Irish Potatoes Grown in Colorado; Exemption From Area No. 2 Handling Regulation for Potatoes Shipped for Experimentation and the Manufacture or Conversion Into Specified Products

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV98-948-2 IFR]

Irish Potatoes Grown in Colorado; Exemption From Area No. 2

Handling Regulation for Potatoes Shipped for Experimentation and the

Manufacture or Conversion Into Specified Products

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule exempts shipments of potatoes handled

for experimentation and the manufacture or conversion into specified

products from the grade, size, maturity, and inspection requirements

prescribed under the handling regulations of the Colorado Potato

Marketing Order for Area No. 2 (San Luis Valley). This rule was

unanimously recommended by the Colorado Potato Administrative Committee

for Area No. 2 (Committee), the agency responsible for local

administration of the marketing order. This rule is designed to expand

markets for potatoes and to increase fresh utilization. These changes

are expected to improve the marketing of Colorado potatoes and increase

returns to producers.

DATES: Effective August 12, 1998; comments received by October 13, 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, PO Box 96456,

Washington, DC 20090-6456; Fax: (202) 205-6632. 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 Programs, AMS, USDA, 1220 SW Third Avenue, room 369,

Portland, Oregon 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, PO 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, PO 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 Marketing Order No. 948 (7 CFR part 948), both as

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

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 rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule 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 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. A handler is afforded the opportunity for a hearing on the

petition. After the hearing the Secretary would rule on the

[[Page 42687]]

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 date of the entry of the ruling.

This rule exempts shipments of potatoes handled for the purposes of

experimentation and the manufacture or conversion into specified

products from the grade, size, maturity, and inspection requirements

prescribed under the order's handling regulations for Area No. 2 (San

Luis Valley).

Section 948.22 authorizes the issuance of regulations for grade,

size, quality, maturity, and pack for any variety or varieties of

potatoes grown in different portions of the production area during any

period. Section 948.23 authorizes the issuance of regulations that

modify, suspend, or terminate requirements issued under Sec. 948.22 or

to facilitate the handling of potatoes for special purposes. Section

948.24 requires adequate safeguards to be prescribed to ensure that

potatoes handled pursuant to Sec. 948.23 enter authorized trade

channels. Safeguard procedures for special purpose shipments are

specified in Secs. 948.120 through 948.125.

At its meeting on June 18, 1998, the Committee unanimously

recommended that handlers of potatoes shipped for experimentation and

for the manufacture or conversion into specified products be exempted

from the grade, size, maturity, and inspection requirements prescribed

under the order's handling regulations for Area No. 2 in Sec. 948.386.

The Committee recommended that experimentation and manufacture or

conversion into specified products be added under Sec. 948.386(d)(2) as

special purpose shipments.

As is currently required for all special purpose shipments,

handlers would apply and obtain Certificates of Privilege for handling

such potatoes and furnish the Committee such information as the

Committee may require.

Several producers and handlers within the production area are

attempting to develop new fresh uses for potatoes using experimental

varieties and packs. The Committee also anticipates that some handlers

may want to ship experimental varieties, or traditional varieties, for

use in the manufacture or conversion into special products, or perform

the manufacture or conversion themselves prior to shipment. Handlers

are, for example, attempting to develop new special products such as

fresh cut potatoes shipped in vacuum sealed bags. The Committee

strongly encourages innovation that could result in the development of

new varieties, markets, or opportunities for fresh potatoes that would

be good for the Colorado potato industry. Some of the new varieties

have irregular shapes or are small in size, and that prevents them from

being shipped except under the minimum quantity exemption of 1,000

pounds specified in paragraph (f) of Sec. 948.386. This has prevented

handlers from shipping larger quantities. Handlers have also expressed

a desire to experiment with the shipment of potatoes of different

varieties in the same container. This is not currently possible because

the potatoes do not meet the minimum grade requirement that a

particular lot of potatoes have ``similar'' varietal characteristics.

For the purpose of this action, the term ``manufacture or

conversion into specified products'' means the preparation of potatoes

for market into products by peeling, slicing, dicing, applying material

to prevent oxidation, or other means approved by the Committee, but not

including other processing. Under the current regulation, potatoes for

manufacture or conversion into products must be inspected and certified

as meeting specified quality requirements prior to preparation for

market. This action will exempt shipments handled for experimentation

or the manufacture or conversion into products from these requirements,

thus, relieving handlers of this regulatory burden.

These changes to the Area No. 2 handling regulation are expected to

encourage new product development and could lead to market expansion

which would benefit producers, handlers, buyers, and consumers of

Colorado potatoes.

The special purpose shipments authorized by this action are fresh

use markets so it is appropriate that the handlers taking advantage of

the exemptions be assessed to defray the costs the Committee incurs in

administering the program, tracking such shipments, in determining

whether applicable requirements have been met, and in determining

whether the potatoes ended up in the proper trade channel. This rule is

designed to expand markets for potatoes and to increase fresh

utilization. These changes are expected to improve the marketing of

Colorado potatoes and increase returns to producers.

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, the AMS

has prepared this initial regulatory flexibility analysis.

There are approximately 100 handlers of Colorado Area No. 2

potatoes who are subject to regulation under the marketing order and

approximately 285 producers of Colorado potatoes in the regulated 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 producers and handlers regulated under the marketing

agreement and order may be classified as small entities.

This rule exempts shipments of potatoes handled for experimentation

and the manufacture or conversion into specified products from the

grade, size, maturity, and inspection requirements that are prescribed

under the order's handling regulations for Area No. 2 in Sec. 948.386.

At its meeting on June 18, 1998, the Committee unanimously

recommended that potatoes shipped for the purposes of experimentation

and for the manufacture or conversion into specified products be

considered special purpose shipments and be exempt from the grade,

size, maturity, and inspection requirements prescribed in Sec. 948.386.

The Committee recommended that experimentation and manufacture or

conversion into specified products be added under Sec. 948.386(d)(2) as

special purpose shipments.

As is currently required for all special purpose shipments,

handlers would apply and obtain Certificates of Privilege for handling

such potatoes and furnish the Committee such information as the

Committee may require to track such shipments, determine whether

applicable requirements have been met, and whether proper disposition

has occurred.

Several producers and handlers within the production area are

attempting to develop new fresh uses for potatoes using experimental

varieties and packs. The Committee also anticipates that some handlers

may want to ship experimental varieties, or traditional varieties, for

use in the manufacture or conversion into special products, or perform

the manufacture or conversion themselves prior to shipment. Handlers

are, for example, attempting to develop new special products such as

fresh cut potatoes shipped in vacuum sealed bags. The Committee

strongly encourages innovation that could result in the

[[Page 42688]]

development of new varieties, markets, or opportunities for fresh

potatoes that would be good for the Colorado potato industry. Some of

the new varieties have characteristics, such as small size or misshape,

that prevent them from being shipped fresh except under the minimum

quantity exemption of 1,000 pounds in paragraph (f) of Sec. 948.386.

This has placed a burden on handlers desiring to ship larger quantities

of such potatoes. Handlers have also expressed a desire to experiment

with the shipment of potatoes of different varieties in the same

container. This is not currently possible because the potatoes do not

meet the minimum grade requirement that a particular lot of potatoes

have ``similar'' varietal characteristics.

For purpose of this action, the term ``manufacture or conversion

into specified products'' means the preparation of potatoes for market

into products by peeling, slicing, dicing, applying material to prevent

oxidation, or other means approved by the Committee, but not including

other processing.

These changes to the handling regulation are expected to encourage

new product development and could lead to market expansion which would

benefit producers, handlers, buyers, and consumers of Colorado

potatoes.

The special purpose outlets authorized by this action are fresh use

markets so it is appropriate that handlers taking advantage of the

exemptions be assessed to defray the costs the Committee incurs in

administering the program, tracking such shipments, determining whether

applicable requirements have been met, and whether the potatoes end up

in proper trade channels. Currently, the assessment rate is $0.0030 per

hundredweight of potatoes handled. Effective September 1, 1998, the

rate will be $0.0015 per hundredweight of potatoes handled. This rule

is designed to expand markets for potatoes and to increase fresh

utilization. The changes are expected to improve the marketing of

Colorado potatoes and increase returns to producers.

There is no available information detailing how many potatoes this

relaxation will allow to be marketed.

No viable alternatives to this action were identified that would

ensure that innovations in marketing and product development.

Furthermore, the goals expressed by the committee could not be solved

absent this action.

The Committee estimates that three or four handlers may apply for

and obtain Certificates of Privilege for the handling of potatoes for

experimentation or for the manufacture or conversion into specified

products. It is estimated that the time taken by the handlers who apply

will total less than ten hours and this time is currently approved

under OMB No. O581-0111 by the Office of Management and Budget (OMB) in

accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter

35).

As with all Federal marketing order programs, reports and forms are

periodically reviewed to reduce information requirements and

duplication by industry and public sectors. In addition, the Department

has not identified any relevant Federal rules that duplicate, overlap

or conflict with this rule.

Further, the Committee's meeting was widely publicized throughout

the Colorado potato industry and all interested persons were invited to

attend the meeting and participate in Committee deliberations. Like all

Committee meetings, the June 18, 1998, meeting was a public meeting and

all entities, both large and small, were able to express their views on

this issue. The Committee itself is composed of 12 members, of which 5

are handlers and 7 are producers, the majority of whom are small

entities.

Finally, interested persons are invited to submit information on

the regulatory and informational impacts of this action on small

businesses.

After consideration of all relevant material presented, including

the Committee's recommendation, and other information, it is found that

this interim final rule, as hereinafter set forth, will tend to

effectuate the declared policy of the Act.

This rule invites comments on a change to the handling regulation

prescribed for Area No. 2 under the Colorado potato marketing order.

Any comments received will be considered prior to finalization of this

rule.

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 rule relaxes requirements on Area No. 2 handlers and

provides additional marketing opportunities; (2) this action must be

taken promptly so handlers can take advantage of the additional

marketing opportunities as soon as possible; (3) the Committee

unanimously recommended these changes at a public meeting and

interested parties had an opportunity to provide input; and (4) this

rule provides a 60-day comment period and any comments 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.

2. In Sec. 948.386, paragraph (d)(2) is revised, and in paragraph

(g) a new sentence is added before the last sentence to read as

follows:

Sec. 948.386 Handling regulation.

* * * * *

(d) * * *

(1) * * *

(2) The grade, size, maturity and inspection requirements of

paragraphs (a), (b), and (c) of this section shall not be applicable to

shipments of potatoes for experimentation, the manufacture or

conversion into specified products, or for seed pursuant to section

948.6, but such shipments shall be subject to assessments.

* * * * *

(g) Definitions. * * * The term manufacture or conversion into

specified products means the preparation of potatoes for market into

products by peeling, slicing, dicing, applying material to prevent

oxidation, or other means approved by the committee, but not including

other processing. * * *

Dated: August 5, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-21480 Filed 8-10-98; 8:45 am]

BILLING CODE 3410-02-P