[Federal Register: November 26, 2004 (Volume 69, Number 227)]
[Proposed Rules]
[Page 68819-68829]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no04-31]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 68819]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 946
[Docket No. AO-F&V-946-3; FV03-946-01]
Irish Potatoes Grown in Washington; Recommended Decision and
Opportunity To File Written Exceptions to Proposed Amendments to
Marketing Agreement No. 113 and Marketing Order No. 946
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule and opportunity to file exceptions.
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SUMMARY: This recommended decision invites written exceptions on
proposed amendments to the marketing agreement and order (order) for
Irish potatoes grown in Washington. Seven amendments are based on those
proposed by the State of Washington Potato Committee (Committee), which
is responsible for local administration of the order. These amendments
include: Adding authority for container and marking regulations;
requiring Committee producer members to have produced potatoes for the
fresh market in at least 3 out of the last 5 years prior to nomination;
updating order provisions pertaining to establishment of districts and
apportionment of Committee membership among those districts; requiring
Committee nominees to submit a written background and acceptance
statement prior to selection by USDA; allowing for nominations to be
held at industry meetings or events; adding authority to change the
size of the Committee; and adding authority to allow temporary
alternates to serve when a Committee member and that member's alternate
are unable to serve.
The USDA proposed two additional amendments: To establish tenure
limitations for Committee members; and to require that continuance
referenda be conducted on a periodic basis to ascertain producer
support for the order. The proposed amendments are intended to improve
the operation and functioning of the marketing order program.
DATES: Written exceptions must be filed by December 27, 2004.
ADDRESSES: Written exceptions should be filed with the Hearing Clerk,
U.S. Department of Agriculture, room 1081-S, Washington, DC 20250-9200,
Facsimile number (202) 720-9776 or http://www.regulations.gov. All
comments should reference the docket number and the date and page
number of this issue of the Federal Register. Comments will be made
available for public inspection in the Office of the Hearing Clerk
during regular business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html
.
FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order
Administration Branch, Fruit and Vegetable Programs, Agricultural
Marketing Service, USDA, Post Office Box 1035, Moab, UT 84532,
telephone: (435) 259-7988, fax: (435) 259-4945.
Small businesses may request information on this proceeding by
contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop
0237, Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202)
720-8938.
SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice
of Hearing issued on October 6, 2003, and published in the October 10,
2003, issue of the Federal Register (68 FR 58638).
This action is governed by the provisions of sections 556 and 557
of title 5 of the United States Code and is therefore excluded from the
requirements of Executive Order 12866.
Preliminary Statement
Notice is hereby given of the filing with the Hearing Clerk of this
recommended decision with respect to the proposed amendment of
Marketing Agreement No. 113 and Marketing Order 946 regulating the
handling of Irish potatoes grown in Washington, and the opportunity to
file written exceptions thereto. Copies of this decision can be
obtained from Melissa Schmaedick, whose address is listed above.
This recommended decision is issued pursuant to the provisions of
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601 et seq.), hereinafter referred to as the ``Act,'' and the
applicable rules of practice and procedure governing the formulation of
marketing agreements and orders (7 CFR Part 900).
The proposed amendments are based on the record of a public hearing
held November 20, 2003, in Moses Lake, Washington. Notice of this
hearing was published in the Federal Register on October 10, 2003 (68
FR 58638). The notice of hearing contained order changes proposed by
the Committee and USDA.
The Committee's proposed amendments include: Adding authority to
establish container and marking regulations; requiring Committee
producer members to have produced potatoes for the fresh market in at
least 3 out of the last 5 years prior to nomination; updating
provisions pertaining to districts and allocation of Committee
membership among those districts; requiring Committee nominees to
submit a written background and acceptance statement prior to selection
by USDA; allowing for nominations to be held at industry meetings or
events; adding authority to change the size of the Committee; and
adding authority to allow temporary alternates to serve when a
Committee member and that member's alternate are unable to serve.
The USDA proposed two additional amendments: To establish tenure
limitations for Committee members; and require that continuance
referenda be conducted on a periodic basis to ascertain producer
support for the order. In addition, USDA proposed to allow such changes
as may be necessary to the order, if any of the proposed changes are
adopted, so that all of the order's provisions conform to the
effectuated amendments.
Four industry witnesses testified at the hearing. These witnesses
represented fresh Irish potato producers and handlers in the production
area, and they all supported the Committee's recommended changes.
Industry witnesses addressed the need for adding authority to
establish container and marking regulations, noting that uniform
industry regulations and increased flexibility in marketing practices
would positively affect the Washington fresh potato industry. Witnesses
also recommended that definitions of ``pack'' and ``container'' be
added to the order.
[[Page 68820]]
Industry witnesses stated their approval of the Committee's
recommendations to: Require producer members to have produced potatoes
for the fresh market in at least 3 out of the last 5 years prior to
nomination; update obsolete order language pertaining to districts; and
to require Committee nominees to submit a written background and
acceptance statement prior to their selection by USDA. These proposals
would ensure adequate representation of fresh potato growers on the
Committee, replace outdated language pertaining to districts and
allocation of membership among the districts, and combine the
Background Statement and the Letter of Acceptance into a single form.
Witnesses also supported the proposals to allow for nominations to
be held at large industry meetings rather than at meetings in each
district, and to add authority for changes in Committee size. Witnesses
stated that the former would broaden grower participation in the
nomination process. The latter would allow the Committee to assess the
appropriateness of current Committee size and structure in light of
changes in the Washington potato industry.
Lastly, industry witnesses testified in support of allowing a
temporary alternate to serve at Committee meetings when both a member
and his or her alternate are unable to attend. This would facilitate
attaining a quorum and prevent delays in Committee decision-making.
A USDA witness testified in support of tenure limitations as a
means of broadening industry participation in administering the
programs. That witness also favored continuance referenda as a means of
periodically determining whether potato growers want the program to
continue.
At the conclusion of the hearing, the Administrative Law Judge
stated that the final date for interested persons to file proposed
findings and conclusions or written arguments and briefs based on the
evidence received at the hearing would be 30 days after USDA's receipt
of the hearing record transcript. No briefs were filed.
Material Issues
The material issues presented on the record of hearing are as
follows:
(1) Whether to add authority to establish container and marking
regulations;
(2) Whether Committee producer members should be required to have
produced potatoes for the fresh market in at least 3 out of the last 5
years before nomination;
(3) Whether to update order provisions pertaining to establishment
of districts and allocation of Committee membership among those
districts;
(4) Whether to require Committee nominees to submit a written
background and acceptance statement prior to selection by USDA;
(5) Whether to allow for nominations to be held at industry
meetings or events;
(6) Whether to add authority to change the size of the Committee;
(7) Whether to add authority to allow for temporary alternates to
serve when a Committee member and that member's alternate are unable to
serve;
(8) Whether to establish tenure limitation for Committee members;
and
(9) Whether to require periodic grower continuance referenda.
Findings and Conclusions
The following findings and conclusions on the material issues are
based on evidence presented at the hearing and the record thereof.
Material Issue Number 1--Authority To Establish Container and Marking
Regulations
The order should be amended to give authority to the Committee to
recommend, for approval by USDA, container and container marking
regulations. Such recommendations could include specification of the
size, capacity, weight, dimensions, pack, and marking or labeling of
the containers that can be used in the packaging or handling of Irish
potatoes grown in Washington. This amendment would also require the
definition of two new terms: ``pack'' and ``container.'' ``Pack'' would
be defined to mean a quantity of potatoes in any type of container
which falls within specific weight limits or within specific grade and/
or size limits, or any combination thereof. ``Container'' would be
defined to mean a sack, box, bag, crate, hamper, basket, carton,
package, barrel or any other type of receptacle used in the packing,
transportation, sale or other handling of potatoes.
Section 946.52 of the order currently authorizes the establishment
of grade, size, quality and maturity regulations for fresh potatoes.
Under this authority, fresh potatoes grown in the production area must
meet a minimum grade requirement of U.S. No. 2, and must meet minimum
size, cleanness, and maturity specifications. Additionally, potatoes
packed in cartons must grade at least U.S. No. 1. These requirements
appear in Sec. 946.336 of the order's rules and regulations.
The Committee proposed amending Sec. 946.52 to add authority for
container regulations, including labeling requirements. Witnesses
supported this proposal as a way to add flexibility to the order,
allowing the industry to adjust to changing market demands. To
illustrate their point, witnesses discussed their desire to allow U.S.
No. 2 grade potatoes to be packed in cartons, but only if the grade
were required to be clearly marked on the container.
Witnesses stated that having the authority to require labeling of
cartons is vital to the industry, as mandatory labeling would prevent
any handler from misrepresenting the quality of the potatoes packed in
specified cartons. As previously mentioned, only U.S. No. 1 or higher
grade Washington potatoes have been traditionally packed in cartons.
Witnesses pressed the importance of mandatory labeling if U.S. No. 2
potatoes were packed in cartons to differentiate the lower quality
pack, thereby preventing customer dissatisfaction with the quality of
Washington potatoes. As one witness stated, mandatory labeling would
ensure that handlers accurately represent the quality of potatoes
packed in cartons, thereby maintaining the market for the industry's
premium pack.
According to the hearing record, the U.S. potato industry is highly
competitive. Consolidation within the industry has resulted in fewer
producers and handlers competing for market demand. For this reason,
witnesses asserted that the Washington potato industry's ability to
respond to customer demands for alternate containers and labeling or
marking requirements is essential to its continued success in the
market place.
To illustrate this point, witnesses described a recurring request
among industry customers for the packing of U.S. No. 2 grade potatoes
in 50-pound cartons. Record evidence indicates this request stems from
wholesalers and retailers who desire U.S. No. 2 grade potatoes packed
in 50-pound cartons for the purpose of addressing issues such as ease
of stacking in warehouses and greater product protection. Adding this
authority would allow the Washington potato industry to offer its
customers a package that is easier to handle and store, that would
protect potatoes from light induced ``greening'', and would help
protect against bruising during transport.
Witnesses also submitted as evidence a letter from a major food
service distributor outlining several reasons for requesting that U.S.
No. 2 grade potatoes from Washington be packed in cartons. Reasons
outlined in the letter include:
[[Page 68821]]
Reduced damage losses and increased product integrity in the
distribution system; increased handling efficiencies in the flow of
product from the handlers throughout the distribution system; and
efficient receiving, storage, order selection and delivery of the
product to the end user as a result of clear, consistent and accurate
labeling of product. Labeling could include grade, pack, and product
description. When asked if the industry agreed with these statements,
witnesses stated that these benefits could be realized if container and
marking regulatory authority was added to the order.
Witnesses stated that the order's lack of container and labeling
authority has challenged the Washington potato industry's ability to
meet evolving requests from its customers. Moreover, witnesses fear
that if this authority were not added to the order, the Washington
potato industry would potentially lose valuable market share, as
customers would search elsewhere to satisfy their demand for specific
product in specific packaging.
In addition to meeting packing demands, witnesses noted the
importance of proper labeling and product quality. Upholding the
integrity of the Washington State potato industry, witnesses explained,
is as important as meeting customer specifications. Mandatory labeling
would not only ensure that handlers are putting the right product in
the right packaging, but it would also assure that customers actually
receive what they have ordered, thus alleviating potential consumer
perception problems. For example, without labeling authority, a
customer could mistakenly receive cartons containing U.S. No. 2 grade
potatoes instead of U.S. No. 1 grade potatoes. If such a situation were
to occur, it could damage customer perceptions of U.S. No. 1 grade
potatoes produced in Washington.
Having the flexibility to market different grades of potatoes in
labeled cartons would also expand the marketability of Washington
potatoes. Witnesses explained that conditions relating to the
production of table stock, or fresh market, potatoes and the resultant
marketability of such potatoes can greatly fluctuate annually due to
water availability, weather, and variances in pest control and other
cultural practices. Thus, the overall quality of the potato crop can
change enough from year to year that the U.S. No. 1 grade packout
percentage can be widely variable. Witnesses explained that, generally,
U.S. No. 2 grade potatoes are directed to the dehydration market, a
market that does not always provide returns high enough to meet the
costs associated with potato production. Witness added, however, that
occasional demand exists for U.S. No. 2 grade potatoes as ``peelers''
in the restaurant sector for use in soups and salads, or as ``natural''
French fries.
Witnesses stated that because the order lacks container labeling
authority, greater opportunities to market U.S. No. 2 grade potatoes
are not currently available. If this authority were added to the order,
witnesses indicated that the Washington fresh potato industry would
gain access to opportunities that other production areas have access to
that they do not. Witnesses stated that having the ability to pack U.S.
No. 2 grade potatoes in labeled cartons would meet the current demand
of the food service industry, enable the Washington potato industry to
remain competitive with other growing areas, and help potato producers
in Washington State remain viable.
While witnesses used the example of packing U.S. No. 2 grade
potatoes in cartons, it is not intended that the authority for
container (including labeling) requirements be limited to this
situation. Witnesses stated that this authority would allow the
industry to respond to consumer demands as new market trends develop.
Another witness stated that demands on the fresh potato industry are
changing on a regular basis. In order to remain competitive, producers
and handlers cannot rely on ``business as usual'' from year to year.
Testimony indicated that packing facilities are already configured
for packing potatoes in cartons and labeling the cartons. Witnesses
noted that there would be little, if any, need for equipment changes or
additions. Thus, the proposed change is not expected to negatively
affect the costs associated with handling fresh market potatoes.
Moreover, one handler testifying in favor of this amendment expressed
confidence in the principle that customers seeking alternate packing
procedures, container types, or specific marking requirements would
also be willing to pay any cost differential. Thus, the witness argued
that any additional charge incurred while packing would be offset by
the increased selling price. The proposed amendment authorizes
container and marking specifications. Any specific recommendation by
the Committee to implement this authority would be subject to further
analysis through the informal rulemaking process.
It was also requested by witnesses at the hearing that definitions
of ``pack'' and ``container'' be added to the order to further clarify
this proposed amendment. Adding these two definitions would assist in
clarifying future requirements established under the above-proposed
authority. Proposed definitions of both terms were presented at the
hearing and are supported by the hearing record.
Record evidence supports amending the order to include container
and marking regulatory authority. This amendment would allow the
Committee to recommend, and USDA to implement, container and marking
requirements through the informal rulemaking procedure. No opposition
to the above proposal was voiced at the hearing. Accordingly, USDA
proposes that Sec. 946.52 be amended.
The USDA also proposes that definitions of ``pack'' and
``container'' be added to the order. Adding these two definitions would
assist in defining future requirements established under the above-
proposed authority.
Material Issue Number 2--Eligibility Requirements for Producer Members
of the Committee
The order should be amended to require Committee producer members
to have produced potatoes for the fresh market in at least three out of
the last five years before nomination. In addition, producer member
nominees should also be required to be current producers of fresh
potatoes. Such recommendation would ensure representation of fresh
potato interests in a market increasingly dominated by processed potato
interests.
Section 946.22 of the order establishes the Washington Potato
Committee to locally administer the program. The Committee consists of
10 producer and 5 handler members, each having an alternate. Section
946.25 further provides that a producer member of the Committee must be
a producer in the district he or she is nominated to represent, or be
an officer or employee of a corporate grower in that district. The
record supports adding additional eligibility requirements for producer
members of the Committee.
Generally, producers nominated to serve on the Committee produce
fresh market potatoes. However, the order does not specifically prevent
a producer who is solely engaged in the production of potatoes for
processing from being elected to serve on the Committee. Witnesses
indicated that adding this requirement to the order would ensure
adequate representation of fresh potato producers in Committee
deliberations.
Witnesses introduced support for this proposal by noting that
Marketing Order 946 was established in 1949 to address market needs of
the Washington State
[[Page 68822]]
fresh potato industry. Since that time, the proportion of potatoes
produced for the fresh market relative to those produced for the
processing market has shifted substantially. As an example, one witness
noted that, in 1955, nearly three-quarters of the production from the
State's 36,000 acres of potatoes was directed to the fresh market. In
2003, the share directed to the fresh market represented only 15
percent of the 165,000 acres grown in Washington. Witnesses stated that
the declining number of Washington potato producers, coupled with the
decreasing proportion of potato production directed to the fresh
market, has heightened the Committee's awareness of its need to ensure
representation of fresh producers.
Because the order was created to serve the fresh market industry,
witnesses felt that only those producers who supply product to that
market should represent the industry. Moreover, witnesses stated that a
Committee member's personal experience in the production and marketing
of fresh market potatoes would enable that producer to make decisions
that are in his or her best interest, as well as in the best interest
of the industry.
According to the hearing record, the cultural practices of fresh
potato production differ significantly from the cultural practices
utilized in the production of potatoes for processing. Witnesses
explained that, while some shifts by individual producers in delivery
of potatoes to the fresh versus the processing market may occur because
of economic conditions, substantial swings in the flow of product are
unlikely. Reasons preventing significant diversion of potatoes produced
for the fresh market to the processing potato market include different
production and harvesting techniques, as well as differences in the
varieties grown for each market.
One witness stated that production for the fresh versus processing
market is a factor that is taken into consideration before planting of
the crop. While some adjustments may be made due to production or
market conditions, it is unlikely for an entire crop to be diverted
from one market to the other. Therefore, witnesses stressed that
representation of the fresh market industry should be distinct from
that of the processing market industry, even though there may be some
diversion from one to the other.
Witnesses stated that a nominee's eligibility could be easily
verified through the collection of pertinent information on nominee
background and acceptance statements. Nominees would be asked to
designate the number of years they have been growing for the fresh
market, and whether they are currently producing for that market.
Record evidence supports amending the order to require producer
members to have produced potatoes for the fresh market in at least
three out of the last five years before nomination. In addition, USDA
recommends clarifying the industry's intent, as presented at the
hearing, that producer member nominees also be current producers of
fresh potatoes. Further, USDA recommends adding these requirements to
Sec. 946.25(a) of the order, rather than to Sec. 946.22 as proposed
by the Committee. This would put all producer member eligibility
requirements in a single location. This proposal would ensure adequate
representation of fresh potato interests on the Committee. There was no
opposition given to the above proposal.
Material Issue Number 3--Establishment of Districts and Allocation of
Committee Membership Among Districts
Section 946.25, Selection, and Sec. 946.31, Districts, of the
order should be revised to incorporate updated language currently in
the order's administrative rules and regulations. The intent of this
proposal is to replace obsolete order language pertaining to the
establishment of districts and the allocation of Committee membership
among those districts.
As previously discussed, the Committee is comprised of 10 producer
members and 5 handler members. For purposes of Committee
representation, the production area is divided into geographic
districts, and Committee membership is allocated among those districts.
Section 946.31 of the order establishes five districts. Section
946.25 allocates producer and handler membership among those districts.
Section 946.31 further authorizes USDA, upon recommendation of the
Committee, to reestablish the districts and to reapportion Committee
membership among the various districts.
Under the authority in Sec. 946.31, the districts were
reestablished and membership reapportioned in 1975. A further
reapportionment occurred in 1987. These revisions were made to reflect
changes in production patterns since the order's promulgation in 1952.
Current requirements appear in Sec. 946.103, Reestablishment of
districts, and Sec. 946.104, Reapportionment of committee membership,
of the order's administrative rules and regulations.
To update and simplify the order, the Committee recommended that
the current language in Sec. Sec. 946.104 and 946.103 replace the
obsolete language in Sec. Sec. 946.25 and 946.31.
Witnesses maintained that the currently established districts and
apportionment of membership among those districts remain adequate to
ensure appropriate representation of the Washington potato industry on
the Committee. Further, witnesses supported retaining the authority to
further reestablish the districts and reapportion membership in the
future if deemed appropriate.
Record evidence supports revising the order by replacing obsolete
language pertaining to districts and allocation of membership. As this
proposal would facilitate proper interpretation of the order and there
was no opposition presented at the hearing, USDA is proposing that
Sec. Sec. 946.25 and 946.31 be revised accordingly.
A conforming change is recommended in Sec. 946.31. Paragraph (b)
of that section authorizes reestablishment of the districts and
reapportionment of membership among those districts. It also lists the
criteria that must be considered in making such changes. As discussed
further in connection with Material Issue Number 6, USDA is proposing
that this authority be included in Sec. 946.22. Additionally, the
criteria for changes in membership (including reestablishment of
districts and reapportionment among those districts) are being updated.
Thus, USDA recommends deleting current Sec. 946.31(b) as unnecessary
and in need of updating.
Material Issue Number 4--Combing Written Background and Acceptance
Statements
Section 946.26 should be amended to require Committee nominees to
qualify as a member or alternate member by filing a written background
and acceptance statement indicating willingness to serve before
selection. Currently, USDA requires a background statement to be
completed before selection to determine nominees' eligibility to serve.
Section 946.26 requires a written acceptance after selection.
Witnesses stated that this amendment would allow the Background
Statement to be combined with the Letter of Acceptance for nominated
Committee members, thereby reducing the number of forms required of
each nominee from two to one. Rather than eliminate any requirements
currently outlined in the order, this proposal would streamline the
process by making it more efficient.
Currently, nominations of Committee members are made within each
district
[[Page 68823]]
utilizing mail balloting procedures. This process generally entails two
separate mailings, follow-up telephone calls, and finally, submission
of the nominees' names to USDA for final selection. The Committee staff
first collects the names of individuals interested in being on the
Committee. Producers and handlers may nominate themselves or are
nominated by other potato producers or handlers. The Committee manager
then verifies with each individual his or her consent to serve as a
Committee member if selected. The names of all individuals who wish to
serve are then placed on a ballot and mailed to all producers and
handlers by district. Completed ballots are returned and tabulated at
the Committee office.
The producer or handler receiving the highest number of votes for a
vacant producer or handler Committee position is designated as the
member nominee. The producer or handler receiving the second highest
votes is designated as the respective alternate member nominee. Before
submission to USDA for selection, nominated members and alternate
members are required to complete and sign a Background Statement. The
Background Statement allows both the Committee and USDA to determine a
nominee's eligibility to serve on the Committee by requiring
information on the nominee's position in the Washington potato
industry. Following selection by the USDA, the newly appointed
Committee members are each required to complete an Acceptance Letter by
providing their name, address, and signature.
Testimony indicated that this process utilizing two forms is
unnecessary because the producer or handler has already indicated his
or her willingness to serve by accepting the nomination and filling out
the background statement. The Committee believes that combining the two
forms, and requiring the single form's submission at the time of
nomination, would be more efficient than the current method. By
combining these forms into one and requiring the information at the
time of nomination, the Committee and USDA would also know in advance
that the nominees are willing to serve on the Committee if selected.
Record evidence supports amending the order to require Committee
nominees to submit a written background and acceptance statement before
selection by USDA. No opposition to this proposal was presented at the
meeting. Accordingly, record evidence supports revising Sec. 946.26 of
the order.
Material Issue Number 5--Industry Nomination Meetings
Section 946.32 should be amended to authorize Committee nominations
to be held at industry meetings or events rather than at meetings held
in each of the five districts. This proposal would provide more
flexibility in the nomination process and could result in increased
industry participation.
According to the record, several industry-wide meetings are held
between the months of November and March each year. Because these
meetings include producer education and information components, they
typically draw larger crowds than the scheduled district meetings held
solely for the purpose of nominations. Given recent challenges in
recruiting and maintaining a fully seated Committee, witnesses at the
hearing suggested that these large meetings may also represent an
untapped opportunity to educate the industry on the duties of the
administrative committee and to hold nomination meetings. Witnesses
stated that recruitment efforts at these meetings would give Committee
vacancies more exposure and could provide greater diversity on the
Committee, as a broader group of potential nominees would be reached.
Constant demands for time on both producers' and handlers'
schedules limit the effectiveness of current recruitment efforts that
rely heavily on distributing marketing order information through the
mail. Because of this factor, many in the fresh market potato industry
are not knowledgeable about Committee issues and membership
responsibilities. Industry meetings or events would provide an
opportunity to improve understanding of the Committee, its role, and
its objectives relative to the fresh market potato industry. If such
authority is added to the order, testimony indicated that the Committee
could explore the option of asking for nominations at industry meetings
or events. Such meetings would have to be open to all Washington potato
growers and handlers.
Witnesses stated that this amendment would neither change the
Committee's authority to conduct nominations at district meetings or by
mail, nor would it affect the current structure of the Committee.
Record evidence supports amending the order to authorize
nominations at meetings other than at individual district meetings held
by the Committee. This amendment would provide more flexibility in
conducting nominations and could result in participation by more
growers and handlers. There was no opposition to the above proposal.
Accordingly, USDA is proposing that Sec. 946.32 be amended.
Material Issue Number 6--Authority for Changes in Committee Size
Section 946.22 of the order should be revised to add authority for
the Committee to recommend changes in Committee size and structure. The
intent of this proposal is to provide the Committee with a tool to more
efficiently respond to the changing character of the Washington State
fresh potato industry. In recommending any such changes, the following
would be considered: (1) Shifts in acreage within districts and within
the production area during recent years; (2) the importance of new
production in its relation to existing districts; (3) equitable
relationship between Committee apportionment and the various districts;
(4) other relevant factors.
Testimony indicates that significant changes have occurred in both
the production base and industry demographics of the fresh market
potato industry since the order was implemented. These changes suggest
that flexibility in adapting to the changing character of the
Washington fresh market potato industry is important to the
administrative applicability of the order. Witnesses stated that,
ultimately, the order's ability to remain effective over time would be
reliant on its ability to change with the needs of the industry. In
this regard, the Committee has proposed adding authority to the order
that would allow for Committee size and structure to be considered, and
recommendations for change to be made.
Witnesses testified that careful industry analysis would lead to
sound recommendations to USDA regarding any change in Committee size or
structure. If the authority to change the size of the Committee were
added to the order, the Committee could, at a regular meeting, review
the current structure of the Committee using the points of
consideration mentioned above. Upon completing this analysis on the
fresh industry, the Committee could make a recommendation to USDA for a
change in the size of the Committee.
Implementation of this authority would allow such changes to be
pursued through the informal rulemaking process. Witnesses stated that
formal rulemaking does not allow the industry to respond quickly enough
to changes in the industry.
Given the changes that the Washington fresh potato industry has
seen over the past 10 years, flexibility to
[[Page 68824]]
change the size of the Committee in step with the evolving needs of the
industry would be an important tool. It would allow the Committee to
focus on the increasing competitiveness in the market while minimizing
costs and maximizing efficiency.
When asked how procedural aspects of the order would be impacted
given a change in Committee size, witnesses stated that administration
of the order should continue to be conducted as currently outlined, but
should be modified to reflect any changes in the number of Committee
members. For example, Sec. 946.24, Procedure, provides that nine
members are required for a quorum at Committee meetings, and that nine
concurring votes are required to pass any Committee action. If the
Committee size were to change from its current 15 members to 10
members, for example, witnesses felt that the intent of Sec. 946.24
should be maintained. To accomplish this, a conforming change is
recommended in Sec. 946.24. The current ratio of 9 out of 15 members,
or 60 percent, would be applied to the quorum and voting requirements
for any newly established Committee. The revision of this language
would be necessary to maintain the current voting parameters of the
order if the Committee size were to change.
Record evidence supports amending the order to add authority to
change in Committee size and structure. This amendment would allow the
Committee, given due analysis and consideration of key factors and USDA
approval, to more quickly adapt to changes within the industry. There
was no opposition to the above proposal. Accordingly, USDA is proposing
that Sec. Sec. 946.22 and 946.24 be amended.
Material Issue Number 7--Designation of a Temporary Alternate To Act
for an Absent Committee Member
The order should be amended to include the authority for a
Committee member, when that Committee member and his or her alternate
are unable to attend a Committee meeting, to designate any available,
current Committee member alternate of the same classification (handler
or producer) to serve in his or her stead. This should include a
provision that, if the absent Committee member is unable or unwilling
to designate a temporary alternate to serve in his or her place, the
Committee members present could designate the temporary alternate.
The Committee is composed of 15 members, with the industry members
allocated among five geographic districts. Each Committee member has an
alternate who has the same qualifications as the member. Committee
members and alternates are nominated by their peers in the district
they represent.
Section 946.23 of the order provides that if a Committee member is
absent from a meeting, his or her alternate shall act in that member's
place. There is no provision for a situation in which both the member
and that member's alternate are unavailable.
The Committee's proposal would change Sec. 946.23 to provide that
if both a member and his or her alternate cannot attend a Committee
meeting, the Committee members present could designate an available,
current alternate member of the same classification (handler or
producer) to act in their place and stead. Witnesses also stated that
the temporary alternate designated should, if possible, represent the
same district as the absent member.
Witnesses felt strongly about the need to ensure adequate producer
and handler representation at Committee meetings in order to gain
efficiencies in Committee meeting time. Witnesses cited examples of
meetings where a quorum was not present and Committee discussions and
decisions were delayed. Because the Committee typically only meets
twice annually, issues are either tabled until the next meeting or have
to be addressed through telephone meetings or special mailings or fax
transmissions that poll each member on the specific issues requiring
Committee action.
According to the record, the lack of a quorum results in the
Committee staff dedicating valuable time and resources to secure a
Committee decisions through either mail or fax votes. By allowing the
Committee to designate temporary alternates, witnesses stated that a
quorum could be established and Committee business could be carried out
without the need for costly follow-up. This authority would result in a
more cost-effective use of industry time and money. Witnesses also
testified that assembled meetings are preferred quorums for Committee
decision making (as opposed to mail or telephone voting). Such a forum
provides for full and open discussion of issues under consideration.
When asked what type of selection mechanism would be employed to
designate a temporary alternate, witnesses suggested that that decision
should be left to the Committee chairperson, subject to approval from
other members present. However, no specific suggestions were made as to
how the Committee would either voice its approval or disapproval if no
quorum were present, or what guidelines should be offered to ensure
impartial selection of the temporary alternate. Witnesses suggested
that the Committee, if deemed necessary, could establish specific
procedures, as part of its by-laws.
The USDA agrees that full participation at Committee meetings
should be encouraged. The USDA also believes that there is merit in
allocating membership among districts because the conditions in one
district may vary considerably from those in another. Committee members
are nominated by their producer and handler peers to represent them at
Committee meetings. A Committee member's charge to represent his or her
constituents is an important part of fulfilling Committee member
responsibilities for that district.
However, it is also recognized that the order should contain
flexibility to minimize delays in Committee decisions due to a lack of
a quorum. Therefore, should a situation arise where neither a Committee
member nor his or her alternate are able to attend a meeting, the
Committee member should be able to designate a temporary alternate from
among available, current Committee alternate members of the same
classification. However, if the absent Committee member does not
designate a temporary alternate, such responsibility should fall on his
or her alternate. Further, if neither the absent member nor absent
alternate member designate a temporary alternate, the responsibility
should become that of the Committee members present at the meeting.
USDA proposes that Sec. 927.23 be revised accordingly. A
conforming change is recommended in Sec. 946.24 Procedure to provide
that Committee action to designate a temporary alternate to serve at a
meeting shall not be subject to the quorum and voting requirements of
that section.
Material Issue Number 8--Tenure Limitations
Section 946.27, Term of office, should be revised to establish a
limit on the number of consecutive terms a person may serve as a member
of the Committee. Currently, the term of office of each member and
alternate member of the Committee is three years. There are no
provisions related to tenure in the marketing order. Members and
alternates may serve on the Committee until their respective successors
are selected and have qualified.
The record evidence is that tenure limits for Committee members
could increase industry participation on the Committee, provide for
more diverse membership, provide the Committee with new perspectives
and ideas, and
[[Page 68825]]
increase the number of individuals in the industry with Committee
experience.
Experience with other marketing order programs suggests that a
period of six years would be appropriate. Since the current term of
office for members and alternates is three years, USDA is proposing
that members serve no more than two consecutive three-year terms or a
total of six years. This proposal for a limitation on tenure would not
apply to alternate members. Once a member has served on the Committee
for two consecutive terms, or six years, the member would sit out for
at least one year before being eligible to serve as a member again.
However, the individual could immediately begin serving as an alternate
member after completing two consecutive terms as a member.
Industry witnesses presented testimony in opposition to this
proposal. Although they agreed increased industry participation in the
program is desirable, the application of tenure could be problematic.
Testimony indicated that the number of Washington fresh market potato
producers is decreasing, and that finding producers willing to serve on
the Committee is difficult. Witnesses noted that there currently exist
at least six vacancies for alternate member positions on the Committee
due in part to the difficulty involved in recruiting new members.
Moreover, witnesses stated that industry members who currently serve on
the Committee bring knowledge and experience to the Committee that
would be difficult to replace.
The Committee has had difficulty in recent years in recruiting and
maintaining a full membership. However, other program changes proposed
in this recommended decision have been designed to mitigate problems
associated with recruitment and appointment of Committee members.
Therefore, USDA recommends establishing tenure requirements for
Committee members.
Section 946.27 also provides that Committee members serve staggered
terms so that about one-third of the membership is selected each year.
The language of this section if proposed to be revised to retain the
staggered terms of office, but delete references to initial Committee
members' terms of office. These references are obsolete and no longer
needed.
Material Issue Number 9--Continuance Referenda
Section 946.63, Termination, should be amended to require that
continuance referenda be conducted every six years to ascertain
industry support for the order.
Currently, there is no requirement in the order that continuance
referenda be conducted on a periodic basis. The USDA believes that
producers should have an opportunity to periodically vote on whether a
marketing order should continue. Continuance referenda provide an
industry with a means to measure producer support for the program.
Experience has shown that programs need significant industry support to
operate effectively. Under this proposal, USDA would consider
termination of the order if continuance is not favored by at least two-
thirds of those voting, or at least two-thirds of the volume
represented in the referendum. This is the same as that for issuance
and amendment of an order. Experience in recent years indicates that
six years is an appropriate period to allow producers an opportunity to
vote for continuance of the program. Therefore, the proposal sets forth
that a referendum would be conducted six years after the effective date
of this amendment and every sixth year thereafter.
Several industry witnesses opposed periodic continuance referenda.
They indicated that the industry currently has the ability to request a
continuance referendum at any time, and requiring unnecessary referenda
would be costly and of little value to the industry or USDA.
The USDA believes, however, that producers should have an
opportunity to periodically vote on whether the marketing order should
continue, and that the costs in time and money are well worth the
periodic producer feedback afforded the Committee and the USDA by such
referenda. Accordingly, the record evidence supports adding a
requirement that such referenda be conducted.
The USDA also proposed to make such changes as may be necessary to
the order to conform to any amendment that may result from the hearing.
All conforming changes have been identified and discussed in this
document.
Small Business Consideration
Pursuant to the 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 so that small businesses will not be
unduly or disproportionately burdened. Marketing orders and amendments
thereto are unique in that they are normally brought about through
group action of essentially small entities for their own benefit. Thus,
both the RFA and the Act are compatible with respect to small entities.
Small agricultural producers have been defined by the Small
Business Administration (SBA) (13 CFR 121.201) as those having annual
receipts of less than $750,000. Small agricultural service firms, which
include handlers regulated under the order, are defined as those with
annual receipts of less than $5,000,000.
Interested persons were invited to present evidence at the hearing
on the probable regulatory and informational impact of the proposed
amendments to the order on small businesses. The record evidence is
that while minimal costs may occur upon implementation of some of the
proposed amendments, those costs would be outweighed by the benefits
expected to accrue to the Washington fresh market potato industry.
The record indicates that there are about 39 fresh potato handlers
currently regulated under the order. With total fresh sales valued at
$108 million, on average, these handlers each received $2.8 million. In
addition, there are about 160 producers of fresh potatoes in the
production area. With total fresh sales at the grower level valued at
$58 million, each grower's average receipts would be $362,500.
Witnesses testified that about 76 percent of these growers are small
businesses.
It is reasonable to conclude that a majority of the fresh
Washington potato handlers and producers are small businesses.
Potato Industry Overview
Record evidence supplied by the Washington State Potato Commission
indicates that there are approximately 323 potato producers in the
State, of which approximately 160 (50 percent) are producers of fresh
market potatoes. Approximately 76 percent of the fresh market potato
producers are small entities, according to the SBA definition. Many of
these farming operations also produce potatoes for the processing
market. The Washington State potato industry also includes 39 handlers
and 12 processing plants.
A 2001 publication of Washington State University (WSU) Extension
estimated that total demand for potatoes produced in Washington State
was $495 million. Of this total sales value figure for Washington
potato producers, fresh market potato pack-out represented
approximately 12 percent, with
[[Page 68826]]
producer sales valued at $58 million. The largest proportion of the
crop ($357 million or 72 percent) was represented by sales to the
frozen potato product market, principally for French fries. Other uses
included seed potatoes, dehydration and potato chips.
The WSU report also explained that the supply of fresh market
potatoes is handled by various potato packers (handlers) whose
operations vary in size. These handlers supply the retail market,
including supermarkets and grocery stores, as well as restaurants and
other foodservice operations. Potatoes are prepared for the fresh
market by cleaning, sorting, grading, and packaging before shipment is
made to final destinations. Due to customer specifications about sizes,
shapes, and blemishes, as well as the minimum quality, size, and
maturity regulations of the order, about 42-43 percent of the potatoes
delivered to handlers are graded out of the fresh market. Potatoes not
meeting grade are generally delivered to processors for use in the
frozen French fry and dehydrated potato markets. The total output of
the fresh pack industry in terms of sales value is $108 million.
Washington State acreage and production is second only to that of
Idaho, but its yields per acre are the highest of any State in the
United States. Produced on 165,000 acres, total potato production in
Washington in 2002 was 92.4 million hundredweight, with an average
yield of 560 hundredweight per acre. These figures are based on data
published by the USDA's National Agricultural Statistical Service
(NASS), which is also the source for most of the other production,
acreage, yield, and price information used in this document. The
Committee provided other figures at the hearing. Over the last several
years, Washington has produced about 21 percent of the total U.S.
potato production on about 13 percent of the total acreage dedicated to
potatoes. Washington's share of the total value has been about 17
percent of the nation's total. Fresh utilization has varied between 11
percent and 15 percent from 1993 through 2002.
The record indicates that soil type, climate, and number of
irrigated acres combine to make Washington an excellent area to grow
potatoes. In 2000, Washington produced a record crop with 105 million
hundredweight grown on 175,000 acres with a total industry value of
$555.2 million. This represents a substantial increase from 1949--the
year in which the marketing order was established--in which producers
harvested 29,000 acres with a yield of 6.4 million hundredweight of
potatoes valued at $14.8 million. According to testimony, the producer
price per hundredweight of potatoes was $2.30 in 1949 and $5.40 in
2002.
The Role of U.S. No. 2 Grade Potatoes in the Washington Potato Industry
Witnesses at the hearing explained that potato production is
dependent on many factors over which they have little control,
including water availability, weather, and pest and weed pressures. For
example, the potato crop may be of higher average quality one year,
yielding an increased supply of U.S. No. 1 grade potatoes, and have an
overall lower quality the next year with a preponderance of U.S. No. 2
grade potatoes.
According to testimony, U.S. No. 2 grade potatoes in Washington are
generally diverted for use in making dehydrated potato products. In
addition, U.S. No. 2 grade potatoes are occasionally in demand as
``peelers'' for use in soups and salads, or as ``natural'' fries.
Regardless of the secondary products markets, witnesses explained, the
fresh, table stock market is an important additional market for U.S.
No. 2 grade potatoes. Witnesses explained that the Washington potato
industry cannot currently take advantage of this market without
container marking authority. Having the additional flexibility to pack
U.S. No. 2 grade potatoes in labeled cartons would help the industry
overall.
Economic Impact of Proposal 1, Adding Container and Marking Regulatory
Authority
The proposal described in Material Issue No. 1 would amend Sec.
946.52, Issuance of regulations, to add authority for the Committee to
recommend container and marking regulations to the USDA for subsequent
implementation. This would be in addition to the existing authority for
grade, size, quality and maturity requirements.
In testifying in support of this amendment, witnesses cited an
example of how this authority could be used. They stated that the
Committee wants to respond to customer demand for U.S. No. 2 grade
potatoes packed in cartons, but at the same time it wants to ensure
that such cartons would be properly labeled. Three people testified in
favor of this proposal, and no one testified in opposition. The three
witnesses covered similar themes in expressing their views on the
proposal.
Each stated that the U.S. potato market is highly competitive and
that the potato industry in Washington needs to be vigilant in
responding to market needs so as not to lose market share to other
states. Testimony indicated that the fresh market potato industry in
Washington needs to ensure that their customers are receiving what they
order, and must remain flexible and innovative. All three witnesses
emphasized that offering appropriate packaging is a key element of
being flexible and responsive to customers.
The witnesses offered an historical perspective by pointing out
that 40 years ago, the industry standard for potato packaging was a 50
or 100-pound burlap bag. The passing of 30 years saw the phasing in of
50-pound cartons and polyethylene (poly) bags. Now, potatoes are
shipped in burlap, cartons, poly, mesh, cardboard bulk displays and
baler bags. Container sizes can range from 2 pounds to 100 pounds. It
was emphasized that the industry is constantly looking for new
packaging and delivery methods.
Witnesses stated that as early as 1994, the Committee began
receiving requests from retailers and wholesalers to pack U.S. No. 2
grade potatoes from Washington in 50 lb. cartons. These customers cited
a number of reasons for wanting the U.S. No. 2 grade potatoes in
cartons, including ease of handling and stacking in warehouses,
improved worker safety, and better product protection (for example,
less ``greening'' from exposure to light, and reduced bruising during
transport.)
Although authority exists in the order for the Committee to
recommend regulations to allow packing of U.S. No. 2 grade potatoes in
cartons, witnesses explained that up until now the Committee has chosen
not to permit this lower grade to be packed in cartons because of the
inability to mandate labeling. The current handling regulations specify
that only U.S. No. 1 or better grade potatoes may be packed in cartons,
and as such, buyers of Washington potatoes have learned to expect this
premium grade when purchasing potatoes in cartons. Adding this labeling
authority would provide assurance to customers and to the industry that
the product being shipped is properly identified. Mandatory labeling
prevents handlers from misrepresenting the quality of the potatoes
packed in the carton. Even one handler sending substandard product to
customers can mar the reputation of the Washington State potato
industry, according to witnesses.
Witnesses stated that upholding the integrity of the Washington
State potato industry is as important to producers as meeting customer
specifications. Mandating labeling would help ensure product integrity.
The Committee has discussed that without the labeling
[[Page 68827]]
authority, a customer could potentially receive U.S. No. 2 grade
potatoes from a handler, thinking that they are of U.S. No. 1 grade
quality. This could damage customer perceptions of the higher-grade
potatoes coming out of Washington. Labeling authority would help
alleviate consumer perception problems. Further, not only would it help
verify that handlers are putting the right product into the right
packaging, but it also would assure customers that they are actually
receiving what they have ordered.
Witnesses also emphasized the minimal additional cost of
implementing this proposal. They point out that handlers' facilities
are already configured for packing potatoes in cartons, and for
labeling those cartons, so there is no need for any equipment changes
or additions. In the witnesses' view, any additional costs a handler
would have in packing potatoes in cartons rather than sacks would be
offset by the increased selling price.
The USDA concurs that adding container and marking authority would
be a useful market-facilitating improvement to the order. Requiring
labeling of cartons would help to improve market transactions between
seller and buyer by assuring all concerned as to the exact content of
such cartons. Washington producers and handlers would benefit from
taking advantage of another market niche, with minimal additional cost.
Testimony and industry data together indicate that little to no
differential impact between small versus large producers or handlers
would result from the proposed amendment to authorize container and
labeling requirements. Although not easily quantifiable, the USDA
concurs that benefits to the potato industry appear to substantially
outweigh the potential costs associated with implementing this
proposal.
Economic Impact of Remaining Amendment Proposals
Remaining amendment proposals are administrative in nature and
would impose no new regulatory burdens on Washington potato growers or
handlers. They should benefit the industry by improving the operation
of the program and making it more responsive to industry needs.
Grower members of the Committee are currently required to be
growers in the district they are nominated to represent. Adding another
eligibility requirement--that they be growers of fresh potatoes--would
ensure that the Committee is representative of, and responsive to,
those growers the program impacts most directly. No additional costs
would be incurred.
Replacing obsolete order language pertaining to establishment of
districts and allocation of Committee membership among those districts
would simply update the order. To the extent updating order language
simplifies the program and reduces confusion, it would benefit the
industry.
Currently, Committee member nominees are required to complete a
Background Statement before selection by USDA, and an Acceptance Letter
subsequent to selection. Combining these into a single form would
streamline the appointment process and reduce reporting requirements
imposed on Committee members.
Nominations of Committee members can be conducted through mail
balloting or at meetings held in each of the five established
districts. Allowing nominations to be made at larger, industry-wide
meetings would provide the industry with an additional option. This
option could result in the Committee reaching a larger audience of
growers and handlers, thereby broadening industry participation and
facilitating the nomination process.
The Washington Potato Committee consists of 10 growers, 5 handlers,
and their alternates. Changing the size of the Committee would allow
the industry to adjust to changes in fresh potato production patterns
and in the number of active industry participants. An increase in
Committee size could lead to marginally higher program costs because
Committee members are reimbursed for expenses they incur in attending
meetings and performing other duties under the order. A reduction in
Committee size (deemed to be more likely according to the record) would
likewise reduce program costs. Any recommendation to change the size of
the Committee would be considered in terms of cost and the need to
ensure appropriate representation of growers and handlers in Committee
deliberations.
Committee members serve 3-year terms of office, with no limit on
the number of terms they may serve. The proposed amendment to add
tenure requirements would allow more persons the opportunity to serve
as Committee members. It would provide for more diverse membership,
provide new perspectives and ideas, and increase the number of
individuals in the industry with Committee experience. No additional
costs are expected to be incurred because of this proposed amendment.
The recommendation to require periodic continuance referenda to
ascertain industry support for the program would allow growers the
opportunity to vote on whether to continue the operation of the order.
Most of the costs associated with referenda are borne by USDA. Ensuring
that the program is administered in response to grower needs would
outweigh these costs.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
35), any reporting and recordkeeping provision changes that would be
generated by the proposed amendments would be submitted to the Office
of Management and Budget (OMB).
The Washington Potato Committee recommended amending producer
eligibility requirements to require production of potatoes for the
fresh market for 3 out of the 5 years of production prior to
nomination. The Committee has also made recommendations that would
streamline the nomination process and increase industry participation
in nominations. In conformance with these recommendations, a
confidential qualification and acceptance statement would be used in
the appointment of committee members. This form would be based on the
currently approved Confidential Background Statement for the Washington
Potato Marketing Committee. If this proposal is implemented, the form
would only be used after approval by OMB.
Current information collection requirements for Part 946 are
approved by OMB under OMB number 0581-0178. Any changes in those
requirements as a result of this proceeding would be submitted to OMB
for approval.
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.
USDA has not identified any relevant Federal rules that duplicate,
overlap or conflict with this proposed rule. These amendments are
designed to enhance the administration and functioning of the marketing
order to the benefit of the industry.
Committee meetings regarding these proposals as well as the hearing
date were widely publicized throughout the Washington potato industry,
and all interested persons were invited to attend the meetings and the
hearing and participate in Committee deliberations on all issues. All
Committee meetings and the hearing were public forums and all entities,
both large and small, were
[[Page 68828]]
able to express views on these issues. Finally, interested persons are
invited to submit information on the regulatory and informational
impacts of this action on small businesses.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. Thirty days is deemed appropriate so that
this rulemaking may be completed in a timely manner. All written
exceptions timely received will be considered and a grower referendum
will be conducted before these proposals are implemented.
Civil Justice Reform
The amendments to Marketing Agreement 113 and Marketing Order 946
proposed herein have been reviewed under Executive Order 12988, Civil
Justice Reform. They are not intended to have retroactive effect. If
adopted, the proposed amendments would not preempt any State or local
laws, regulations, or policies, unless they present an irreconcilable
conflict with this proposal.
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 USDA 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, USDA 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 USDA's ruling on the petition,
provided an action is filed not later than 20 days after the date of
the entry of the ruling.
Rulings on Briefs of Interested Persons
Briefs, and proposed findings and conclusions based on the record
evidence were solicited in this proceeding. No briefs were filed.
General Findings
The findings hereinafter set forth are supplementary to the
findings and determinations which were previously made in connection
with the issuance of the marketing agreement and order; and all said
previous findings and determinations are hereby ratified and affirmed,
except insofar as such findings and determinations may be in conflict
with the findings and determinations set forth herein.
(1) The marketing agreement and order, as amended, and as hereby
proposed to be further amended, and all of the terms and conditions
thereof, would tend to effectuate the declared policy of the Act;
(2) The marketing agreement and order, as amended, and as hereby
proposed to be further amended, regulate the handling of Irish potatoes
grown in the production area in the same manner as, and are applicable
only to, persons in the respective classes of commercial and industrial
activity specified in the marketing agreement and order upon which a
hearing has been held;
(3) The marketing agreement and order, as amended, and as hereby
proposed to be further amended, are limited in their application to the
smallest regional production area which is practicable, consistent with
carrying out the declared policy of the Act, and the issuance of
several orders applicable to subdivisions of the production area would
not effectively carry out the declared policy of the Act;
(4) The marketing agreement and order, as amended, and as hereby
proposed to be further amended, prescribe, insofar as practicable, such
different terms applicable to different parts of the production area as
are necessary to give due recognition to the differences in the
production and marketing of Irish potatoes grown in the production
area; and
(5) All handling of Irish potatoes grown in the production area as
defined in the marketing agreement and order, is in the current of
interstate or foreign commerce or directly burdens, obstructs, or
affects such commerce.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. Thirty days is deemed appropriate so that
this rulemaking may be completed prior to the 2005-2006 season. All
written exceptions timely received will be considered and a grower
referendum will be conducted before these proposals are implemented.
List of Subjects in 7 CFR Part 946
Marketing agreements, Potatoes, Reporting and recordkeeping
requirements.
Recommended Further Amendment of the Marketing Agreement and Order
For the reasons set out in the preamble, 7 CFR part 946 is proposed
to be amended as follows:
PART 946--IRISH POTATOES GROWN IN WASHINGTON
1. The authority citation for 7 CFR part 946 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Add a new Sec. 946.17 to read as follows:
Sec. 946.17 Pack.
Pack means a quantity of potatoes in any type of container and
which falls within the specific weight limits or within specific grade
and/or size limits, or any combination thereof, recommended by the
committee and approved by the Secretary.
3. Add a new Sec. 946.18 to read as follows:
Sec. 946.18 Container.
Container means a sack, box, bag, crate, hamper, basket, carton,
package, barrel, or any other type of receptacle used in the packing,
transportation, sale or other handling of potatoes.
4. In Sec. 946.22, designate the current text as paragraph (a) and
add a new paragraph (b) to read as follows:
Sec. 946.22 Establishment and membership.
* * * * *
(b) The Secretary, upon recommendation of the committee, may
reestablish districts, may reapportion members among districts, may
change the number of members and alternate members, and may change the
composition by changing the ratio of members, including their
alternates. In recommending any such changes, the following shall be
considered:
(1) Shifts in acreage within districts and within the production
area during recent years;
(2) The importance of new production in its relation to existing
districts;
(3) The equitable relationship between committee apportionment and
districts; and,
(4) Other relevant factors.
5. In Sec. 946.23, designate the current text as paragraph (a) and
add a new paragraph (b) to read as follows:
Sec. 946.23 Alternate members.
* * * * *
(b) In the event that both a member and his or her alternate are
unable to attend a Committee meeting, the member, the alternate member,
or the Committee members present, in that order, may designate another
alternate of the same classification (handler or producer) to serve in
such member's place and stead.
6. Section 946.24 is revised to read as follows:
Sec. 946.24 Procedure.
(a) Sixty percent of the committee members shall constitute a
quorum and a concurring vote of 60 percent of the committee members
will be required to
[[Page 68829]]
pass any motion or approve any committee action.
(b) The quorum and voting requirements of paragraph (a) of this
section shall not apply to the designation of temporary alternates as
provided in Sec. 946.23.
(c) The committee may provide for meetings by telephone, telegraph,
or other means of communication and any vote cast at such a meeting
shall be confirmed promptly in writing: Provided, That if any assembled
meeting is held, all votes shall be cast in person.
7. Section 946.25 is amended by:
A. Revising paragraph (a).
B. Revising paragraph (c).
The revisions read as follows:
Sec. 946.25 Selection.
(a) Persons selected as committee members or alternates to
represent producers shall be individuals who are producers of fresh
potatoes in the respective district for which selected, or officers or
employees of a corporate producer in such district. Such individuals
must also have produced potatoes for the fresh market for at least
three out of the five years prior to nomination.
(b) * * *
(c) The Secretary shall select committee membership so that, during
each fiscal period, each district, as designated in Sec. 946.31, will
be represented as follows:
(1) District No. 1--Three producer members and one handler member;
(2) District No. 2--Two producer members and one handler member;
(3) District No. 3--Two producer members and one handler member;
(4) District No. 4--Two producer members and one handler member;
(5) District No. 5--One producer member and one handler member.
8. Revise Sec. 946.26 to read as follows:
Sec. 946.26 Acceptance.
Any person nominated to serve as a member or alternate member of
the committee shall, prior to selection by USDA, qualify by filing a
written background and acceptance statement indicating such person's
willingness to serve in the position for which nominated.
9. Amend Sec. 946.27 by revising paragraph (a) to read as follows:
Sec. 946.27 Term of office.
(a) The term of office of each member and alternate member of the
committee shall be for 3 years beginning July 1 and continuing until
their successors are selected and have qualified. The terms of office
of members and alternates shall be determined so that about one-third
of the total committee membership is selected each year. Committee
members shall not serve more than 2 consecutive terms. Members who have
served for 2 consecutive terms will be ineligible to serve as a member
for 1 year.
* * * * *
10. Revise Sec. 946.31 to read as follows:
Sec. 946.31 Districts.
For the purpose of determining the basis for selecting committee
members, the following districts of the production area are hereby
established:
(a) District No. 1--The counties of Ferry, Stevens, Pend Oreille,
Spokane, Whitman, and Lincoln, plus the East Irrigation District of the
Columbia Basin Project, plus the area of Grant County not included in
either the Quincy or South Irrigation Districts which lies east of
township vertical line R27E, plus the area of Adams County not included
in either of the South or Quincy Irrigation Districts.
(b) District No. 2--The counties of Kittitas, Douglas, Chelan, and
Okanogan, plus the Quincy Irrigation District of the Columbia Basin
Project, plus the area of Grant County not included in the East or
South Irrigation Districts which lies west of township line R28E.
(c) District No. 3--The counties of Benton, Klickitat, and Yakima.
(d) District No. 4--The counties of Walla Walla, Columbia,
Garfield, and Asotin, plus the South Irrigation District of the
Columbia Basin Project, plus the area of Franklin County not included
in the South District.
(e) District No. 5--All of the remaining counties in the State of
Washington not included in Districts No. 1, 2, 3, and 4 of this
section.
11. Amend Sec. 946.32 by revising paragraph (a) to read as
follows:
Sec. 946.32 Nomination.
* * * * *
(a) Nominations for Committee members and alternate members shall
be made at a meeting or meetings of producers held by the Committee or
at other industry meetings or events not later than May 1 of each year;
or the Committee may conduct nominations by mail not later than May 1
of each year in a manner recommended by the Committee and approved by
the Secretary.
* * * * *
12. Amend Sec. 946.52 by adding a new paragraph (a)(5) to read as
follows:
Sec. 946.52 Issuance of regulations.
(a) * * *
(5) To regulate the size, capacity, weight, dimensions, pack, and
marking or labeling of the container, or containers, which may be used
in the packing or handling of potatoes, or both.
* * * * *
13. In Sec. 946.63, redesignate paragraph (d) as paragraph (e) and
add a new paragraph (d) to read as follows:
Sec. 946.63 Termination.
* * * * *
(d) The Secretary shall conduct a referendum six years after the
effective date of this paragraph and every sixth year thereafter to
ascertain whether producers favor continuance of this part.
* * * * *
Dated: November 19, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-26124 Filed 11-24-04; 8:45 am]
BILLING CODE 3410-02-P