Potato Research and Promotion Plan; Suspension of Portions of the Plan; Amendments of the Regulations Regarding Importers' Votes; and Clarification of Reporting Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[FV-96-703IFR]

Potato Research and Promotion Plan; Suspension of Portions of the

Plan; Amendments of the Regulations Regarding Importers' Votes; and

Clarification of Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule will suspend portions of the Potato Research and

Promotion Plan (Plan) that require National Potato Promotion Board

(Board) members be nominated at meetings, suspends obsolete provisions

in the Plan, amends the rules and regulations issued under the Plan to

provide for mail balloting as an alternative means of selecting

nominees for appointment, permits importer members of the Board to vote

on the basis of the volume of imported potatoes, and provides in the

rules and regulations that designated handlers must report to the Board

those potatoes of their own production for which the assessment has

been paid by another designated handler.

DATES: Effective September 3, 1997. Comments must be received by

November 3, 1997.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule to: Docket Clerk, Research and Promotion

Branch, Fruit and Vegetable Division, Agricultural Marketing Service,

USDA, STOP Code 0244, 1400 Independence Avenue, SW, Washington, DC

20250-0244, fax (202) 205-2800. Three copies of all written material

should be submitted. Comments will be made available for public

inspection at the Research and Promotion Branch during regular business

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

page number of this issue of the Federal Register.

FOR FURTHER INFORMATION CONTACT: Georgia C. Abraham, Research and

Promotion Branch, Fruit and Vegetable Division, AMS, USDA, STOP Code

0244, 1400 Independence Avenue, SW, Washington, DC 20250-0244;

telephone (202) 720-5057 or (888) 720-9917 (toll free).

SUPPLEMENTARY INFORMATION: This rule is issued under the Potato

Research and Promotion Plan (Plan) [7 CFR Part 1207]. The Plan is

authorized by the Potato Research and Promotion Act, as amended [7

U.S.C. 2611-2627], hereinafter referred to as the Act.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. It is not intended to have retroactive effect. This

rule will not preempt any state or local laws, regulations, or policies

unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 311 of the Act, a

person subject to a plan may file a petition with the Secretary of

Agriculture (Secretary) stating that such plan, any provision of such

plan, or any obligation imposed in connection with such plan is not in

accordance with law; and requesting a modification of the plan or an

exemption from the plan. Such person is afforded the opportunity for a

hearing on the petition. After the hearing, the Secretary will rule on

the petition. The Act provides that the district court of the United

States in any district in which such person is an inhabitant, or has

principal place of business, has jurisdiction to review the Secretary's

ruling on the petition, provided that a complaint is filed within 20

days after the date of entry of the ruling.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been determined not significant for purposes of

Executive Order 12866 and, therefore, has not been reviewed by the

Office of Management and Budget.

In accordance with the Regulatory Flexibility Act [5 U.S.C. 601 et

seq.]

[[Page 46176]]

(RFA), the Agency is required to examine the impact of this rule on

small entities. Accordingly, we have performed this initial regulatory

flexibility analysis.

According to data from the 1992 Census of Agriculture, published by

the Department of Commerce, there are approximately 6,744 potato

producers who grow potatoes on 5 or more acres and are thus subject to

the provisions of the Plan. Of these, approximately 4,817 potato

producers may be classified as small agricultural producers. Small

agricultural producers are defined by the Small Business Administration

[13 CFR 121.601] as those having annual receipts of less than $500,000.

Therefore, the majority of potato producers may be classified as small

entities.

According to data from the Board, there are an estimated 1,511

potato handlers, 334 importers of potatoes and potato products for

human consumption, and 27 importers of seed potatoes who are subject to

the provisions of the Plan. Small agricultural service firms are

defined by the Small Business Administration [13 CFR 121.601] as those

whose annual receipts are less than $5 million. For the purpose of this

analysis, it is concluded that the majority of potato handlers and

importers are small entities.

According to data from USDA's National Agricultural Statistics

Service (NASS), potato production in the United States for 1996 totaled

497 million hundredweight (cwt). Idaho leads the U.S. in the production

of potatoes with 28.2 percent of this total, followed by Washington

with 19.1 percent. Colorado, Oregon, Wisconsin, and North Dakota each

produce about 6 percent of the total U.S. production. Other major

producing states in 1996 were Minnesota (4.9 percent), Maine (4.3

percent), Michigan (2.8 percent), and California (3.1 percent).

Florida, New York, and Nebraska each produced between 1 and 2 percent

of total U.S. production, and all other states produced less than 1

percent each.

Using preliminary data from NASS that shows an average U.S. farm

price for potatoes in 1996 was $5.11 per cwt., the value of the 1996

U.S. potato crop is estimated at $2.54 billion.

Exports of all types of potatoes and potato products during 1996

totaled approximately 39 million cwt. on a fresh-weight basis. East

Asia and the Pacific Rim countries are the largest market for frozen

potatoes and frozen french fries, while Canada is the largest market

for exports of U.S. tablestock and seed potatoes.

Imports of tablestock, seed potatoes, and processed potatoes

(frozen, canned, chips, etc.) for 1996 totaled 24 million cwt. on a

fresh-weight basis. Tablestock, seed potatoes, and frozen potato

products accounted for about 93 percent of the total value of potato

imports, and over 99 percent of these items came from Canada.

The Board administers a national program of research, development,

advertising, and promotion designed to strengthen potatoes' competitive

position and to maintain and expand domestic and foreign markets for

potatoes and potato products. The program is financed by assessments on

producers of 5 or more acres of potatoes (collected by the first

handler) and on all imported fresh or processed potatoes for human

consumption and seed potatoes (collected by the U.S. Customs Service).

The Secretary has oversight responsibility for the Board's activities.

There are currently 107 Board members--102 producers; 4 importers; and

1 public member--who are appointed by the Secretary to serve a 3-year

term on the Board. Approximately one-third of the members' terms of

office expire each year on the last day of February.

This action will suspend portions of the Plan and amend the rules

and regulations issued under the Plan.

The suspension of portions of the Plan will eliminate the

requirement that industry members be nominated for appointment to the

Board only at meetings of producers or importers. The rules issued

under the Plan are also being amended to provide mail balloting as an

alternative means of selecting nominees for appointment.

The Plan currently requires nominations for producer and importer

members be submitted to USDA by November 1 of each year for

appointments to be made by the Secretary by March 1 of the following

year. In order to provide the largest number of producers an

opportunity to participate, nomination meetings are typically held in

conjunction with meetings of state or local potato or vegetable

industry organizations, usually late in the fall after harvesting.

However, in many cases, this places nomination meetings close to or

after the November 1 deadline for submitting nominations to USDA.

Additionally, in some states, potato production may be in widely

separated locations, posing a hardship for growers to attend meetings.

In some cases, growers must travel several hundred miles and incur the

expense of an overnight stay in order to participate in a nomination

meeting. In these cases, attendance at meetings has suffered.

Nomination meetings for importer members have been conducted by the

Board at its office in Denver, Colorado. Although Denver is a central

location for this meeting, all importers have had to fly to Denver to

attend a 1-hour meeting.

For several years, the Board has discussed this problem with USDA.

At its January 1997 meeting, the Board's Administrative Committee,

acting on behalf of the Board, voted to recommend to USDA that action

be taken to suspend portions of the Plan and to amend the rules and

regulations to permit members of the potato industry the flexibility to

choose the manner of nominating candidates for appointment. Providing

the option of a mail ballot for nominating candidates will provide an

opportunity for a greater number of industry members to participate in

the nomination process. In some cases, the burden and expense for

producers to travel long distances to attend a nomination meeting will

be eliminated. Permitting an optional means of nominating importer

members will also eliminate the time and expense currently incurred for

importers to participate in these meetings. Additionally, nomination

activity will not have to be coupled with industry meetings, thus

permitting the nomination process to take place early enough that the

nominees' applications for appointment can be forwarded to USDA well

before the November 1 deadline.

If these changes are not made, producers and importers will

continue to incur financial and time loss to attend and participate in

nomination meetings, and attendance at these meetings will continue to

suffer.

The second amendment to the rules and regulations will permit

importer members of the Board to vote on the basis of the volume of

imported potatoes, processed potato products, and seed potatoes in the

same manner as producer members of the Board vote on the basis of

domestic potato production. Since the program's inception, the Plan has

permitted producer members to call for a vote by the production of each

State. In the 1990 Farm Bill, Congress amended the Act to, along with

other changes, include imported potatoes and potato products for human

consumption and seed potatoes under the program's provisions. When the

Plan and rules and regulations were amended to conform with the amended

Act, a provision permitting importers to vote on the basis of the

volume of imported

[[Page 46177]]

potatoes was inadvertently omitted. In production votes taken by the

Board since imports were included in the program's provisions,

importers have voted the volume of potato imports on a fresh-weight

basis.

This amendment will correct the oversight and include provisions in

the regulations to reflect the procedure currently in practice.

Importers' votes carry the same proportional weight as producers' votes

and will result in equitable treatment of importers.

The third amendment will specify in the rules and regulations that

the designated handlers of potatoes must report to the Board those

potatoes of their own production for which the assessment has been paid

by another first handler.

The regulations currently require designated handlers of potatoes

to report and pay assessments on the potatoes of someone else's

production that they handle. In some cases, designated handlers are

also producers, and the assessment for their potato production may be

paid by another designated handler. For example, a processor who

purchases field-run potatoes is considered the designated handler and

is responsible for reporting to the Board and paying assessments on

those potatoes even though the producer may also be a designated

handler who is also submitting reports and assessments to the Board. In

order for the Board to assure that all handling has been reported and

assessments have been paid and credited to the producer, the Board must

be able to cross-reference the handling of potatoes on the reports of

both designated handlers.

The authority for this information collection exists in

Sec. 1207.350 of the Plan. It is necessary to provide in the text of

the regulation concerning designated handlers' reporting

responsibilities that designated handlers must report to the Board

those potatoes of their own production for which the assessment has

been paid by another designated handler. The information collection

burden and the form used to collect the information on handling of

potatoes have been reviewed and approved by the Office of Management

and Budget (OMB) under approval number 0581-0093. The 1-hour-per-

response burden currently approved includes the time necessary for

designated handlers to provide information on assessments paid by

another designated handler on the reporting form submitted no more

often than monthly. This information is readily available from the

confirmation each designated handler is required to provide to

producers on the amount of assessments paid on their behalf.

In addition, this rule suspends obsolete provisions in the Plan

referring to meetings, nomination of the initial Board, and references

to importer organizations.

As with all Federal research and promotion programs, reports and

forms are periodically reviewed to reduce information requirements and

duplication by industry and public sector agencies.

This rule permits importer members of the Board to vote on the

basis of the volume of imported potatoes. This revision will not affect

the estimated burden on potato growers or designated handlers.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

The changes contained in this action suspend obsolete provisions in

the Plan, provide for alternative means of nominating candidates for

appointment to the Board, provide importer members a vote by volume at

meetings, and clarify handlers' reporting requirements. These changes

will enhance the efficiency of the operation of the potato research and

promotion program, and will reduce the financial burden on industry

members when nominating candidates for appointment by the Secretary.

Accordingly, we believe that these revisions are the best alternatives

to facilitate the nomination process, provide for importer voting by

production, and to clarify handlers' reporting requirements.

Paperwork Reduction Act

This rule contains no new information collection or recordkeeping

requirements under the Paperwork Reduction Act of 1995 [44 U.S.C. 3501

et seq.]. The information collection and recordkeeping requirements

related to this action were previously approved by the Office of

Management and Budget (OMB) under number 0581-0093.

Eliminating the requirement that industry members be nominated to

serve on the Board at meetings and providing the alternative of mail

balloting will be less burdensome, overall, for potato producers and

importers, but the information collection burden remains the same. When

nominations are conducted by mail ballot rather than at a meeting, the

nomination ballot will be completed and mailed instead of being turned

in at a meeting.

The second amendment to the rules and regulations will permit

importer members of the Board to vote on the basis of the volume of

imported potatoes, processed potato products, and seed potatoes in the

same manner as producer members of the Board vote on the basis of

domestic potato production. This amendment will correct an oversight

and include provisions in the regulations to reflect procedures

currently in practice. Importers' votes carry the same proportional

weight as producers' votes and will result in equitable treatment of

importers. There is no burden associated with importers voting at board

meetings.

The third amendment provides in the rules and regulations that

designated handlers must report to the Board those potatoes of their

own production for which the assessments have been paid by another

handler. The information collection burden and the form used to collect

information on handling of potatoes have been reviewed and approved by

the OMB under approval number 0581-0093. The 1-hour-per-response burden

currently approved includes designated handlers providing information

on assessments paid by another designated handler on the reporting form

submitted no more often than monthly.

The form requires the minimum information necessary to effectively

carry out the requirements of the program, and its use is necessary to

fulfill the intent of the Act. Such information can be supplied without

data processing equipment or outside technical expertise. In addition,

there are no additional training requirements for individuals filling

out reports and remitting assessments to the promotion Board. The forms

are simple, easy to understand, and place as small a burden as possible

on the person required to file the information. This action will not

impose any additional reporting or recordkeeping requirements on either

small or large potato handlers.

Background

This action suspends portions of the Plan and amends three sections

of the rules and regulations issued under the Plan.

The suspension of portions of the Plan will eliminate the

requirement that industry members be nominated for appointment to the

Board only at a meeting of producers or importers. Other obsolete

provisions of the Plan will also be suspended. The rules issued under

the Plan will also be amended to provide an alternative means of

selecting nominees for appointment such as by a mail ballot of the

industry.

The Plan requires nominations for producer and importer members be

[[Page 46178]]

submitted to USDA by November 1 of each year for appointments to be

made by the Secretary by March 1 of the following year. In order to

provide the largest number of producers an opportunity to participate,

nomination meetings are typically held in conjunction with meetings of

state or local potato or vegetable industry organizations, usually

after harvesting. However, this places nomination meetings close to or

after the November 1 deadline for submitting nominations to USDA.

Additionally, in some states, potato production may be in widely

separated locations, posing a hardship for a grower--in some cases

traveling several hours and incurring the cost of an overnight trip--in

order to participate in a nomination meeting.

In the case of importer nominations, the Plan provided that the

Board could call upon organizations of potato, potato products, and/or

seed potato importers to assist in nominating importers for appointment

to the Board. This provision was intended to allow importers the

opportunity to nominate importer members from their own membership.

However, no such organizations have been found to exist, and the Board

has conducted importer nomination meetings in Denver. Importers must

therefore travel to Denver for nomination meetings.

For several years, the Board has discussed this problem with USDA.

At its January 1997 meeting, the Board's Administrative Committee,

acting on behalf of the Board, voted to recommend to USDA that action

be taken to suspend portions of the Plan and to amend the rules and

regulations to permit members of the potato industry the flexibility to

choose the manner of nominating candidates for appointment in a manner

that would provide for the ability for a greater number of industry

members to participate in the nomination process with less of a burden.

In order to do this, this action suspends wording referring to

meetings in Sec. 1207.322 of the Plan. Paragraph (a) of Sec. 1207.322

deals only with nomination of the initial Board and is thus obsolete.

Therefore, paragraph (a) is suspended in its entirety. References to

meetings are suspended in paragraphs (b) and (c).

Also, because no organizations of potato importers exist,

references to importer organizations are unnecessary and will be

suspended in Sec. 1207.322(d).

In addition, references in Sec. 1207.503 of the rules and

regulations to meetings and importer organizations have been removed

and amendments made to this section to provide the option of mail

balloting to nominate producers and importers for appointment to the

Board.

A second amendment to the rules and regulations deals with

importers being able to vote on the basis of the volume of the fresh-

weight equivalent of imported potatoes and potato products for human

consumption and seed potatoes in the same manner that producer members

can vote on the basis of potato production within each State.

One of the 1990 Farm Bill amendments to the Act [7 U.S.C. 2611 et

seq.] extended the Act's coverage to imported potatoes, potato

products, and seed potatoes and provided for importer representation on

the Board. When the Plan and rules and regulations issued under the

Plan were subsequently amended in 1991 to conform with the amended Act,

a provision permitting importer members to vote on the basis of the

volume of imported product was inadvertently overlooked. From the

program's inception, Sec. 1207.325 of the Plan authorized producer

members of the Board to call for a production vote in which the Board

members from each State are allocated votes based on that State's fresh

potato production (i.e., one vote for each 1 million hundredweight of

potatoes).

In production votes taken by the Board since imports were included

in the program's provisions, importers have voted the volume of potato

imports on a fresh-weight basis. At its March 1996 annual meeting, the

Board voted to amend the rules and regulations to correct this

oversight by amending Sec. 1207.505 to provide the same voting rights

as afforded to producer members.

The third amendment provides in the rules and regulations that

designated handlers must report to the Board those potatoes of their

own production for which the assessments have been paid by another

designated handler.

Section 1207.350(a) of the Plan provides authority for the Board to

prescribe in the regulations the information designated handlers must

report in order for the Board to perform its duties, and this

information is set forth in Sec. 1207.513 of the regulations. Some

designated handlers are also potato producers and, in some cases, the

assessment for their potato production may be paid by another

designated handler. For example, a processor who purchases field-run

potatoes is considered the designated handler and is responsible for

reporting to the Board and paying assessments on those potatoes even

though the producer may also be a designated handler who is also

submitting reports and paying assessments to the Board. In order for

the Board to assure that all handling has been reported and assessments

have been paid and credited to the producer, the Board must be able to

cross-reference the handling of potatoes on the reports of both

handlers. Since Sec. 1207.513 of the regulations does not specifically

state that designated handlers must report to the Board those potatoes

of their own production for which the assessments have been paid by

another designated handler, it is necessary to amend this section to

provide that handlers must report to the Board those potatoes of their

own production for which the assessment has been paid by another first

handler. Therefore, this action amends Sec. 1207.513 of the regulations

to provide for this reporting.

After consideration of all relevant material presented, including

the information and recommendation submitted by the Board, it is hereby

found that the suspended sections of the plan no longer tend to

effectuate the declared policy of the Act. In addition, it is found

that the amendments to the rules and regulations are necessary for the

appropriate administration of the Plan and the rules and regulations

and that they are consistent with the intention of the Act.

All written comments received in response to this rule by the date

specified herein will be considered prior to finalizing this action.

Pursuant to the provisions in 5 U.S.C. 553, it is found and

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

contrary to the public interest to give preliminary notice prior to

putting this rule into effect and that good cause exists for not

postponing the effective date of this action until 30 days after

publication in the Federal Register because: (1) This action suspends

obsolete and unnecessary provisions of the Plan and clarifies

provisions in the regulations; (2) in addition, a time and travel

burden upon potato producers and importers will continue to be imposed

if they are not provided the option to nominate candidates for

appointment to the Board by mail ballots rather than only at meetings;

(3) nominations for the term of office beginning on March 1, 1998, will

begin soon; (4) a 60-day period is provided to allow interested parties

to comment prior to finalization; and (5) no useful purpose would be

served by a delay of the effective date.

List of Subjects in 7 CFR Part 1207

Advertising, Agricultural research, Marketing agreements, Potatoes,

Reporting and recordkeeping requirements.

[[Page 46179]]

For the reasons set forth in the preamble, 7 CFR part 1207 is

amended as follows:

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

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

follows:

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

Sec. 1207.322 [Amended]

2. Section 1207.322 is amended by suspending:

(A) Paragraph (a) in its entirety,

(B) In paragraph (b), the words ``at meetings'' in the first

sentence and the entire last sentence,

(C) In paragraph (c), the entire last sentence, and

(D) In paragraph (d), the entire last two sentences of the

introductory text and paragraphs (d)(1) through (5).

3. In Sec. 1207.503, paragraphs (a), (b), and (c) are revised 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 by mail ballots. 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 the Board. Such

nominations may be conducted at meetings or by mail ballots.

(c) Nomination meetings or mail balloting shall be well publicized

with notice given to producers, importers, and the Secretary at least

10 days prior to each meeting or mailing of ballots.

* * * * *

4. Section 1207.505 is revised to read as follows:

Sec. 1207.505 Procedure.

(a) The procedure for conducting the Board's meetings shall be in

accordance with the bylaws adopted by the Board on June 7, 1972, and

approved by the Secretary and any subsequent amendments adopted by the

Board and approved by the Secretary.

(b) Each importer member shall be entitled to not less than one

vote. Importer members shall also be entitled to one additional vote

for each 1 million hundredweight, or major fraction thereof, on a

fresh-weight basis, of imported tablestock potatoes, potato products,

or seed potatoes, as determined by data on imports provided by the U.S.

Department of Agriculture. The casting of such votes shall be

determined by the importer members.

5. In Sec. 1207.513, paragraph (c)(2) is revised to read as

follows:

Sec. 1207.513 Payment of assessments.

* * * * *

(c) * * *

(2) All designated handlers, including a designated handler whose

own production is handled and assessments to the Board paid by another

designated handler, shall report to the Board:

(i) Date of report (which is also date of payment to the Board).

(ii) The name and address of the designated handler;

(iii) The period potatoes were handled;

(iv) The total quantity of potatoes determined to be assessable

during the period potatoes were handled, pursuant to Sec. 1207.511.

* * * * *

Dated: August 26, 1997.

Lon Hatamiya,

Administrator, Agricultural Marketing Service.

[FR Doc. 97-23307 Filed 8-28-97; 12:10 p.m.]

BILLING CODE 3410-02-P