 Filed 9-1-23; 8:45 am]
BILLING CODE 3410-02-P