Irish Potatoes Grown in Colorado; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. FV99-948-1 PR]

Irish Potatoes Grown in Colorado; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate from $0.01 to

$0.02 per hundredweight of potatoes established for the Colorado Potato

Administrative Committee, Area III (Committee) under Marketing Order

No. 948 for the 1999-2000 and subsequent fiscal periods handled. The

Committee is responsible for local administration of the marketing

order which regulates the handling of potatoes grown in Colorado.

Authorization to assess Colorado potato handlers enables the Committee

to incur expenses that are reasonable and necessary to administer the

program. The 1999-2000 fiscal period began July 1 and ends June 30. The

assessment rate would remain in effect indefinitely unless modified,

suspended, or terminated.

DATES: Comments must be received by August 13, 1999.

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]. 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: Robert J. Curry, 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. 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 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 order now in effect, Colorado potato handlers

are subject to assessments. Funds to administer the order are derived

from such

[[Page 37891]]

assessments. It is intended that the assessment rate proposed herein

will be applicable to all assessable potatoes beginning on July 1,

1999, and continue until amended, 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.

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 would increase the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal periods from $0.01

per hundredweight to $0.02 per hundredweight of potatoes handled.

The Colorado potato 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 Committee consists of five producer members and four

handler members, each of whom is 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 current assessment rate of $.01 per hundredweight was

recommended by the Committee and approved by the Department for the

1996-97 and subsequent fiscal periods. That rate continues in effect

until modified, suspended, or terminated by the Secretary, upon

recommendation and information submitted by the Committee, or other

information available to the Secretary.

A meeting of the Committee was scheduled for May 13, 1999, to

review the current assessment rate and budget needs of the program for

the 1999-2000 fiscal period. However, a quorum was not present. Based

upon discussion among those Committee members who showed up for the

meeting, the manager of the Committee prepared information and voting

material that was sent by facsimile copy (fax) to Committee members and

alternates. Voting by telegraph, telephone, or other means of

communication is provided for in paragraph (c) of Sec. 948.61

Procedure, of the marketing order. Seven members subsequently faxed

completed votes back to the manager during the voting period May 14

through May 19, 1999. Thus, a fax vote was used to determined the

Committee's level of support for an increased rate of assessment and to

establish an operating budget for the 1999-2000 fiscal period. Those

voting confirmed their votes at the next scheduled Committee meeting

June 20, 1999.

Based on the fax vote, the Committee approved an assessment rate of

$0.02 per hundredweight of potatoes handled during the 1999-2000 and

subsequent fiscal periods. This is a $0.01 increase over the rate

currently in effect. The increased assessment rate is recommended

because the current rate of $.01 would not generate enough income to

adequately administer the program, given the projected short crop for

1999. The assessment rate increase is based on the 1999-2000 crop

estimate, the 1999-2000 fiscal period expenditures estimate, and the

current and projected balance of the operating reserve.

The Area III assessable potato crop for 1999-2000 is estimated to

be approximately 792,000 hundredweight. This is about 380,000

hundredweight less than the assessed crop of 1998-99 due to a reduction

in the acreage planted this season. The increased assessment would

ensure that the operating reserve is not depleted at the end of the

1999-2000 fiscal period because of the projected short crop.

The increased assessment rate of $.02 per hundredweight should

provide $15,840 in assessment income, (792,000 hundredweight x $.02).

This amount would be supplemented with $3,000 interest income, $1,500

rental income from the sublease of office space to the State Inspection

Service, and $4,110 from the operating reserve. These income sources

would total $24,450, which is the same as the 1999-2000 budget

recommended by the Committee by a vote of 6 in favor and 1 opposed. The

recommended budget is $1,603 less than the 1998-99 budget of $26,053.

Because of fax voting, the reason for the one negative budget vote is

not known.

The major expenditures recommended by the Committee for the 1999-

2000 fiscal period include $10,500 for the manager's salary, $3,000 for

rent, and $2,000 for office supplies. Budgeted expenses for these items

in the 1998-99 fiscal period were $11,500, $3,000, and $2,000,

respectively.

The Committee estimates it will have approximately $38,245 in its

operating reserve at the end of the current fiscal period. This should

be adequate to cover any income shortages for the current fiscal

period. This amount is within the maximum permitted by the order of

approximately two fiscal periods' expenditures (Sec. 948.78).

The proposed assessment rate of $.02 would continue in effect for

the 2000-2001 and subsequent fiscal periods unless modified, suspended,

or terminated by the Secretary, based on recommendation and information

submitted by the Committee, or other available information.

Although this assessment rate would be in effect for an indefinite

period, the Committee would 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 and are locally published. Committee meetings are open to

the public and interested persons may express their views at these

meetings. The Department would evaluate Committee recommendations and

other available information to determine whether modification of the

assessment rate is needed. Further rulemaking would be undertaken as

necessary.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact this rule would have on small entities. Accordingly,

the 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 17 handlers of Colorado Area III potatoes

who are subject to regulation under the order and approximately 60

potato producers in the regulated production 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

[[Page 37892]]

$5,000,000, and small agricultural producers are defined as those

having annual receipts of less than $500,000. The majority of Colorado

Area III potato handlers and producers may be classified as small

entities.

This rule would increase the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal periods from $0.01 per hundredweight to $0.02 per hundredweight

of potatoes handled. The $0.02 assessment rate was approved by all

seven of the Committee members who cast votes during a fax vote held

between May 14 and May 19, 1999. The proposed assessment rate is $0.01

greater than the rate currently in effect. The Committee recommended

the increased assessment rate because the current rate would not

generate enough income to adequately administer the program. The

anticipated fresh potato crop of 792,000 hundredweight is approximately

380,000 hundredweight less than the 1998-99 crop. The $0.02 rate should

provide $15,840 in assessment income, which, when combined with

interest income of $3,000, rental income of $1,500 from the sublease of

office space to the State Inspection Service, and $4,110 from the

operating reserve, would be adequate to meet the 1999-2000 fiscal

period's budgeted expenses.

In a fax vote of six in favor and one opposed, the Committee

recommended 1999-2000 expenditures of $24,450, which is $1,603 less

than last year's budgeted expenses. Prior to recommending this budget,

the Committee considered historical income and expenses, current income

and expense levels, the 1999-2000 estimated crop production, current

and projected operating reserve levels, and input from the Committee

officers. The major expenditures recommended by the Committee for the

1999-2000 fiscal period include $10,500 for the manager's salary,

$3,000 for rent, and $2,000 for office supplies. Budgeted expenses for

these items in the 1998-99 fiscal period were $11,500, $3,000, and

$2,000, respectively.

A review of historical data and preliminary information pertaining

to the upcoming season indicates that the price to producers for the

1999-2000 Colorado Area III potato season could average $5.30 per

hundredweight of potatoes. Therefore, the estimated assessment revenue

for the 1999-2000 fiscal period ($0.02 x 792,000 cwt = $15,840) as a

percentage of the projected total revenue at the farm gate ($5.30 x

792,000 cwt = $4,197,600) would be 0.37 percent. This figure indicates

that the $0.02 assessment rate recommended by the Committee would have

an insignificant impact on the Colorado potato industry.

This action would increase the assessment obligation imposed on

handlers. While assessments impose some additional costs on handlers,

the costs are minimal and uniform on all handlers. Some of the

additional costs may be passed on to producers. However, these costs

would be offset by the benefits derived by the operation of the order.

In addition, 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 on all

issues. Like all Committee meetings, the May 13, 1999, 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 proposed rule would impose no additional reporting or

recordkeeping requirements on either small or large 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.

A 30-day comment period is provided to allow interested persons the

opportunity to respond to this request for information and comments.

Thirty days is deemed appropriate because: (1) The Committee needs to

have sufficient funds to pay its expenses which are incurred on a

continuous basis; (2) the 1999-2000 fiscal period began on July 1,

1999, and the order requires that the rate of assessment for each

fiscal period apply to all assessable potatoes handled during such

fiscal period; and (3) handlers are aware of this action which is

similar to other assessment rate actions issued in past years.

List of Subjects in 7 CFR Part 948

Potatoes, Marketing agreements, Reporting and recordkeeping

requirements.

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

proposed to be 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. Section 948.215 is revised to read as follows:

Sec. 948.215 Assessment rate.

On and after July 1, 1999, an assessment rate of $0.02 per

hundredweight is established for Colorado Area III potatoes.

Dated: July 8, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-17892 Filed 7-13-99; 8:45 am]

BILLING CODE 3410-02-P