Vegetables; Import Regulations; Removal of Banana and Fingerling Types of Potatoes and Exemption of Potatoes for Potato Salad From the Potato Import Regulation

SUMMARY: This proposed rule would remove banana/fingerling potatoes

from the provisions of the potato import regulation (import

regulation). Such potatoes cannot now be imported because they are too

small or misshapen to meet the minimum requirements under the import

regulation. Removing banana/fingerling potatoes from the potato import

regulation would allow such potatoes, which do not compete with

potatoes currently regulated under Federal marketing orders, to be

imported for specialized markets. This proposed rule also would

reclassify potatoes used to make fresh potato salad as potatoes for

processing. Such potatoes would then be exempt from the grade, size,

quality, and maturity requirements of the potato import regulation.

DATES: Comments must be received by January 22, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule. Comments must be sent in triplicate to

the Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S,

P.O. Box 96456, Washington, DC 20090-6456; Fax number (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: Robert F. Matthews, Marketing

Specialist, Marketing Order Administration Branch, F&V, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; Telephone: (202)

690-0464; Fax number: (202) 720-5698. Small businesses may request

information on compliance with this proposed regulation by contacting:

Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-

6456; Telephone: (202) 720-2491; Fax number: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposal to change the potato import

regulation (7 CFR 980.1; 61 FR 13051, March 26, 1996) is issued under

section 8e of 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 rule in

conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This proposed rule is not intended to have

retroactive effect. This proposed rule would not preempt any State or

local laws, regulations, or policies, unless they present an

irreconcilable conflict with this rule. There are no administrative

procedures which must be exhausted prior to any judicial challenge to

the provisions of this proposed rule.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), 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. There are approximately

62 importers of potatoes who would be affected by this proposal. Small

agricultural service firms, which include potato importers, have been

defined by the Small Business Administration (13 CFR 121.601) as those

having annual receipts of less than $5,000,000. The majority of potato

importers may be classified as small entities.

Import regulations issued under the Act are based on regulations

established under Federal marketing orders which regulate the handling

of domestically produced products. Thus, this proposed rule should

impact on both small and large business entities in a manner comparable

to rules issued under marketing orders.

This rule proposes to remove banana/fingerling types of potatoes

from the minimum grade, size, quality, and maturity provisions of the

potato import regulation. These potatoes cannot now be imported because

they cannot meet the minimum size or shape requirements under the

import regulation. Removing banana/fingerling potatoes from the minimum

requirements of the import regulation would allow such potatoes, which

do not compete with potatoes currently regulated under Federal

marketing orders, to be imported for specialized markets. Most

importers of these potatoes are small business entities that would

benefit from being able to import and sell such potatoes.

Reclassifying potatoes imported for use in the preparation of fresh

potato salad as potatoes for processing will benefit importers, both

large and small. The importers of such potatoes will be subject only to

a form filing requirement necessary for the Department to determine

that the potatoes are used for their intended purpose. The form filing

requirement is specified in Sec. 980.501 (OMB No. 0581-0167).

Therefore, the AMS has determined that this proposal would not have

a significant economic impact on a substantial number of small

entities.

Section 8e of the Act provides that whenever certain specified

commodities, including potatoes, are regulated under a Federal

marketing order, imports of that commodity into the United States are

prohibited unless they meet the same or comparable grade, size,

quality, and maturity requirements. Section 8e also provides that

whenever two or more marketing orders regulate the same commodity

produced in different areas of the United States, the Secretary shall

determine with which area the imported commodity is in most direct

competition and apply regulations based on that area to the imported

commodity.

[[Page 67500]]

The Secretary has determined that imported potatoes are in most

direct competition with potatoes grown in designated counties in Idaho

and Oregon, the States of Washington, Colorado, and in designated

counties in North Carolina and Virginia. Additionally, the Secretary

has found that the minimum grade, size, quality, and maturity

requirements for certain types of potatoes imported during specified

periods should be the same as those established under the various

marketing orders in effect.

Marketing Order No. 945 (7 CFR part 945) regulates the handling of

potatoes grown in designated counties of Idaho and Eastern Oregon; all

long types of potatoes imported into the U.S. must meet the minimum

grade, size, quality, and maturity requirements established under this

marketing order all year. Marketing Order No. 946 (7 CFR part 946)

regulates the handling of potatoes grown in the State of Washington;

imported round red potatoes must meet the requirements established

under this order during the July through September period each year.

Marketing Order No. 948 (7 CFR part 948) regulates the handling of

potatoes grown in Colorado; imported round red potatoes must meet the

requirements established under this order during the October through

the following June period each season, and imported round white

potatoes during the August through the following June 4 period each

season. Marketing Order No. 953 (7 CFR part 953) regulates the handling

of potatoes grown in designated counties in Virginia and North

Carolina; imported round white potatoes must meet the requirements

established under this order during the June 5 through July 31 period

each year.

The Department has been asked by an importer to remove small white

and non-white fleshed varieties of potatoes, known to the trade as

banana or fingerling potatoes, from the requirements of the potato

import regulation.

These potatoes are much smaller and different in appearance from

the round red, round white, or long types of potatoes usually found in

the marketplace, and are different varieties, not just round or long

types that have not reached maturity. The Department had considered a

requirement for maximum size for these potatoes. After examining

samples of banana/fingerling potatoes provided by the importer and a

domestic producer, the Department concluded that limiting banana/

fingerling potatoes to a maximum size may not be an appropriate

criterion. However, such potatoes are frequently misshapen compared to

potato varieties produced commercially and have a significantly

different appearance than the usual commercial varieties.

Recent trends in consumer preferences have resulted in an

increasing demand for ``banana'' and ``fingerling'' type potatoes.

These have a ``niche'' market as a ``gourmet'' item, and usually bring

a much higher price than the potatoes usually found in the marketplace.

Removing genetically different varieties of potatoes, such as

``banana'' and ``fingerling'' types, both white and non-white fleshed,

from the potato import regulation would recognize that these potatoes

do not compete directly with the major commercial varieties regulated

under the various marketing orders.

Compliance procedures for banana/fingerling potatoes would be

similar to those currently used for the importation of certified seed

potatoes. Two alternatives to this proposed rule were considered. The

first would have classified the banana/fingerling potatoes as

tablestock potatoes, and the second alternative would have required

importers to submit Exempt Commodity Form FV-6 to the U.S. Customs

Service and to the Department, and receivers to complete the third part

of the FV-6 and return it to the Department. Both of these alternatives

were rejected with the proposed rule considered to be the most

practicable and least burdensome alternative.

On March 26, 1996, the Department revised the potato import

regulation (61 FR 13051; March 26, 1996). Among other things, the final

rule stated that potatoes offered for importation for use in the

preparation of fresh potato salad would be considered as a fresh use,

and, therefore, not be exempt from the grade, size, quality, and

maturity requirements of the potato import regulation.

Since publication of that rule, the Department has determined that

the marketing orders for domestically produced potatoes Nos. 945

(Idaho-Eastern Oregon), 946 (Washington), 947 (Oregon-Northern

California), 948 (Colorado), and 953 (Southeastern States), define

``other processing'' as the preparation of potatoes for market which

involves the application of heat or cold to such an extent that the

natural form or stability of the commodity undergoes a substantial

change. In the preparation of fresh potato salad, the potatoes are

boiled prior to being mixed with the other ingredients. Therefore,

potatoes shipped under these orders for processing into fresh potato

salad are exempt from minimum grade, size, quality, and maturity

requirements established under the orders. Potatoes imported for that

use also should be exempt from the grade, size, quality, and maturity

requirements of the potato import regulation. Appropriate changes are

proposed to exempt such potatoes from all such requirements. Importers

of such potatoes would be subject to FV-6 form filing requirements to

assure that any potatoes imported for use in the preparation of fresh

potato salad were properly used. The form filing requirements are

specified in section 980.501.

A minor editorial change is proposed to be made to recognize that

the U.S. Bureau of Customs is now called the U.S. Customs Service.

In accordance with section 8e of the Act, the U.S. Trade

Representative has concurred with the issuance of this proposed rule.

A 30-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 980

Food grades and standards, Imports, Marketing agreements, Onions,

Potatoes, Tomatoes.

For the reasons set forth in the preamble, 7 CFR part 980 is

proposed to be amended as follows:

PART 980--VEGETABLES; IMPORT REGULATIONS

1. The authority citation for 7 CFR part 980 continues to read as

follows:

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

2. In Sec. 980.1, paragraph (b) introductory text is revised and

paragraphs (h)(1) and (h)(2) are redesignated as paragraphs (i) and (j)

and revised, to read as follows:

Sec. 980.1 Import regulations; Irish potatoes.

* * * * *

(b) Grade, size, quality, and maturity requirements. The

importation of Irish potatoes, except banana/fingerling potatoes and

certified seed potatoes, shall be prohibited unless they comply with

the following requirements.

* * * * *

(i) Definitions. (1) For the purpose of this part, potatoes meeting

the requirements of Canada No. 1 grade and Canada No. 2 grade shall be

deemed to comply with the requirements of the U.S. No. 1 grade and U.S.

No. 2 grade, respectively, and the tolerances for size as set forth in

the U.S. Standards for Potatoes (Secs. 51.1540 to 51.1566, inclusive of

this title) may be used.

(2) Importation means release from custody of the U.S. Customs

Service.

[[Page 67501]]

(3) Banana/fingerling potatoes means various varieties of potatoes

which, when mature, have a significantly different shape from normal

commercial varieties of potatoes to the extent that they may be

seriously misshapen as set forth in the U.S.Standards for Grades of

Potatoes, Secs. 51.1540 through 51.1566.

(j) Exemptions. The grade, size, quality, and maturity requirements

of this section shall not be applicable to potatoes imported for

canning, freezing, other processing, livestock feed, charity, or

relief, but such potatoes shall be subject to the safeguard provisions

contained in section 980.501. Processing includes canning, freezing,

dehydration, chips, shoestrings, starch, cooking the potatoes for use

in fresh potato salad, and flour. Processing does not include potatoes

that are only peeled, or cooled, sliced, diced, or treated to prevent

oxidation.

Dated: December 17, 1996.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 96-32514 Filed 12-20-96; 8:45 am]

BILLING CODE 3410-02-P