Irish Potatoes Grown in Washington; Establishment of Interest Charge on Overdue Assessment Payments and Clarification of Operating Reserve Authority

SUMMARY: This proposed rule would establish an interest charge on

overdue assessments under the marketing order and clarify authority for

an operating reserve not to exceed approximately two fiscal periods'

expenses. This proposed rule would contribute to the efficient

operation of the order by ensuring that adequate funds are available to

cover authorized expenses incurred under the order. This proposed rule

was recommended by the State of Washington Potato Committee

(Committee), the agency responsible for the local administration of the

order.

DATES: Comments must be received by May 3, 1995.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments must be sent in triplicate to the

Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525, South

Building, P.O. Box 96456, Washington, D.C. 20090-6456, Fax: (202) 720-

5698. All comments should reference the docket number and the date and

page number of this issue of the Federal Register and will be made

available for public inspection in the Office of the Docket Clerk

during regular business hours.

FOR FURTHER INFORMATION CONTACT: Dennis L. West, Northwest Marketing

Field Office, Marketing Order Administration Branch, Fruit and

Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,

Portland, Oregon 97204-2807; telephone: (503) 326-2724; or James B.

Wendland, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, D.C.

20090-6456; telephone: (202) 720-2170.

SUPPLEMENTARY INFORMATION: This rule is proposed under Marketing

Agreement No. 113 and Marketing Order No. 946 (7 CFR part 946), both as

amended, regulating the handling of Irish potatoes grown in Washington,

hereinafter referred to as the ``order.'' The order is authorized by

the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.

601-674), hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this proposed

rule in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12778,

Civil Justice Reform. It is not intended to have retroactive effect. If

adopted, the proposed rule would not preempt any State or local laws,

regulations, or policies, unless they present an irreconcilable

conflict with the proposal.

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 the Secretary of

Agriculture (Secretary) 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 the

Secretary 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 in equity to review the Secretary's ruling

on the petition, provided a bill in equity is filed not later than 20

days after the date of the entry of the ruling.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this action on small

entities.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. Marketing orders issued

pursuant to the Act, and rules issued thereunder, are unique in that

they are brought about through group action of essentially small

entities acting on their own behalf. Thus, both statutes have small

entity orientation and compatibility.

There are approximately 50 handlers of Washington potatoes subject

to regulation under the order and approximately 450 producers of

Washington potatoes in the regulated production area. Small

agricultural service firms have been defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts of less

than $5,000,000, and small agricultural producers are defined as those

whose annual receipts are less than $500,000. The majority of potato

handlers and producers regulated under the order may be classified as

small entities.

This proposed rule would (1) establish an interest charge of one

(1) percent per month to be applied to any assessment balance remaining

unpaid after 30 days, and (2) clarify that funds in the operating

reserve may not exceed approximately two fiscal periods' expenses.

These proposed changes were recommended by the Committee at its

February 22, 1995, meeting. Thirteen of the 15-member Committee

attended the meeting. All in attendance favored the proposed changes.

The proposed changes would contribute to the efficient operation of the

program by ensuring that adequate funds are available to cover the

Committee's authorized expenses.

Section 946.41 of the order specifies that if handlers do not pay

their assessments within the time prescribed by the Committee, the

assessments may be increased by a late payment charge or an interest

charge, or both, at rates prescribed by the Committee with the approval

of the Secretary.

The Committee depends upon handler assessment payments for

operating funds. Handlers are invoiced by the Committee on a monthly

basis. However, some handlers are continually late with their

assessment payments, and a few wait until the end of the

[[Page 19383]] season to remit to the Committee what is owed. When

assessments are not paid in a timely manner, the handlers paying

assessments on time are placed in an unfair situation compared with the

delinquent handlers, who have use of that unpaid assessment money for

other purposes, including earning interest in a financial institution.

As part of its collection efforts, the Committee has requested

handlers to promptly submit delinquent assessment payments. However,

such requests have not substantially decreased the frequency of

delinquent payments. To facilitate the collection of assessments needed

for the maintenance and functioning of the Committee, it recommended

the establishment of an interest charge of one (1) percent per month to

be applied to any assessment balance remaining unpaid after 30 days,

and that this one (1) percent interest charge shall be applied monthly

thereafter to the unpaid balance, including any accumulated unpaid

interest. The Committee believes that these charges are high enough to

encourage timely assessment payments. The charges are within the

interest range customarily charged by banks on commercial accounts.

This proposed change is intended to encourage handlers to pay their

assessments when due, thereby eliminating inequities. The Committee

believes that this would be an effective means to ensure timely

payments. This proposed change is expected to reduce the need for

Department involvement with compliance efforts and thereby reduce the

costs for the government to administer the order.

Effective June 5, 1972, Sec. 946.42 of the order was revised to

authorize the Committee to maintain an operating reserve not to exceed

approximately two fiscal periods' operational expenses, or such lower

limits as the Committee, with the approval of the Secretary, may

establish (37 FR 10915; June 1, 1972). Funds in the reserve are

available for use by the Committee for expenses authorized pursuant to

Sec. 946.40. Since June of 1972, the Committee has conducted its

financial operations with a reserve approximating two fiscal periods'

expenses and has not recommended a lower limit.

However, the proviso in paragraph (a) of Sec. 946.142 of Subpart--

Rules and Regulation's (7 CFR 946.100-946.142; 32 FR 16199; November

28, 1967) limiting the operating reserve to approximately one fiscal

year's expenses has never been updated to bring it into conformity with

amended paragraph (a) of Sec. 946.42 of the order. This proposed rule

proposes to make that conforming change by changing the words ``one

fiscal year's expenses'' at the end of the proviso to ``two fiscal

periods' expenses''.

Based on available information, the Administrator of the AMS has

determined that this action would not have a significant economic

impact on a substantial number of small entities.

A 15-day comment period is deemed appropriate to allow interested

persons to respond to this proposal. The Committee would like to impose

interest charges on delinquent handlers as soon as possible to

encourage such handlers to pay assessments in a timely manner. All

written comments received within the comment period will be considered

before a final rule is issued on this matter.

List of Subjects in 7 CFR Part 946

Marketing agreements, Potatoes, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, it is proposed that 7

CFR part 946 be amended as follows:

PART 946--IRISH POTATOES GROWN IN WASHINGTON

1. The authority citation for 7 CFR part 946 continues to read as

follows:

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

2. A new Sec. 946.141 is added to read as follows:

Sec. 946.141 Late payment and interest charge.

The Committee shall impose an interest charge on any handler who

fails to pay his or her assessment within thirty (30) days of the

billing date shown on the handler's assessment statement received from

the Committee. The interest charge shall, after 30 days, be one percent

of the unpaid assessment balance. In the event the handler fails to pay

the delinquent assessment, the one percent interest charge shall be

applied monthly thereafter to the unpaid balance, including any

accumulated unpaid interest. Any amount paid by a handler as an

assessment, including any charges imposed pursuant to this paragraph,

shall be credited when the payment is received in the Committee office.

3. In Sec. 946.142, paragraph (a) is revised to read as follows:

Sec. 946.142 Operating reserve.

(a) The Committee, with the approval of the Secretary, may carry

over excess funds into subsequent fiscal periods as an operating

reserve: Provided, That funds in the operating reserve may not exceed

approximately two fiscal periods' expenses.

* * * * *

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-9453 Filed 4-17-95; 8:45 am]

BILLING CODE 3410-02-P