Irish Potatoes Grown in Modoc and Siskiyou Counties, California, and in all Counties in Oregon, Except Malheur County; Temporary Suspension of Handling Regulations and Establishment of Reporting Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 947

[Docket No. FV99-947-1 IFR]

Irish Potatoes Grown in Modoc and Siskiyou Counties, California,

and in all Counties in Oregon, Except Malheur County; Temporary

Suspension of Handling Regulations and Establishment of Reporting

Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule suspends, for the 1999-2000 season only, the minimum

grade, size, quality, maturity, pack, inspection, and other related

requirements currently prescribed under the Oregon-California potato

marketing order. The marketing order regulates the handling of Irish

potatoes grown in Modoc and Siskiyou Counties, California, and in all

Counties in

[[Page 34114]]

Oregon, except Malheur County, and is administered locally by the

Oregon-California Potato Committee (Committee). During this suspension

of the handling regulations, reports from handlers will be required to

obtain information necessary to administer the marketing order. This

rule is expected to reduce industry expenses.

DATES: Effective July 1, 1999, through June 30, 2000; comments received

by August 24, 1999 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) 720-5698; or E-mail:

[email protected]. 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: Teresa L. Hutchinson, Northwest

Marketing Field Office, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, Room 369,

Portland, Oregon 97204-2807; telephone: (503) 326-2724, Fax: (503) 326-

7440 or George Kelhart, Technical Advisor, 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) 720-5698. Small businesses may request information

on complying with this regulation, or obtain a guide on complying with

fruit, vegetable, and specialty crop marketing agreements and orders by

contacting Jay Guerber, Marketing Order Administration Branch, Fruit

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

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

5698, or E-mail: Jay.G[email protected]. You may view the marketing

agreement and order small business compliance guide at the following

web site: http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 114 and Marketing Order No. 947, both as amended (7 CFR

part 947), regulating the handling of Irish potatoes grown in Modoc and

Siskiyou Counties in California, and in all counties in Oregon, except

Malheur County, 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. 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 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 suspends the handling and related regulations currently

prescribed under the order from July 1, 1999, to June 30, 2000. This

rule allows the Oregon-California potato industry to market potatoes

without minimum grade, size, quality, maturity, pack, and inspection

requirements. These regulations will resume July 1, 2000, for the 2000-

2001 season and future seasons. This rule also establishes handler

reporting requirements during the same time period. Reporting

requirements will allow the Committee to obtain information from

handlers necessary to administer the order.

Section 947.52 of the order authorizes the issuance of regulations

for grade, size, quality, maturity, and pack for any variety of

potatoes grown in the production area during any period. Section 947.51

authorizes the modification, suspension, or termination of regulations

issued under Sec. 947.52.

Section 947.60 provides that whenever potatoes are regulated

pursuant to Sec. 947.52, such potatoes must be inspected by the

Federal-State Inspection Service, and certified as meeting the

applicable requirements of such regulations. The cost of inspection and

certification is borne by handlers.

Section 947.80 authorizes the Committee, with the approval of the

Secretary, to require reports and other information from handlers that

are necessary for the Committee to perform its duties.

Minimum grade, size, quality, maturity, and pack requirements for

potatoes regulated under the order are specified in Sec. 947.340

Handling Regulation [7 CFR 947.340]. This regulation, with

modifications and exemptions for different varieties and types of

shipments, provides that all potatoes grade at least U.S. No. 2; be at

least 2 inches in diameter or weigh at least 4 ounces; and be not more

than moderately skinned. Additionally, potatoes packed in cartons must

be U.S. No. 1 grade or better, with an additional tolerance allowed for

internal defects, or U.S. No. 2 grade weighing at least 10 ounces.

Section 947.340 also includes waivers of inspection procedures,

reporting and safeguard requirements for special purpose shipments, and

a minimum quantity exemption of 19 hundredweight per day. Related

provisions appear in the regulations at Sec. 947.130, Special Purpose

Certificates--application and issuance; Sec. 947.132 Reports;

Sec. 947.133 Denial and appeals; and Sec. 847.134 Establishment of list

of manufacturers of potato products.

The Committee meets prior to and during each season to consider

recommendations for modification, suspension, or termination of the

regulatory requirements for Oregon-California potatoes which have been

issued on a continuing basis. Committee meetings are open to the public

and interested persons may express their views at these meetings. The

Department reviews Committee recommendations and information submitted

by the Committee and other available information, and determines

whether modification, suspension, or termination of the regulatory

requirements would tend to effectuate the declared policy of the Act.

At its February 23, 1999, meeting, the Committee unanimously

recommended suspending the handling regulations and related sections

and establishing handler reporting requirements for the 1999-2000

season. The Committee met again on May 14, 1999, to review the

recommendation made at the earlier meeting. After extensive discussion,

the Committee decided not to rescind or modify their earlier

recommendation to suspend handling regulations and related sections.

The Committee requested that this rule be effective at

[[Page 34115]]

the beginning of the next fiscal period, July 1, 1999, which is also

the date shipments of the 1999 Oregon-California potato crop are

expected to begin.

The objective of the handling and inspection requirements is to

ensure that only acceptable quality potatoes enter fresh market

channels, thereby ensuring consumer satisfaction, increasing sales, and

improving returns to producers. While the industry continues to believe

that quality is an important factor in maintaining sales, the Committee

believes the cost of inspection and certification (mandated when

minimum requirements are in effect) may exceed the benefits derived.

Potato prices have been at low levels in recent seasons, and many

producers have faced difficulty covering their production costs.

Therefore, the Committee has been discussing the possibility of

reducing costs through the elimination of mandatory inspection. The

Committee is concerned, however, that the elimination of current

requirements could possibly result in lower quality potatoes being

shipped to fresh markets. Also, there is some concern that the Oregon-

California potato industry could lose sales to other potato producing

areas that are covered by quality and inspection requirements. For

these reasons, the Committee recommended that the suspension of the

requirements be effective for the 1999-2000 season only. This will

enable the Committee to study the impacts of the suspension and

consider appropriate actions for ensuing seasons.

This rule will enable handlers to ship potatoes without regard to

the minimum grade, size, quality, maturity, pack, and inspection

requirements for the 1999-2000 season only. This rule will allow

handlers to decrease costs by eliminating the costs associated with

inspection. This rule will not restrict handlers from seeking

inspection on a voluntary basis. The Committee will evaluate the

effects of removing the minimum requirements on marketing and on

producer returns at its meeting next spring.

The suspension action also will result in the elimination of the

monthly inspection report from the Federal-State Inspection Service

which the Committee used as a basis for the collection of assessments

from handlers. This inspection report was compiled by the Federal-State

Inspection Service from inspection certificates. During the suspension

of the regulations, reports from handlers will be needed for the

Committee to obtain information on which to collect assessments.

Therefore, a new Sec. 947.180 Reports is established which requires

each handler to submit a monthly assessment report to the Committee

containing the following information: (a) The date and quantity of

fresh potatoes sold including identification numbers; (b) the name and

address of the producers; (c) the assessment payment due; and (d) the

name and address of the handler. Authorization to assess handlers

enables the Committee to incur expenses that are reasonable and

necessary to administer the program. Although adding reporting

requirements, this rule through the elimination of inspection and

certification and other related requirements is expected to reduce

industry expenses.

Consistent with the suspension of Sec. 947.340, this rule also

suspends Secs. 947.120, 947.123, 947.130, 947.132, 947.133, and 947.134

of the rules and regulations in effect under the order. Sections

947.120 and 947.123 provide authority for hardship exemptions from

inspection and certification, and establish reporting and recordkeeping

requirements when such exemptions are in place. Sections 947.130,

947.132, 947.133, and 947.134 are safeguard and reporting provisions of

the order that are applicable to special purpose shipments when

inspection and certification requirements are in place.

Contained within Sec. 947.340(i) of the current handling

regulations is a minimum quantity exemption under which a handler may

ship not more than 19 hundredweight of potatoes on any day without

regard to the inspection and assessment requirements issued under the

order. The suspension of the handling regulations removes all

inspection requirements. To continue the current minimum quantity

exemption for assessments, a new Sec. 947.125 Minimum quantity

exemption is established. This section simply continues the current

minimum quantity exemption under which a handler may ship not more than

19 hundredweight of potatoes on any day without regard to the

assessment requirements issued under the order.

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 30 handlers of Oregon-California potatoes

who are subject to regulation under the marketing order and

approximately 450 potato producers 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

having annual receipts of less than $500,000.

Currently, about 83 percent of the Oregon-California potato

handlers ship less that $5,000,000 worth of potatoes and 17 percent

ship more than $5,000,000 worth on an annual basis. In addition, based

on acreage, production, and producer prices reported by the National

Agricultural Statistics Service, and the total number of Oregon-

California potato producers, average annual producer receipts are

approximately $285,000. In view of the foregoing, it can be concluded

that the majority of handlers and producers of Oregon-California

potatoes may be classified as small entities.

This rule suspends the handling and related regulations and

establishes reporting requirements from July 1, 1999, through June 30,

2000. This rule will allow the Oregon-California potato industry to

market potatoes without minimum grade, size, quality, maturity, pack,

and inspection requirements. The handling regulations currently

specified in Sec. 947.340 and in other related sections will resume

July 1, 2000, for the 2000-2001 season and future seasons. New

reporting requirements will allow the Committee to obtain information

from handlers necessary to collect assessments during the period of

suspension.

At its February 23, 1999, meeting, the Committee unanimously

recommended suspending the handling and related regulations and

establishing reporting requirements for the 1999-2000 season. The

Committee met again on May 14, 1999, to review the recommendation made

at the earlier meeting. After extensive discussion, the Committee

decided not to rescind or modify their earlier recommendation to

suspend the regulations. The Committee requested that this rule be

effective at the beginning of the next fiscal period, July 1, 1999,

which is also the date shipments of the 1999 Oregon-California potato

crop are expected to begin.

The objective of the handling requirements is to ensure that only

acceptable quality potatoes enter fresh market channels, thereby

ensuring

[[Page 34116]]

consumer satisfaction, increasing sales, and improving returns to

producers. While the industry continues to believe that quality is an

important factor in maintaining sales, the Committee believes the cost

of inspection and certification (mandated when minimum requirements are

in effect) may exceed the benefits derived.

Potato prices have been at low levels in recent seasons, and many

producers have faced difficulty covering their production costs.

Therefore, the Committee has been discussing the possibility of

reducing costs through the elimination of mandatory inspection. The

Committee is concerned, however, that the elimination of current

requirements could possibly result in lower quality potatoes being

shipped to fresh markets. Also, there is some concern that the Oregon-

California potato industry could lose sales to other potato producing

areas that are covered by quality and inspection requirements. For

these reasons, the Committee recommended that the suspension of the

requirements be effective for the 1999-2000 season only. This will

enable the Committee to study the impacts of the suspension and

consider appropriate actions for ensuing seasons.

This rule will enable handlers to ship potatoes without regard to

the minimum grade, size, quality, maturity, pack, inspection, and

related requirements for the 1999-2000 season only. This rule will

allow handlers to decrease costs by eliminating the costs associated

with inspection. This rule will not restrict handlers from seeking

inspection on a voluntary basis. The Committee will evaluate the

effects of removing the minimum requirements on marketing and on

producer returns at its meeting next spring.

The suspension action also will result in the elimination of the

monthly inspection report from the Federal-State Inspection Service

which the Committee used for billing purposes. This inspection report

was compiled by the Federal-State Inspection Service from inspection

certificates. During this suspension of the regulations, reports from

handlers will be necessary for the Committee to obtain information on

which to collect assessments. This rule establishes a new Sec. 947.180

Reports which requires each handler to submit a monthly assessment

report to the Committee containing the following information: (a) The

date and quantity of fresh potatoes sold including identification

numbers; (b) the name and address of the producers; (c) the assessment

payment due; and (d) the name and address of the handler. Authorization

to assess handlers enables the Committee to incur expenses that are

reasonable and necessary to administer the program. Although adding

reporting requirements, this rule through the elimination of inspection

and certification and other related requirements is expected to reduce

industry expenses.

Contained within Sec. 947.340(i) of the current handling

regulations is a minimum quantity exemption under which a handler may

ship not more than 19 hundredweight of potatoes on any day without

regard to the inspection and assessment requirements issued under the

order. The suspension of the handling regulations removes all

inspection requirements. To continue the current minimum quantity

exemption for assessments, a new Sec. 947.125 Minimum quantity

exemption is established. This section simply continues the current

minimum quantity exemption under which a handler may ship not more than

19 hundredweight of potatoes on any day without regard to the

assessment requirements issued under the order.

The Committee anticipates that this rule will not negatively impact

small businesses. This rule will suspend minimum grade, size, quality,

maturity, pack, and inspection requirements. Further, this rule will

allow handlers and producers the choice to obtain inspection for

potatoes, as needed, thereby reducing costs for producers and handlers.

The total cost of inspection and certification for fresh shipments of

Oregon-California potatoes during the 1998-99 marketing season is

estimated at $600,000. This is approximately $20,000 per handler. The

Committee expects, however, that most handlers will continue to have

some of their potatoes inspected and certified by the Federal-State

Inspection Service.

The Committee investigated the use of other types of inspection

programs as another option to reduce the cost of inspection, but

believed they were not viable at this time. With the suspension of

handling regulations, there are no alternatives to reporting

requirements to ensure the collection of assessments needed to

administer the order.

This rule will require monthly reports from handlers to obtain

information necessary to collect assessments. Although this rule

establishes new reporting requirements, the suspension of the handling

regulations eliminates the more frequent reporting requirements that

were included under the safeguard provisions of the order.

Therefore, any additional reporting or recordkeeping requirements

on either small or large potato handlers are expected to be offset by

the elimination of reporting requirements currently in effect. In

addition, the elimination of inspection and certification requirements

is expected to further reduce industry expenses. Finally, 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 accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

Chapter 35), the information collection requirements that are contained

in this rule have been approved by the Office of Management and Budget

(OMB) and have been assigned OMB No. 0581-0178. It is estimated that it

will take a handler 20 minutes to complete a monthly assessment report,

and that each handler will fill out 12 monthly assessment reports each

year. This creates an estimated total industry burden of approximately

120 hours. It is estimated that it currently takes a handler 5 minutes

to complete a safeguard reporting form. With an estimated 2,000

safeguard reports completed each year, the estimated decrease in burden

because of the suspension of safeguard reporting requirements is

estimated to be 167 hours. Five other miscellaneous forms are also

being suspended. With an estimated 31 responses each year, the

estimated decrease in burden because of the suspension of these forms

is estimated to be 6.5 hours.

The Department has not identified any relevant Federal rules that

duplicate, overlap or conflict with this rule. Further, the Committee's

meetings were widely publicized throughout the Oregon-California potato

industry and all interested persons were invited to attend the meetings

and participate in Committee deliberations. Like all Committee

meetings, the February 23, 1999, and May 14, 1999, meetings were public

meetings and all entities, both large and small, were able to express

their views on this issue. The Committee itself is composed of 14

members, of which 5 are handlers and 9 are producers. 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

(1) The regulations suspended by this action for a specified period no

longer tend to effectuate the declared policy of the Act and (2) the

addition of new regulations, as hereinafter set forth, will

[[Page 34117]]

tend to effectuate the declared policy of the Act.

This rule invites comments on suspension of the handling

regulations and establishment of reporting requirements under the

Oregon-California 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 suspends the current handling and related

regulations and establishes reporting requirements for Oregon-

California potatoes for the 1999-2000 marketing year which begins July

1, 1999; (2) this rule was unanimously recommended by the Committee at

open public meetings and all interested persons had an opportunity to

express their views and provide input; (3) Oregon-California potato

handlers are aware of this rule and need no additional time to comply

with the relaxed requirements; (4) this rule should be in effect by

July 1, 1999, the date 1999-2000 season shipments of the Oregon-

California potato crop are expected to begin, and this action should

apply to the entire season's shipments; and (5) 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 947

Marketing agreements, Potatoes, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR Part 947 is

amended as follows:

PART 947--IRISH POTATOES GROWN IN MODOC AND SISKIYOU COUNTIES,

CALIFORNIA, AND IN ALL COUNTIES IN OREGON, EXCEPT MALHEUR COUNTY

1. The authority citation for 7 CFR Part 947 continues to read as

follows:

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

2. In Part 947, Secs. 947.120, 947.123, 947.130, 947.132, 947.133,

947.134 and 947.340 are suspended in their entirety effective July 1,

1999, through June 30, 2000.

3. In Subpart--Rules and Regulations, under the undesignated center

heading ``Exemptions'', a new Sec. 947.125 is added, and a new

undesignated center heading and Sec. 194.180 are added to read as

follows:

Sec. 947.125 Minimum quantity exemption.

From July 1, 1999, through June 30, 2000, any person may handle not

more than 19 hundredweight of potatoes on any day without regard to the

assessment requirements of Sec. 947.41 of this part. This exemption

shall not apply to any part of a shipment which exceeds 19

hundredweight.

Reports

Sec. 947.180 Reports.

From July 1, 1999, through June 30, 2000, each person handling

potatoes shall submit a Monthly Assessment Report to the Committee

containing the following information:

(a) The date and quantity of fresh potatoes sold including

identification numbers;

(b) the name and address of the producers;

(c) the assessment payment due; and

(d) the name and address of such handler.

Dated: June 18, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-16056 Filed 6-24-99; 8:45 am]

BILLING CODE 3410-02-P