Irish Potatoes Grown in Colorado; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV98-948-1 IFR]

Irish Potatoes Grown in Colorado; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This interim final rule decreases the assessment rate

established for the Colorado Potato Administrative Committee, San Luis

Valley Office (Area II) (Committee) under Marketing Order No. 948 for

the 1998-99 and subsequent fiscal periods from $0.0030 to $0.0015 per

hundredweight of potatoes handled. The Committee is responsible for

local administration of the marketing order which regulates the

handling of Irish potatoes grown in Colorado. Authorization to assess

potato handlers enables the Committee to incur expenses that are

reasonable and necessary to administer the program. The 1998-99 fiscal

period begins September 1 and ends August 31. The assessment rate will

continue in effect indefinitely unless modified, suspended, or

terminated.

DATES: Effective July 17, 1998. Comments received by September 14,

1998, will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax (202) 205-6632. Comments should

reference the docket number and the date and page number of this issue

of the Federal Register and will be 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, Fruit and Vegetable Programs, AMS, USDA, 1220 SW Third

Avenue, Room 369, Portland, OR 97204; telephone: (503) 326-2724, Fax:

(503) 326-7440, or George J. Kelhart, Marketing Order Administration

Branch, Fruit and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box

96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202)

205-6632. Small businesses may request information on compliance with

this regulation by contacting Jay Guerber, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone (202) 720-

2491, Fax: (202) 205-6632.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 97 and Order No. 948, both as amended (7 CFR part 948),

regulating the handling of Irish potatoes grown in Colorado hereinafter

referred to as the ``order.'' The marketing agreement and order are

effective under 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 rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Under the marketing order now in effect, Colorado

potato handlers are subject to assessments. Funds to administer the

order are derived from such assessments. It is intended that the

assessment rate as issued herein will be applicable to all assessable

potatoes beginning September 1, 1998, and continuing until modified,

suspended, or terminated. This rule will not preempt any State or local

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

conflict with this rule.

[[Page 38283]]

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 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. Such 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 to review the

Secretary's ruling on the petition, provided an action is filed not

later than 20 days after the date of the entry of the ruling.

This rule decreases the assessment rate established for the

Committee for the 1998-99 and subsequent fiscal periods from $0.0030 to

$0.0015 per hundredweight of potatoes handled.

The Colorado potato marketing order provides authority for the

Committee, with the approval of the Department, to formulate an annual

budget of expenses and collect assessments from handlers to administer

the program. The members of the Committee are producers and handlers of

Colorado Area II potatoes. They are familiar with the Committee's needs

and with the costs for goods and services in their local area and are

thus in a position to formulate an appropriate budget and assessment

rate. The assessment rate is formulated and discussed in a public

meeting. Thus, all directly affected persons have an opportunity to

participate and provide input.

In Colorado, both a State and a Federal marketing order operate

simultaneously. The State order authorizes promotion, including paid

advertising, which the Federal order does not. All expenses in this

category are financed under the State order. The jointly operated

programs consume about equal administrative time and the two orders

continue to split administrative costs equally.

For the 1996-97 and subsequent fiscal periods, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from fiscal period to fiscal period indefinitely

unless modified, suspended, or terminated by the Secretary upon

recommendation and information submitted by the Committee or other

information available to the Secretary.

The Committee met on May 21, 1998, and recommended, by a nine to

one vote, 1998-99 expenditures of $66,895 and an assessment rate of

$0.0015 per hundredweight of potatoes. The Committee member voting no

objected to the amount being budgeted for the executive director's

salary, but had no problem with the total amount budgeted or the

reduction in the assessment rate. In comparison, last year's budgeted

expenditures were $63,329. The assessment rate of $0.0015 is $0.0015

less than the rate currently in effect. The Committee voted to lower

the assessment rate and use some of the funds in its operating reserve

in order to bring the reserve closer to the amount it believes

necessary to administer the program. The decrease would reduce the

financial burden on handlers as prices for San Luis Valley potatoes

have been extremely low the past two seasons. Over production of the

1996 fall crop and unusually cold weather during the 1997 fall crop

growing season resulted in major financial disasters within the San

Luis Valley potato industry. The Committee discussed various assessment

rates, but decided that an assessment rate of less than $0.0015 would

not generate the income necessary to administer the program with an

adequate reserve.

Major expenses recommended by the Committee for the 1998-99 fiscal

period include $37,210 for salaries, $10,850 for office expenses, which

include telephone, supplies, and postage, and $5,250 for building

maintenance, which includes insurance and utilities. Budgeted expenses

for these items in 1997-98 were $35,579, $9,500, and $5,250,

respectively.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of Colorado Area II

potatoes. Potato shipments for the year are estimated at 16,500,000

hundredweight which should provide $24,750 in assessment income. Income

derived from handler assessments, along with funds from the Committee's

authorized reserve, will be adequate to cover budgeted expenses. Funds

in the reserve ($124,903 as of September 1, 1997) will be kept within

the maximum permitted by the order (less than approximately two fiscal

periods' expenses; Sec. 948.78).

The assessment rate established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the

Committee or other available information.

Although this assessment rate is effective for an indefinite

period, the Committee will continue to meet prior to or during each

fiscal period to recommend a budget of expenses and consider

recommendations for modification of the assessment rate. The dates and

times of Committee meetings are available from the Committee or the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department will

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

Further rulemaking will be undertaken as necessary. The Committee's

1998-99 budget and those for subsequent fiscal periods will be reviewed

and, as appropriate, approved by the Department.

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. Accordingly, AMS has

prepared this initial regulatory flexibility analysis.

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 the 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 285 producers of Colorado Area II potatoes

in the production area and approximately 100 handlers subject to

regulation under the marketing order. Small agricultural producers have

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

those having annual receipts less than $500,000 and small agricultural

service firms are defined as those whose annual receipts are less than

$5,000,000. The majority of Colorado Area II potato producers and

handlers may be classified as small entities.

The rule decreases the assessment rate established for the

Committee and collected from handlers for the 1998-99 and subsequent

fiscal periods from $0.0030 to $0.0015 per hundredweight of potatoes

handled. The Committee by a nine to one vote recommended 1998-99

expenditures of $66,895 and an assessment rate of $0.0015 per

hundredweight of potatoes handled. The Committee member voting no

objected to the amount being budgeted for the executive director's

salary but

[[Page 38284]]

had no problem with the total amount budgeted or the reduction in the

assessment rate. In comparison, last year's budgeted expenditures were

$63,329. The assessment rate of $0.0015 is $0.0015 less than the rate

currently in effect. The Committee voted to lower the assessment rate

and use some of the funds in its operating reserve in order to bring

the reserve closer to the amount it believes necessary to administer

the program. The decrease would reduce the financial burden on handlers

as prices for San Luis Valley potatoes have been extremely low the past

two seasons. Overproduction of the 1996 fall crop and unusually cold

weather during the 1997 fall crop growing season resulted in major

financial disasters within the San Luis Valley potato industry. The

Committee discussed various assessment rates, but decided that an

assessment rate of less than $0.0015 would not generate the income

necessary to administer the program with an adequate reserve.

Major expenses recommended by the Committee for the 1998-99 fiscal

period include $37,210 for salaries, $10,850 for office expenses, which

include telephone, supplies, and postage, and $5,250 for building

maintenance which includes insurance and utilities. Budgeted expenses

for these items in 1997-98 were $35,579, $9,500, and $5,250,

respectively.

With Colorado Area II potato shipments for 1998-99 estimated at

16,500,000 hundredweight, the $0.0015 rate of assessment should provide

$24,750 in assessment income. Income derived from handlers assessments,

along with funds from the Committee's authorized reserve, will be

adequate to cover budgeted expenses. Funds in the reserve ($124,903 as

of September 1, 1997) will be kept within the maximum permitted by the

order (less than approximately two fiscal periods' expenses;

Sec. 948.78).

Recent price information indicates that the grower price for the

1998-99 marketing season will range between $1.60 and $6.15 per

hundredweight of Colorado potatoes. Therefore, the estimated assessment

revenue for the 1998-99 fiscal period as a percentage of total grower

revenue will range between 0.0900 and 0.0243 percent.

This action decreases the assessment obligation imposed on

handlers. Assessments are applied uniformly on all handlers, and some

of the costs may be passed on to producers. However, decreasing the

assessment rate reduces the burden on handlers and may reduce the

burden on producers. In addition, the Committee's meeting was widely

publicized throughout the Colorado Area II potato industry and all

interested persons were invited to attend the meeting and participate

in Committee deliberations on all issues. Like all Committee meetings,

the May 21, 1998, meeting was a public meeting and all entities, both

large and small, were able to express views on this issue. Finally,

interested persons are invited to submit information on the regulatory

and informational impacts of this action on small businesses.

This action will not impose any additional reporting or

recordkeeping requirements on either small or large Colorado Area II

potato handlers. As with all Federal marketing order programs, reports

and forms are periodically reviewed to reduce information requirements

and duplication by industry and public sector agencies.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the Committee and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

Pursuant to 5 U.S.C. 553, it is also 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 rule until 30 days after publication in the Federal

Register because: (1) This action reduces the current assessment rate

for Colorado Area II potatoes; (2) the 1998-99 fiscal period begins on

September 1, 1998, and the marketing order requires that the rate of

assessment for each fiscal period apply to all assessable Colorado Area

II potatoes handled during such fiscal period; (3) handlers are aware

of this action which was recommended by the Committee at a public

meeting and is similar to other assessment rate actions issued in past

years; and (4) this interim final rule provides a 60-day comment

period, and all comments timely received will be considered prior to

finalization of this rule.

List of Subjects in 7 CFR Part 948

Marketing agreements, Potatoes, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 948 is

amended as follows:

PART 948--IRISH POTATOES GROWN IN COLORADO

1. The authority citation for 7 CFR part 948 continues to read as

follows:

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

Sec. 948.216 [Amended]

Section 948.216 is amended by removing the words ``September 1,

1996,'' and adding in their place the words ``September 1, 1998,'' and

by removing ``$0.0030'' and adding in its place ``$0.0015.''

Dated: July 10, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-18998 Filed 7-15-98; 8:45 am]

BILLING CODE 3410-02-P