[Federal Register: May 6, 2005 (Volume 70, Number 87)]
[Proposed Rules]
[Page 23942-23945]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my05-13]
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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 23942]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 948
[Docket No. FV05-948-1 PR]
Irish Potatoes Grown in Colorado; Relaxation of Handling
Regulation for Area No. 2 and Certain Imported Potatoes
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule with request for comments.
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SUMMARY: This rule would relax the minimum grade requirements for
potatoes handled under the Colorado potato marketing order, Area No. 2.
This rule was recommended by the Colorado Potato Administrative
Committee for Area No. 2 (Committee), the agency responsible for the
local administration of the marketing order. For all potato varieties
produced in Area No. 2 measuring from 1\1/2\-inch minimum diameter to
2\1/4\-inch maximum diameter (size B), and from 1-inch minimum diameter
to 1\3/4\-inch maximum diameter, this rule changes the minimum grade
from U.S. No. 1 to U.S. Commercial. This rule also would relax the
minimum grade requirements between October 1 through June 30 of each
year for imported red-skinned round type potatoes of the same size
categories under the import regulations as required by section 8e of
the Agricultural Marketing Agreement Act of 1937. The changes are
intended to provide potato handlers and importers with more marketing
flexibility, growers with increased returns, and consumers with a
greater supply of small potatoes, and to bring the section 8e potato
import regulation into conformity with the marketing order.
DATES: Comments must be received by July 5, 2005.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938; e-mail: moab.docketclerk@usda.gov; or
Internet: http://www.regulations.gov. All comments should reference the
docket number and the date and page number of this issue of the Federal
Register and will be made available for public inspection in the Office
of the Docket Clerk during regular business hours, or can be viewed at:
http://www.ams.usda.gov/fv/moab.html.
FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, 1220 SW., Third Avenue, Suite 385,
Portland, Oregon 97204; telephone: (503) 326-2724, Fax: (503) 326-7440;
or George Kelhart, Technical Advisor, 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.
Small businesses may request information on complying with this
regulation 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, or e-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing
Agreement No. 97 and Marketing Order No. 948, both as amended (7 CFR
part 948), regulating the handling of Irish potatoes grown in Colorado,
hereinafter referred to as the ``order.'' The order is effective under
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601-674), hereinafter referred to as the ``Act.''
This proposed rule also is issued under section 8e of the Act,
which provides that whenever certain specified commodities, including
potatoes, are regulated under a Federal marketing order, imports of
these commodities into the United States are prohibited unless they
meet the same or comparable grade, size, quality, or maturity
requirements as those in effect for the domestically produced
commodities. Section 8e also provides that whenever two or more
marketing orders regulating the same commodity produced in different
areas of the United States are concurrently in effect, a determination
must be made as to which of the areas produces the commodity in most
direct competition with the imported commodity. Imports must meet the
same or comparable requirements established for that particular area.
The requirements for red-skinned round type potatoes imported from
October 1 through June 30 are based on the Colorado Area No. 2
marketing order requirements.
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule would not have retroactive effect. This
rule would 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 Sec. 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. Section 608c(15)(B)
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.
There are no administrative procedures which must be exhausted
prior to any judicial challenge to the provisions of import regulations
issued under section 8e of the Act.
This rule would relax the minimum grade requirements from U.S. No.
1 to U.S. Commercial for all Colorado Area No. 2 potato varieties
measuring from 1\1/2\-inch minimum diameter to 2\1/4\-inch maximum
diameter (size B), and from 1-
[[Page 23943]]
inch minimum diameter to 1\3/4\-inch maximum diameter. These changes
were recommended by the Committee on August 19, 2004, with nine members
in favor and four against. The four members who voted against the
change felt that the minimum grade for small potatoes should continue
to be U.S. No. 1. The Committee believes that the changes would
facilitate the marketing of Area No. 2 Colorado potatoes and improve
grower returns. As provided under section 8e of the Act, the grade
changes also would apply to all red-skinned round type imported
potatoes of the same size categories during the months of October
through June.
Section 948.22 authorizes the issuance of grade, size, quality,
maturity, pack, and container regulations for potatoes grown in the
production area. Section 948.21 further authorizes the modification,
suspension, or termination of regulations issued pursuant to Sec.
948.22.
Section 948.40 provides that whenever the handling of potatoes is
regulated pursuant to Sec. Sec. 948.20 through 948.24, such potatoes
must be inspected by the Federal-State Inspection Service, and
certified as meeting the applicable requirements of such regulations.
Grade regulations specific to the handling of potatoes grown in
Area No. 2 are contained in Sec. 948.386 of the order's handling
regulations, whereas relevant import regulations are contained in Sec.
980.1 and Sec. 980.501 of the vegetable import regulations. Section
948.4 of the order defines the counties included in Area No. 2, which
is commonly known as the San Luis Valley. The State of Colorado is
divided into three areas for marketing order purposes. Currently, only
Area No. 2 and Area No. 3 are active.
For many years, consumer demand for small fresh market potatoes was
relatively soft in comparison to larger sizes. Size B and smaller
potatoes were often discarded or fed to livestock. Grade and size
regulations were developed to keep lower quality small potatoes out of
the fresh market. At that time, the Committee believed that small
potatoes, sold at a great discount, eroded the price for large
potatoes. By requiring small potatoes to grade U.S. No. 1 or better,
the Committee believed that high quality small potatoes would not have
an adverse affect on the market for larger potatoes.
Within the past several years, however, demand has increased for
small potatoes, which often command premium prices compared to larger
size A potatoes (1\7/8\-inch and larger). With the growing demand for
small potatoes, growers and handlers are concerned that they will not
be able to supply this market, because only U.S. No. 1 or better grade
can be shipped under the marketing order. Growers and handlers have had
requests from their customers for additional small potatoes that grade
U.S. Commercial or better. This action would help handlers in Area No.
2 meet their buyers' needs.
Committee statistics show that approximately 75 percent of the
entire potato crop in Area No. 2 grades U.S. No. 1 or better. However,
the percentage of Size B and smaller potatoes meeting U.S. No. 1 grade
is only about 50 percent. The reason for the lower percentage of
smaller potatoes is because several potato defects are scored based on
the percentage of surface area affected on the individual potato. For
example, a cut on a large potato may not affect a large enough surface
area to be a scorable defect, but the same size cut would be scorable
on a smaller potato. Under such circumstances, it would be much harder
for a small potato to meet the U.S. No. 1 grade than it would for a
large potato. The U.S. Commercial grade allows a slightly higher
percentage of total defects than the U.S. No. 1 grade.
By changing the grade requirements to allow size B potatoes and
potatoes measuring from 1-inch minimum diameter to 1\3/4\-inch maximum
diameter to meet U.S. Commercial grade or better, the Committee
believes more small potatoes would be available to meet increasing
demand, and thus help increase returns to growers. Not only would more
small potatoes enter the market, small potatoes typically sell for a
premium price in today's marketplace.
The Committee believes that by allowing small potatoes to meet the
more relaxed U.S. Commercial grade instead of U.S. No. 1 grade,
available volume for sale into the fresh market could increase by about
25 percent.
Although facing an increasing demand, the market for small potatoes
is a minor segment of the market served by the Area No. 2 production
area. As a consequence, the Committee believes that the smaller
potatoes do not compete directly with the predominant large potatoes
produced in this area, and that the relaxation of the grade
requirements would not adversely effect the overall Area No. 2 potato
market.
As mentioned earlier, section 8e of the Act provides that when
certain domestically produced commodities, including potatoes, are
regulated under a Federal marketing order, imports of that commodity
must meet the same or comparable grade, size, quality, and maturity
requirements. Section 8e also provides that whenever two or more
marketing orders regulating the same commodity produced in different
areas of the United States are concurrently in effect, a determination
must be made as to which of the areas produces the commodity in most
direct competition with the imported commodity. Imports must meet the
requirements established for that particular area.
Grade, size, quality, and maturity regulations have been issued
regularly under marketing order Nos. 945 (Idaho-Eastern Oregon
potatoes), 948 (Colorado potatoes, Area No. 2 and Area No. 3), 947
(Oregon-California potatoes), 946 (Washington potatoes), and 953
(Southeastern potatoes), since the marketing orders were established.
Section 980.1 of the vegetable import regulations specifies that import
requirements for potatoes are to be based on the seasonal categories of
potatoes produced in all marketing order areas. In that regard,
imported red-skinned round type potatoes must meet the requirements of
the Area No. 2 Colorado potato marketing order during the months of
October through the following June and the Washington potato marketing
order during the months of July through September.
USDA's Foreign Agricultural Service reports that Canada has been
the major source of fresh potato imports into the United States during
1999 through 2003. Imports totaled 276,955 metric tons in 1999, 228,023
metric tons in 2000, 221,303 metric tons in 2001, 281,891 metric tons
in 2002, and 288,035 metric tons in 2003. During the five-year period,
minor quantities of potatoes also were imported from The Netherlands,
Costa Rica, Dominican Republic, Japan, Brazil, Ecuador, India, United
Kingdom, Columbia, Fiji, and Jamaica. Imports from these sources
represented less than 5 percent of the total imports. We do not have
statistics on what portion of these potatoes are red-skinned.
Initial Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, AMS has
prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own
[[Page 23944]]
behalf. Thus, both statutes have small entity orientation and
compatibility.
Import regulations issued under the Act are based on regulations
established under Federal marketing orders which regulate the handling
of domestically produced products.
There are approximately 95 handlers of Colorado Area No. 2 potatoes
subject to regulation under the order and approximately 230 producers
in the regulated production area. In addition, based on the most recent
information available, approximately 168 importers of potatoes are
subject to import regulations and may be affected by this rule. Small
agricultural service firms are defined by the Small Business
Administration (13 CFR 121.201) as those having annual receipts of less
than $6,000,000, and small agricultural producers are defined as those
having annual receipts of less than $750,000.
During the 2003-2004 marketing year, 17,125,898 hundredweight of
Colorado Area No. 2 potatoes were inspected under the order and sold
into the fresh market. Based on an estimated average f.o.b. price of
$6.75 per hundredweight, the Committee estimates that 90 Area No. 2
handlers or about 96 percent had annual receipts of less than
$6,000,000.
In addition, based on information provided by the National
Agricultural Statistics Service, the average grower price for Colorado
fall potatoes for 2003 was $4.55 per hundredweight. The average annual
grower revenue for the 230 Colorado Area No. 2 potato growers is
therefore calculated to be approximately $338,795. In view of the
foregoing, the majority of the Colorado Area No. 2 potato growers and
handlers may be classified as small entities. Although it is not known
how many importers of potatoes may be classified as small entities, we
believe that many of the 168 importers can be classified as such.
This rule would relax grade requirements implemented under Colorado
marketing order Area 2 from U.S. No. 1 grade to U.S. Commercial grade
for all potato varieties measuring from 1\1/2\-inch minimum diameter to
2\1/4\-inch maximum diameter (size B) and from 1-inch minimum diameter
to 1\3/4\-inch maximum diameter. As provided under section 8e of the
Act, these changes would also apply to all imported red-skinned round
type potatoes of the same size categories between October 1 through
June 30 of each year. While no changes would be required in the
language of Sec. 980.1, all imported red-skinned round type potatoes
in these size categories October 1 through June 30 would be required to
meet the requirements of U.S. Commercial grade or better rather than
U.S. No. 1 grade or better.
Authority for this action is contained in Sec. Sec. 948.21,
948.22, 948.40, and 948.386. Relevant import regulations are contained
in Sec. 980.1 and Sec. 980.501 of the vegetable import regulations.
Regarding the impact of this rule on affected entities, relaxing
the grade requirements for these small potatoes is expected to benefit
handlers, importers, and growers. By relaxing the minimum grade
requirements for small potatoes, a potentially greater quantity of
potatoes would meet the order's handling regulations and the import
regulations. This could translate into an increased market for these
small potatoes and greater returns for handlers, importers, and
growers.
As small potatoes have grown in popularity with consumers, the
market demand has outpaced the quantity of small, high quality potatoes
available from Area No. 2. The Committee believes that a relaxation in
the grade requirements would increase the available supply of small
potatoes. The small potato market is a minor segment of the potato
market served by the Area No. 2 production area. As such, the Committee
believes that these small potatoes do not compete directly with most of
the potatoes produced in this area and that the relaxation of the grade
requirements would not adversely effect the overall Area No. 2 potato
market.
Based on Committee records, about half the handlers ship all of the
size B and smaller potatoes grown in Area No. 2. Committee records also
indicate that during the 2003-2004 season, approximately 165,000
hundredweight (less than 1 percent) of size B and smaller were
inspected and shipped. If this proposed change in the minimum grade
requirements is implemented, the Committee estimates that the
marketable supply of size B and smaller potatoes would increase at
least 25 percent and add about 41,250 hundredweight to the marketable
supply. The Committee anticipates that the greater quantity of small
potatoes would expand Area No. 2's market share, increase the supply of
potatoes available for consumers, and increase grower returns.
The Committee considered several alternatives to the proposed
relaxation in grade requirements for small sized potatoes. Prior to the
August 19, 2004, meeting, the Committee mailed a survey to all Area No.
2 Colorado potato growers requesting recommendations on grade and size
requirements. The consensus among the responding growers indicated that
the majority preferred U.S. Commercial as a minimum grade for these two
size categories.
After reviewing the results of the survey, the Committee discussed
the merits of taking no action--thereby leaving the grade requirement
at U.S. No. 1 grade or better--or adopting U.S. Commercial grade or
U.S. No. 2 grade as a minimum requirement for the two size categories.
The Committee felt that leaving the minimum grade at U.S. No. 1 would
not have provided additional potatoes to supply the increasing market
demand. In regards to the merits of U.S. Commercial grade as a minimum
versus U.S. No. 2 grade, the Committee concurred with the industry that
a U.S. No. 2 grade minimum would be too much of a relaxation due to
quality considerations.
After discussing the alternatives, the Committee determined that a
relaxation in the grade requirements to U.S. Commercial grade or better
for small potatoes would provide the greatest benefit to the industry
by augmenting the developing market for small potatoes and increasing
grower returns.
This rule would not impose any additional reporting or
recordkeeping requirements on either small or large potato handlers or
importers. 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. In addition, USDA
has not identified any relevant Federal rules that duplicate, overlap,
or conflict with this rule.
The Committee's meeting was widely publicized throughout the
Colorado potato industry and all interested persons were invited to
attend the meeting and participate in Committee deliberations. Like all
Committee meetings, the August 19, 2004, meeting was a public meeting
and all entities, both large and small, were able to express their
views on this issue. In addition, the World Trade Organization and
known importers of potatoes will be notified of this proposed action.
Finally, interested persons are invited to submit information on the
regulatory and informational impacts of this proposed rule on small
businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: 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.
This rule invites comments on a proposed change to the handling
regulations prescribed under the
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Colorado potato marketing order and the potato import regulations. Any
comments received will be considered prior to finalization of this
rule.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this rule.
List of Subjects in 7 CFR Part 948
Marketing agreements, Potatoes, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 948 is
proposed to be amended as follows:
PART 948--IRISH POTATOES GROWN IN COLORADO
1. The authority citation for 7 CFR part 948 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. In Sec. 948.386, paragraphs (a)(3) and (a)(4) are revised to
read as follows:
Sec. 948.386 Handling regulation.
* * * * *
(a) * * *
(3) All varieties. Size B, if U.S. Commercial grade or better.
(4) All varieties. 1-inch minimum diameter to 1\3/4\-inch maximum
diameter, if U.S. Commercial grade or better.
* * * * *
Dated: May 3, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-9110 Filed 5-5-05; 8:45 am]
BILLING CODE 3410-02-P