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 FIR]

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: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule without change, the provisions of an interim final rule

suspending, for the 1999-2000 season only, the minimum grade, size,

quality, maturity, pack, and inspection 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 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.

EFFECTIVE DATE: October 13, 1999.

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 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].

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 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 continues in effect the suspension of the handling

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. The handling 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

[[Page 49353]]

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.

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 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. The Committee requested that this rule be effective for

the fiscal period beginning July 1, 1999, which is also the date

shipments of the 1999 Oregon-California potato crop began.

The objective of the handling 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

handling and inspection 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 handling 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 of the handling regulations 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 handling 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 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, the AMS

has prepared this final 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

[[Page 49354]]

Oregon-California potatoes may be classified as small entities.

This rule suspends the handling 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 will resume July 1, 2000, for the 2000-2001 season and

future seasons. Reporting requirements will allow the Committee to

obtain information from handlers necessary to collect assessments.

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

recommended suspending the handling 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 handling

regulations. The Committee requested that this rule be effective for

the fiscal period beginning July 1, 1999, which is also the date

shipments of the 1999 Oregon-California potato crop began.

The objective of the handling 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

handling and inspection 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 handling 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 of the handling regulations 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 handling

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 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 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 cost to 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

[[Page 49355]]

decrease in burden because of the elimination of safeguard reporting

requirements is estimated to be 167 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.

An interim final rule concerning this action was published in the

Federal Register on June 25, 1999. A copy of the rule was mailed to the

Committee's administrative office for distribution to producers and

handlers. In addition, the rule was made available through the Internet

by the Office of the Federal Register. That rule provided for a 60-day

comment period which ended August 24, 1999. No comments were received.

A small business guide on complying with fruit, vegetable, and

specialty crop marketing agreements and orders may be viewed at the

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

about the compliance guide should be sent to Jay Guerber at the

previously mentioned address in the FOR FURTHER INFORMATION CONTACT

section.

After consideration of all relevant material presented, including

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

finalizing the interim final rule, without change, as published in the

Federal Register (64 FR 34113, June 25, 1999) will tend to effectuate

the declared policy of the Act.

List of Subjects in 7 CFR Part 947

Marketing agreements, Potatoes, Reporting and recordkeeping

requirements.

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

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

Accordingly, the interim final rule amending 7 CFR part 947 which

was published at 64 FR 34113 on June 25, 1999, is adopted as a final

rule without change.

Dated: September 7, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-23792 Filed 9-10-99; 8:45 am]

BILLING CODE 3410-02-P