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-96-703FR]

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: Final rule.

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SUMMARY: The U.S. Department of Agriculture (USDA or the Department) is

adopting without modification as a final rule an interim final rule

which suspended portions of the Potato Research and Promotion Plan

(Plan) that required National Potato Promotion Board (Board) members to

be nominated at meetings, suspended obsolete provisions in the Plan,

amended the rules and regulations issued under the Plan to provide for

mail balloting as an alternative means of selecting nominees for

appointment, permitted importer members of the Board to vote on the

basis of the volume of imported potatoes, and provided 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.

EFFECTIVE DATE: November 5, 1998.

FOR FURTHER INFORMATION CONTACT: Michael I. Hankin, Research and

Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244,

1400 Independence Avenue, S.W., Washington, DC 20250-0244; telephone

(202) 720-9915 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 (OMB).

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

seq.] (RFA), the Agency has examined the impact of this rule on small

entities. Accordingly, we have performed this final 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.

The 1997 U.S. potato crop is at 46.6 billion pounds, down 8 percent

or approximately 3.9 billion pounds from 1996. For 1997, Idaho leads in

the production of potatoes with 29 percent of the total, followed by

Washington (19 percent). Colorado, Oregon, and Wisconsin each produced

6 percent of the 1997 crop, and North Dakota contributed 5 percent to

the total. Other major producing states in 1997 were Minnesota, Maine

and California (4 percent each), and Michigan (3 percent). Nebraska,

New York, and Florida each produced approximately 2 percent of the U.S.

total; all other states produced less than 1 percent each. Per capita

consumption of potatoes in the United States has increased from 125.2

pounds in 1976 to 142.4 pounds in 1997.

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

price for potatoes in 1997 was $5.68 per cwt., the value of the 1997

U.S. potato crop is estimated at $2.60 billion.

Exports of all types of potatoes and potato products during 1997

totaled approximately 4.3 billion pounds on a fresh weight basis. East

Asia and Pacific Rim countries are the largest markets 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 1997 totaled 2.7 billion pounds on a

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

products accounted for about 94 percent of the total value of potato

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

for

[[Page 53544]]

human consumption accounted for about 4 percent of the total value of

potato imports. Nearly all imports of potato starch for human

consumption came from Europe, with The Netherlands accounting for 57

percent, and Germany 34 percent of the total tonnage. The remaining two

percent of the value of total potato imports was from flour, flakes,

granules, and chips.

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.

On September 2, 1997 [62 FR 46175], an interim final rule suspended

portions of the Plan and amended the rules and regulations issued under

the Plan.

The suspension of portions of the Plan eliminated 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.

At the time, the Plan required nominations for producer and

importer members to be submitted to the Department of Agriculture (USDA

or the Department) 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.

In addition, all importers have had to fly to Denver to attend a 1-

hour nomination meeting.

For several years, the Board 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 provided 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 has been eliminated.

Permitting an optional means of nominating importers members also

eliminated the time and expense currently incurred for importers to

participate in these meetings. Additionally, nomination activity no

longer has 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 had not been made, producers and importers would

have continued to incur financial and time loss to attend and

participate in nomination meetings, and attendance at these meetings

would have continued to suffer.

The second amendment to the rules and regulations permitted

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

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

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

along with other changes, 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 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.

The interim final rule corrected the oversight and included

provisions in the regulations to reflect the procedure currently in

practice. Importers' votes carry the same proportional weight as

producers' votes, resulting in equitable treatment of importers.

The third amendment made by the interim final rule specified in the

rules and regulations that 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.

Previously, the regulations required 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. The rulemaking was 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 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.

[[Page 53545]]

In addition, the interim final rule suspended 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 finalizes the action that permitted importer members of

the Board to vote on the basis of the volume of imported potatoes. This

revision does 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 finalize the suspension of

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 enhance the efficiency of the operation of

the potato research and promotion program and 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 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 is 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 permits 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 corrects an oversight and includes

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 finalizes an interim final rule which suspended

portions of the Plan and amended three sections of the rules and

regulations issued under the Plan.

The suspension of portions of the Plan eliminated 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 were also suspended. The rules issued under the Plan were also

amended to provide an alternative means of selecting nominees for

appointment such as by a mail ballot of the industry.

Previously, the Plan required 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 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 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, the interim final rule suspended wording

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

Sec. 1207.322 dealt only with nomination of the initial Board and was

thus obsolete. Therefore, paragraph (a) was suspended in its entirety.

References to meetings were suspended in paragraphs (b) and (c).

Also, because no organizations of potato importers exist,

references to importer organizations are unnecessary and were suspended

in Sec. 1207.322(d).

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

regulations to meetings and importer organizations were removed and

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

to nominate producers and importers for appointment to the Board.

[[Page 53546]]

A second amendment to the rules and regulations dealt 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 provided 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 did 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 was 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, the interim final rule amended Sec. 1207.513 of the

regulations to provide for this reporting.

The interim final rule was issued on August 26, 1997, and published

in the Federal Register [62 FR 46179] on September 2, 1997. The

deadline for comments was November 3, 1997. No comments were received.

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.

List of Subjects in 7 CFR Part 1207

Advertising, Agricultural research, Marketing agreements, Potatoes,

Reporting and recordkeeping requirements.

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

Accordingly, the interim final rule amending 7 CFR Part 1207 which

was published at 62 FR 46175 on September 2, 1997, is adopted as a

final rule without change.

Dated: September 30, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-26763 Filed 10-5-98; 8:45 am]

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