[Federal Register: February 24, 2006 (Volume 71, Number 37)]
[Rules and Regulations]
[Page 9427-9430]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe06-1]
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Rules and Regulations
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[[Page 9427]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 948
[Docket No. FV05-948-1 FRA]
Irish Potatoes Grown in Colorado; Relaxation of Handling
Regulation for Area No. 2
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule relaxes the minimum grade requirement for certain
potatoes handled under the Colorado potato marketing order, Area No. 2.
The Colorado Potato Administrative Committee, Area No. 2 (Committee),
the agency responsible for local administration of the marketing order,
recommended this rule. This rule changes the minimum grade from U.S.
No. 1 to U.S. Commercial for varieties of long, red-skinned, yellow
fleshed potatoes 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. The change is
intended to provide potato handlers with more marketing flexibility,
growers with increased returns, and consumers with a greater supply of
small specialty potatoes.
EFFECTIVE DATE: This final rule becomes effective February 27, 2006.
FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA; 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 final 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.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with 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.
This final rule relaxes the minimum grade requirement from U.S. No.
1 to U.S. Commercial for all varieties of long, red-skinned, yellow
fleshed potatoes produced in Colorado 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
change was recommended by the Committee on October 20, 2005, with 12
members in favor and one opposed. The member voting against the change
felt that the minimum grade for all small potatoes should continue to
be U.S. No. 1. This member is opposed to having grading exceptions for
any variety of potato. The Committee believes that this change will
facilitate the marketing of Area No. 2 Colorado potatoes and improve
grower returns.
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. 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.
The Committee's initial recommendation, made on August 19, 2004,
was to relax the minimum grade requirement 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-inch minimum diameter to 1\3/4\-inch maximum diameter. This
change was recommended by the Committee with nine members in favor and
four opposed. The members voting against the change believed that the
minimum grade for all small potatoes should continue to be U.S. No. 1.
This initial recommendation led to a proposed rule being published
in the
[[Page 9428]]
Federal Register on May 6, 2005 (70 FR 23942), with comments being
invited until July 5, 2005. The comment period was reopened until
September 12, 2005, in a document published on August 22, 2005 (70 FR
48903), for the purpose of receiving additional input. Five comments
were received during the reopened comment period. All of these comments
opposed the relaxation of the grade requirement because of the
potentially negative impact on the quality of imported round, red-
skinned varieties of potatoes. Under section 980.1 of the import
regulations, the initially proposed grade change would have applied to
all imported round, red-skinned potatoes of the same size categories
during the months of October through June. All of the commenters
expressed concern that lower quality imported round, red-skinned
potatoes would adversely affect the domestic market.
The Committee met on October 20, 2005, to consider the comments
received regarding the previously issued proposed rule, as well as
other information received from the Colorado potato industry. After
much discussion, the Committee recommended that the rule be modified to
reflect that the relaxed grade requirement would only apply to long,
red-skinned, yellow fleshed potato varieties.
Because this final rule is limited to all varieties of long, red-
skinned, yellow fleshed potatoes, imported round, red-skinned potato
varieties will not be affected. Under Sec. 980.1, imported long type
potatoes must meet the grade, size, quality, and maturity requirements
of Marketing Order No. 945 (Idaho-Eastern Oregon potatoes) throughout
the entire year.
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 all 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.
Recently, however, demand has increased for varieties of long, red-
skinned, yellow fleshed small potatoes, which often command premium
prices compared to larger size A potatoes (1\7/8\-inch and larger).
With the growing demand for this type of small specialty potato, some
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 order. Growers and handlers have had requests from their
customers for long, red-skinned, yellow fleshed varieties of small
potatoes that grade U.S. Commercial or better. The Committee believes
that this action will help handlers in Area No. 2 meet their buyers'
needs.
Committee statistics show that approximately 65 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 requirement to allow long, red-skinned,
yellow fleshed potato varieties that are size B and those 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 of this
type of small specialty potato would be available to meet increasing
demand, and thus help increase returns to growers. Not only would more
small long, red-skinned, yellow fleshed potatoes enter the market,
these small specialty potatoes typically sell for a premium price in
today's marketplace.
The Committee believes that by allowing small long, red-skinned,
yellow fleshed 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 10 percent.
Although facing an increasing demand, the market for small long,
red-skinned, yellow fleshed potatoes is a minor segment of the market
served by the Area No. 2 production area. As a consequence, the
Committee believes that this type of small specialty potato does not
compete directly with the predominant large potatoes produced in this
area, and that the relaxation of the grade requirement would not
adversely effect the overall Area No. 2 potato market.
Final 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 final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 88 handlers of Colorado Area No. 2 potatoes
subject to regulation under the order and approximately 230 producers
in the regulated production area. 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 2004-2005 marketing year, 17,626,974 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 83 Area No. 2
handlers or about 94 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 2004 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 $348,708. In view of the
foregoing, the majority of the Colorado Area No. 2 potato growers and
handlers may be classified as small entities.
This final rule relaxes the grade requirement implemented under the
order from U.S. No. 1 grade to U.S. Commercial grade for all long, red-
skinned, yellow fleshed 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-inch minimum diameter to 1\3/4\-inch maximum diameter.
Authority for this action is contained in Sec. Sec. 948.21,
948.22, 948.40, and 948.386.
Regarding the impact of this rule on affected entities, this
relaxation of the
[[Page 9429]]
grade requirement for small long, red-skinned, yellow fleshed varieties
of potatoes is expected to benefit handlers and growers. Through this
relaxation of the minimum grade requirement for this type of small
specialty potato, a potentially greater quantity of potatoes will meet
the order's handling regulations. This could translate into an
increased market for small long, red-skinned, yellow fleshed potatoes
and greater returns for handlers and growers.
As small long, red-skinned, yellow fleshed varieties of potatoes
have grown in popularity with consumers, the market demand has outpaced
the quantity of these small, high quality potatoes available from Area
No. 2. The Committee believes that this relaxation in the grade
requirement will increase the available supply of small, long, red-
skinned, yellow fleshed varieties of potatoes. These small specialty
potatoes are a minor segment of the potato market served by the Area
No. 2 production area. As such, the Committee believes that these small
long, red-skinned, yellow fleshed potato varieties do not compete
directly with most of the potatoes produced in this area and that the
relaxation of the grade requirement will 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 2004-2005 fiscal period, approximately 165,000
hundredweight (less than 1 percent) of size B and smaller were
inspected and shipped. The Committee estimates that the marketable
supply of size B and smaller long, red-skinned, yellow fleshed potato
varieties will increase approximately 10 percent and add about 16,500
hundredweight to the marketable supply. The Committee anticipates that
the greater quantity of small long, red-skinned, yellow fleshed
varieties of potatoes will expand Area No. 2's market share, increase
the supply of potatoes available for consumers, and increase grower
returns.
After discussing possible alternatives to this rule and reviewing
the comments received in regards to the first proposed rule (70 FR
23942, May 6, 2005; and 70 FR 48903, August 22, 2005), the Committee
determined that a relaxation in the grade requirement to U.S.
Commercial grade for small long, red-skinned, yellow fleshed potatoes
will sufficiently meet the industry's current needs. The relaxation in
the grade requirement for this type of small specialty potato will
provide the greatest benefit to the industry by augmenting the
developing market for these potatoes and thereby increase grower
returns.
The first proposal would have allowed all varieties of small
potatoes produced in Area No. 2 to meet U.S. Commercial grade,
including round, red-skinned potato varieties. Under the import
regulations, round, red-skinned potatoes are required to meet the
grade, size, quality, and maturity requirements of the Area No. 2
Colorado potato marketing order from October through June. Thus, under
the first proposal, all imported round, red-skinned potatoes would have
been allowed into the U.S. as U.S. Commercial grade during this period.
Commenters expressed concern that such a relaxation of the grade
requirement for small round, red-skinned potatoes could potentially
have a negative impact on the quality of imported round, red-skinned
potatoes. They were concerned that lower quality imported round, red-
skinned potatoes would adversely affect the domestic market. However,
this final rule will only relax the grade requirement for long, red-
skinned, yellow fleshed potato varieties and, therefore, will not
change the grade requirement for round, red-skinned potatoes or for any
imported round, red-skinned potatoes during the months of October
through June.
This action will not impose any additional reporting or
recordkeeping requirements on either small or large potato handlers. As
with all Federal marketing order programs, reports and forms are
periodically reviewed to reduce information requirements and
duplication by industry and public sector agencies.
As noted in the initial regulatory flexibility analysis, USDA has
not identified any relevant Federal rules that duplicate, overlap, or
conflict with this rule.
In addition, the Committee's meetings were widely publicized
throughout the Colorado potato industry and all interested persons were
invited to attend the meetings and participate in Committee
deliberations. Like all Committee meetings, the August 19, 2004, and
the October 20, 2005, meetings were public meetings and all entities,
both large and small, were able to express their views on this issue.
A proposed rule concerning the Committee's amended action was
published in the Federal Register on December 22, 2005 (70 FR 75981).
Copies of the rule were mailed or sent via facsimile to all Committee
members. Finally, the rule was made available through the Internet by
USDA and the Office of the Federal Register. A 15-day comment period
ending January 6, 2005, was provided to allow interested persons to
respond to the proposal. No comments were received.
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.
After consideration of all relevant matter presented, including the
information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because handlers are already shipping
potatoes from the 2005-2006 crop and handlers want to take advantage of
the relaxation as soon as possible. Further, handlers are aware of this
rule, which was recommended at a public meeting. In addition, this rule
replaces a previously proposed rule. Affected entities were allowed to
provide input during the previous comment periods and all comments were
considered in the preparation of this rule. Finally, an additional 15-
day comment period was provided for in the second proposed rule and no
comments were received.
List of Subjects in 7 CFR Part 948
Marketing agreements, Potatoes, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, 7 CFR part 948 is amended as
follows:
PART 948--IRISH POTATOES GROWN IN COLORADO
0
1. The authority citation for 7 CFR part 948 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
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. No. 1 or better grade: Provided,
That varieties of long, red-skinned, yellow fleshed potatoes shall
grade U.S. Commercial or better.
(4) All varieties. 1-inch minimum diameter to 1\3/4\-inch maximum
diameter, if U.S. No. 1 or better grade: Provided, That varieties of
long, red-
[[Page 9430]]
skinned, yellow fleshed potatoes shall grade U.S. Commercial or better.
* * * * *
Dated: February 17, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-1717 Filed 2-23-06; 8:45 am]
BILLING CODE 3410-02-P