Regulation Governing the Fresh Irish Potato Diversion Program, 1996 Crop

DEPARTMENT OF AGRICULTURE

Agriculture Marketing Service

7 CFR Part 80

[FV-97-80-01]

Regulation Governing the Fresh Irish Potato Diversion Program,

1996 Crop

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim rule sets forth the terms of the Fresh Irish

Potato Diversion Program for the 1996 crop pursuant to clause (2) of

section 32 of the Act of August 24, 1935, as amended. The program will

assist fresh Irish potato growers faced with oversupplies and low

prices by diverting potatoes to charitable institutions, and to

livestock feed.

DATES: This rule is effective May 29, 1997. Comments must be received

by July 2, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this action to: Susan Proden, Acting Chief, Commodity

Procurement Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box

96456, room 2548--South Building, Washington, DC 20090-6456. All

written submissions made pursuant to this rule will be made available

for public inspection in room 2548--South Building, USDA, between the

hours of 8:00 a.m. and 4:30 p.m. Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Sandra Gardei, Assistant Branch Chief,

room 2548--South Building, USDA or call (202) 720-6391.

SUPPLEMENTARY INFORMATION:

Regulatory Requirements

This interim final rule has been reviewed under USDA procedures

established in accordance with Executive Order 12291 and Departmental

Regulation No. 1512-1 and has been designated as ``nonmajor''. It has

been determined that this rule will not result in: (1) An annual effect

on the economy of $100 million or more; (2) A major increase in costs

or prices for consumers, individual industries, federal, state or local

governments, or geographical regions; or (3) significant adverse

effects on competition, employment, investment, productivity,

innovation, or the ability of United States based enterprises in

domestic or export markets.

Executive Order 12778

This interim rule has been reviewed under USDA procedures

established in accordance with Executive Order 12778 Civil Justice

Reform. The provisions of the interim rule do not preempt state law and

are not retroactive. Before any judicial action may be brought

regarding the provisions of this interim rule the appeal and mediation

procedure in 7 CFR part 780 must be exhausted.

Paperwork Reduction Act

Information collection requirements contained in this (part,

subpart) have been approved by the Office of Management and Budget

(OMB) in accordance with the provisions of 44 U.S.C. chapter 35, and

have been assigned OMB control numbers 0560-0145.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility

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

(AMS) has determined that this action will not have a significant

economic impact on a substantial number of 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 disproportionally burdened. The Small Business Administration

(13 CFR 121.1) has defined small agricultural producers as those having

annual gross revenue for the last three years of less than $500,000,

and small agricultural service firms are defined as those whose gross

annual receipts are less than $5,000,000. Because there is a

preponderance of entities shipping fresh Irish potatoes that meet these

gross revenue limitations it is anticipated that the majority of the

program participants could be classified as small entities without

substantial regulatory restriction. Therefore the provisions of the RFA

are not applicable and no Regulatory Flexibility analysis is required.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372, which requires intergovernmental consultation with state and

local officials. See the Notice related to 7 CFR part 3015, subpart V.

Published at 4 FR 29115 (June 24, 1983).

Unfunded Mandates

The provisions of the Unfunded Mandates Reform Act of 1995 are not

applicable to this rule because AMS is not required by 5 U.S.C. 553 or

any other provision of the law to publish a notice of proposed

rulemaking with respect to the subject matter of this rule.

Interested parties are invited to submit comments with respect to

this action. However, pursuant to 5 U.S.C. 553, it is found and

determined that, upon good cause, it is impracticable, unnecessary and

contrary to the public interest to give notice prior to putting this

rule into effect, and that good cause exists for not postponing the

effective date of this action until 30 calendar days after publication

in the Federal Register because marketing is in process, the commodity

is perishable, and program effectiveness would be adversely affected by

undue delay. The crop is in the process of being sent to market and for

a diversion to occur the rule must be made effective immediately.

Written comments may be submitted within 30 calendar days of the

publishing of the rule in the Federal Register and will be considered

when the rule is made final.

Executive Order 12612

It has been determined that this rule does not have sufficient

federalism implications to warrant the preparation of a Federalism

Assessment. The provisions contained in this rule will not have a

substantial direct effect on States or their political subdivisions, or

on the distribution of power and responsibilities among the various

levels of government.

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Background

Clause (2) of section 32 of the Act of August 24, 1935, as amended

(7 U.S.C. 612c) authorizes the Secretary of Agriculture to ``encourage

the domestic consumption of such [agricultural] commodities or products

by diverting them, by the payment of benefits or indemnities or by

other means, from the normal channels of trade and commerce * * *.''

Section 32 also authorizes the Secretary to use section 32 funds ``at

such times, in such manner, and in such amounts as the Secretary of

Agriculture finds will effectuate substantial accomplishment of any one

or more of the purposes of this section.'' Furthermore,

``determinations by the Secretary as to what constitutes diversion, and

what constitutes normal channels of trade and commerce, and what

constitutes normal production for domestic consumption shall be

final.''

According to crop storage reports, on May 1, 1997, fresh white

Irish potatoes and russet potatoes stored in 15 states were 32 percent

above the stocks on May 1, 1996. Storage reports for May 1, 1997,

indicate that the production of fresh Irish potatoes is up 65 percent

from the same period in 1996. Based on these statistics and other

market factors, the Secretary has determined that the fresh Irish

potato 1996 crops are in surplus supply and that the domestic

consumption of such potatoes will be encouraged by using section 32

funds to divert the fresh Irish potatoes from the normal channels of

trade and commerce under a Fresh Irish Potato Diversion Program. This

fresh Irish potato diversion program encompasses all types and

varieties of potatoes (except sweet potatoes) of U.S. Grade No. 2

(fairly clean) and U.S. Grade No. 2 Processing, including varieties

commonly used for processing, chipping and table stock. Due to a need

for expediency in implementing the Fresh Irish Potato Diversion Program

and concern about undue delay in conducting environmental analysis and

impact studies on composting, this program is limited to charitable

institutions and livestock feed.

The price established for fresh Irish potatoes destined for animal

feed will include all costs including transportation. The price

established for fresh Irish potatoes destined for use by charitable

institutions will cover all costs except transportation. USDA will

arrange and pay for the transportation costs between the grower and the

charitable institution because it is in a better position than the

grower to efficiently and effectively match the grower with the

charitable institutions already identified by USDA.

List of Subjects in 7 CFR Part 80

Administrative practice and procedures, Agriculture, Agricultural

commodities, Reporting and record keeping requirements.

For the reasons set forth in the preamble, 7 CFR part 80 is amended

as follows:

1. In Part 80, Subpart A is revised to read as follows:

PART 80--FRESH IRISH POTATO DIVERSION PROGRAM

Subpart A--Fresh Irish Potato--Diversion Program

Sec.

80.1 Applicability.

80.2 Administration.

80.3 Definitions.

80.4 Length of program.

80.5 Rate of payment.

80.6 Eligibility for payment.

80.7 Application and approval for participation.

80.8 Inspection and certificate of diversion.

80.9 Claim for payment.

80.10 Compliance with program provisions.

80.11 Inspection of premises.

80.12 Records and accounts.

80.13 Offset and assignment.

80.14 Appeals.

Authority: 7 U.S.C. 612c.

Subpart A--Fresh Irish Potato--Diversion Program

Sec. 80.1 Applicability.

In order to encourage the domestic consumption of the 1996 crop of

fresh Irish potatoes by diverting them from normal channels of trade

and commerce, the Secretary of Agriculture, pursuant to the authority

conferred by section 32 of the Act of August 24, 1935, as amended (7

U.S.C. 612c) (Section 32), will make payment to producers who divert

fresh Irish potatoes that they produced by donating them to charitable

institutions for human consumption or by using such fresh Irish

potatoes as livestock feed in accordance with the terms and conditions

set forth herein.

Sec. 80.2 Administration.

The program will be administered under the general direction and

supervision of the Director, Fruit and Vegetable Division, Agricultural

Marketing Service (AMS), United States Department of Agriculture

(USDA), and will be implemented by the Farm Service Agency (FSA). AMS,

FSA, or their authorized representatives do not have authority to

modify or waive any of the provisions of this subpart.

Sec. 80.3 Definitions.

Application means Form FSA-117.

Charitable institutions means those organizations which offer food,

housing, and other necessities to low income, homeless, or other

persons in need of assistance in obtaining basic sustenance.

Diversion means the delivery of potatoes to an eligible outlet.

Eligible outlet means charitable institutions or livestock feeding

operations.

Fresh Irish Potatoes means the 1996 crop of all types and varieties

of potatoes (except sweet potatoes) fit for human consumption and

produced and stored in the United States.

Invoice and certificate of inspection and diversion means Form FSA-

118.

Producer means an individual, partnership, association, or

corporation located in the United States who grows potatoes for market

and is in possession of such potatoes as of the date of May 29, 1997,

and whose Form FSA-117 has been approved by USDA.

Sec. 80.4 Length of program.

This program will be effective May 29, 1997, and will continue

until July 28, 1997. Producers diverting potatoes to charitable

institutions must file an application at the FSA office responsible for

the county in which the farm is located for FSA purposes within the

first ten Federal Government business days following the effective date

of this program. Producers diverting potatoes to livestock feed must

file an application at such office no later than July 28, 1997.

Sec. 80.5 Rate of payment.

(a) The rate of payment for potatoes for charitable institutions

will be $1.50 per hundredweight for fresh Irish potatoes. All eligible

fresh Irish potatoes intended for donation to charitable institutions

must: Meet U.S. Grade No. 2 (fairly clean) requirements as certified by

the AMS or the Federal-State Inspection Service; be in a quantity of

40,000 pounds net or a multiple of 40,000 pounds net; be in 50 pound

bags or cases and be palletized. Only transportation costs associated

with donations to charitable institutions may be arranged for and paid

by USDA. USDA will make no other payment with respect to such potatoes.

(b) Livestock feed payments will be $.75 per hundredweight for U.S.

Grade No. 2 Processing potatoes when whole as certified by AMS or the

Federal-State Inspection Service. Payment will not be made for any

fractional part of a hundredweight not meeting grade requirements. All

arrangements and costs for: U.S. grading and inspection;

[[Page 29651]]

processing, and transportation, as well as identifying the livestock

feed recipient will be included in the $.75 per hundredweight payment.

USDA will make no other payment with respect to such potatoes.

Sec. 80.6 Eligibility for payment.

(a) To the extent applications for payment do not exceed $9

million, payments will be made under this program to any producer of

fresh Irish potatoes who:

(1) Provides fresh Irish potatoes that are free from any water

damage and:

(i) If intended for human consumption, meet the requirements of 7

CFR 51.1540-51.3006 U.S. Grade No. 2 (fairly clean); or

(ii) If intended for livestock feed, meet the requirements of 7 CFR

51.3410-51.3418 U.S. Grade No. 2 Processing when whole, and are cut,

chopped sliced, gouged, crushed, ensiled, or cooked to the degree that

the potatoes are readily and obviously identifiable as having been

rendered unsuitable to enter into normal channels of trade and commerce

as determined by FSA or its representative;

(2) Executes and files Form FSA-117 with the FSA county office

responsible for the county where the producer's farm is located for FSA

program purposes;

(3) Receives approval for their application;

(4) Completes form FSA-118 and whose fresh Irish potatoes are

shipped in accordance with this regulation;

(5) Diverts fresh Irish potatoes after the date the Form FSA-117 is

approved by USDA before July 28, 1997.

(6) Files a claim as provided in Sec. 80.10; and

(7) Complies with all other terms and conditions in this subpart.

(b) In the event applications for participation in the program

authorized by this subpart exceed $9 million, USDA shall, at its sole

discretion, determine which applications to accept.

Sec. 80.7 Application and approval for participation.

(a) The applications will be reviewed by the FSA in the order shown

on the FSA register located at the respective FSA county office and

will be approved taking into account the availability of funds, for

each method of diversion;

(b) An approved Form FSA-117 may be modified or amended with the

consent of the applicant and the duly authorized representative of AMS

or FSA provided that such modification or amendment does not conflict

with the provisions of this subpart; and

(c) Copies of the applicable U.S. grade standards and the

application for participation in the Fresh Irish Potato Diversion

Program can be obtained from the local county FSA office.

Sec. 80.8 Inspection and certificate of diversion.

Prior to diversion of potatoes to a charitable institution, the

fresh Irish potatoes must be inspected by an inspector authorized or

licensed by the USDA to inspect and certify the class, quality, and

condition of fresh Irish potatoes. The producer will be responsible for

requesting and arranging for inspection. For charitable institutions

the product must be Positive Lot Identification (PLI) or certified by

USDA grading personnel at time of loading. With respect to potatoes

diverted for livestock feed, the producer must furnish to FSA such

scale tickets, weighing facilities, or volume measurements as

determined by the inspector to be necessary for ascertaining the net

weight of the potatoes being diverted.

Sec. 80.9 Claim for payment.

(a) In order to obtain payment for shipments to charitable

institutions, the producer must submit to the county FSA office which

approved the application: a properly executed Form FSA-118; a copy of

the Notice to Deliver sent from FSA, Kansas City Commodity Office,

Kansas City, Missouri; a bill of lading showing shipment was made. All

such claims must be filed no later than 30 days after the termination

date specified in the applicable approved application. For those

potatoes which fail to meet the definition of fresh Irish potatoes

provided in Sec. 80.3 or the eligibility requirements of Sec. 80.6, the

producer may request an appeal inspection; however, payment of the

truck detention and storage charges will be the responsibility of the

producer.

(b) Livestock feed payments will be based on the percentage of the

offered fresh Irish potatoes meeting U.S. Grade No. 2 Processing. In

order to obtain payment the producer must submit to the county FSA

office which approved the application a properly executed FSA-118, and

a livestock feed recipient delivery receipt indicating hundredweight

received, the date and name, address, and telephone number of the

recipient.

Sec. 80.10 Compliance with program provisions.

If USDA determines that any provisions of the application or of

these regulations has not been complied with, whether by the producer,

charitable institution, or livestock feeder, or that any quantity of

fresh Irish potatoes diverted under this program was not used

exclusively for donation to charitable institutions or livestock

feeders (whether such failure was caused directly by the producer or by

any other person or persons), the producer will not be entitled to

diversion payments in connection with such fresh Irish potatoes, must

refund any USDA payment made in connection with such fresh Irish

potatoes, and will also be liable to USDA for any other damages

incurred as a result of such failure to use the fresh Irish potatoes

exclusively for donation to charitable institutions or for use as

livestock feed. The USDA may deny any producer the right to participate

in this program or the right to receive payments in connection with any

diversion previously made under this program, or both, if USDA

determines that:

(a) The producer has failed to use or caused to be used any

quantity of fresh Irish potatoes diverted under this program

exclusively for donation to charitable institutions or livestock feed,

whether such failure was caused directly by the producer or by any

other person or persons;

(b) The producer has not acted in good faith in connection with any

transaction under this program; or

(c) The producer has failed to discharge fully any obligation

assumed by him under this program.

Sec. 80.11 Inspection of premises.

The producer, charitable institution, or livestock feeder must

permit authorized representatives of USDA, at any reasonable time, to

have access to their premises to inspect and examine such fresh Irish

potatoes as are being diverted or stored for diversion, and to inspect

and examine the facilities for diverting fresh Irish potatoes to

determine compliance with the provisions of this program.

Sec. 80.12 Records and accounts.

The producer, charitable institution, or livestock feeder

participating in this program must keep accurate records and accounts

showing the details relative to the diversion and livestock feeding of

the fresh Irish potatoes. The producer, charitable institution, or

livestock feeder must permit authorized representatives of USDA and the

General Accounting Office at any reasonable time to inspect, examine,

and make copies of such records and accounts to determine compliance

with provisions of this program; such records and accounts must be

retained for three years after the date of last payment to the producer

under the program, or for two years after

[[Page 29652]]

date of audit of records by USDA as provided herein, whichever is the

later.

Sec. 80.13 Offset and assignment.

(a) Except as provided in paragraph (b) of this section, below, any

payment or portion thereof due any person shall be allowed without

regard to questions of title under state law, and without regard to any

claim or lien against the crop or proceeds thereof in favor of the

owner or any other creditor, except for statutory liens belonging to

agencies of the U.S. Government. The regulations governing offsets and

withholdings found at 7 CFR part 3 shall be applicable to such

payments.

(b) Assignments. Assignments will be done in accordance with Form

FSA-117.

Sec. 80.14 Appeals.

Appeals under this part will be in accordance with 7 CFR part 780.

Dated: May 28, 1997.

Lon Hatamiya,

Administrator.

[FR Doc. 97-14273 Filed 5-29-97; 8:45 am]

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