E7-23839. Irish Potatoes Grown in Colorado; Modification of the Handling Regulation for Area No. 2

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This rule invites comments on a modification of the minimum size requirements under the Colorado potato marketing order, Area No. 2. The marketing order regulates the handling of Irish potatoes grown in Colorado, and is administered locally by the Colorado Potato Administrative Committee, Area No. 2 (Committee). The minimum size requirements for Area No. 2 potatoes currently allow the handling of potatoes that are at least 2 inches in diameter or 4 ounces minimum weight, except that round potatoes may be of any weight, and Russet Burbank, Russet Norkotah, and Silverton Russet varieties may be a minimum of 17/8 inches in diameter or 4 ounces in weight. This rule would remove the exception that Russet Burbank, Russet Norkotah, and Silverton Russet varieties may be 17/8 inches in diameter, thus requiring these varieties to also meet the minimum requirements of 2 inches in diameter or 4 ounces in weight. This change is intended to facilitate the handling and marketing of Colorado Area No. 2 potatoes.

DATES:

Comments must be received by December 26, 2007.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposal. 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: [phone], 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 available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Teresa Hutchinson or Gary Olson, Northwest Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Telephone: [phone], Fax: [phone], or E-mail: [e-mail] or [e-mail].

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: [phone], Fax: [phone], or E-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

This proposal 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 proposal has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This proposal 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 proposal invites comments on a modification of the minimum size requirements under the order. The minimum size requirements for Area No. 2 potatoes currently allow the handling of potatoes that are at least 2 inches in diameter or 4 ounces minimum weight, except that round potatoes may be of any weight, and Russet Burbank, Russet Norkotah, and Silverton Russet varieties may be a minimum of 17/8 inches in diameter or 4 ounces in weight. This rule would remove the exception that Russet Burbank, Russet Norkotah, and Silverton Russet varieties may be 17/8 inches in diameter. This rule was recommended by the Committee at a meeting on August 16, 2007.

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 requirements issued pursuant to § 948.22.

Section 948.40 provides that whenever the handling of potatoes is regulated pursuant to §§ 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.

Under the order, the State of Colorado is divided into three areas of regulation for marketing order purposes. These include: Area No. 1, commonly known as the Western Slope, includes and consists of the counties of Routt, Eagle, Pitkin, Gunnison, Hinsdale, La Plata, and all counties west thereof; Area No. 2, commonly known as the San Luis Valley, includes and consists of the counties of Sanguache, Huerfano, Las Animas, Mineral, Archuleta, and all counties south thereof; and, Area No. 3 includes and consists of all the remaining counties in the State of Colorado which are not included in Area No. 1 or Area No. 2. The order currently regulates the handling of potatoes grown in Areas No. 2 and No. 3 only; regulation for Area No. 1 is currently not active.

Grade, size, and maturity regulations specific to the handling of potatoes grown in Area No. 2 are contained in § 948.386 of the order.

On August 16, 2001, the Committee recommended increasing the minimum size requirements from 17/8 inches to 2 inches in diameter or 4 ounces minimum weight for all varieties of potatoes, except for round varieties and the Russet Burbank, Russet Norkotah, and Silverton Russet varieties. This recommendation was made effective July 15, 2002 (67 FR 40844). The Russet Burbank, Russet Norkotah, and Silverton Russet varieties were left at 17/8 inches minimum diameter.

The Committee believes that the demand for fresh potatoes has decreased for the last several years and there are abundant supplies in the marketplace. Consumers prefer larger, higher quality potatoes. After reviewing market data over the past six years, the Committee decided to recommend removing the minimum size exception for Russet Burbank, Russet Norkotah, and Silverton Russet varieties. The Committee reports that potato size is important to consumers and that providing the sizes desired is necessary to maintain consumer confidence in the marketplace. The Committee believes that quality assurance is very important to the Colorado potato industry. The Committee also believes that most Colorado potato handlers are shipping Russet varieties at a minimum size of 2 inches in diameter or 4 ounces minimum weight. Providing customers with acceptable quality produce on a consistent basis is necessary to maintain buyer confidence in the marketplace and improve producer returns.

Under this proposal, Russet potatoes subject to minimum size requirements would meet the size requirements if they are at least 2 inches in diameter or 4 ounces in weight. Some long, thin potatoes might be smaller than 2 inches in diameter, but weigh at least 4 ounces. These potatoes would meet the proposed size requirements. Some potatoes might weigh less than 4 ounces, but be at least 2 inches in diameter. These potatoes would also meet the proposed minimum size requirements.

Twelve members voted in favor of the proposed change and one member voted in opposition. The dissenting member was concerned that some industry members who produce smaller Russet potatoes might not support the change. The Committee made the recommendation to provide buyers with the sizes they prefer and to maintain buyer confidence. The Committee believes that this change would facilitate the handling and marketing of Colorado Area No. 2 potatoes and help improve producer returns.

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 rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 77 handlers of Colorado Area No. 2 potatoes subject to regulation under the order and approximately 180 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 are less than $6,500,000, and small agricultural producers are defined as those having annual receipts of less than $750,000.

During the 2006-2007 marketing year, approximately 16,061,432 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 $11.00 per hundredweight, the Committee estimates that 66 Area No. 2 handlers, or about 86 percent, had annual receipts of less than $6,500,000. In view of the foregoing, the majority of Colorado Area No. 2 potato handlers may be classified as small entities.

In addition, based on information provided by the National Agricultural Statistics Service (NASS), the average producer price for Colorado potatoes for 2006 was $8.80 per hundredweight. The average annual fresh potato revenue for the Colorado Area No. 2 potato producers is therefore calculated to be approximately $785,226. Consequently, on average, the majority of the Area No. 2 Colorado potato producers may not be classified as small entities.

This rule would remove the exception that Russet Burbank, Russet Norkotah, and Silverton Russet varieties of Area No. 2 Colorado potatoes may be 17/8 inches in diameter. This rule would thus have the effect of increasing the minimum size requirements for Russet potatoes from 17/8 inches in diameter to 2 inches in diameter or 4 ounces in weight. Authority for this action is contained in §§ 948.21, 948.22, 948.40, and 948.386.

NASS estimated planted acreage for the 2006 crop in Area No. 2 at 59,900 acres, an increase of 1,700 acres when compared with 58,200 acres planted in 2005. In 2006, NASS data shows that Russet Norkotah, the most popular variety, was planted on 60.3 percent of the total potato acreage. Other Russet varieties accounted for 20.6 percent of the total acres planted, with various other varieties making up the remaining 19.1 percent.

Based on Committee records, 89.6 percent of Area No. 2 potatoes entered the fresh market during the 2006-2007 marketing year (including potatoes produced for seed). Of those potatoes, Russet potato varieties accounted for 89.2 percent.

Only a small portion of the crop is expected to be affected by the proposed size increase (i.e., that portion of Russet Burbank, Russet Norkotah, or Silverton Russet varieties smaller than 2 inches in diameter or 4 ounces in weight, but larger than 17/8 inches in diameter). Based on current customer demand, many handlers are already shipping 2-inch minimum diameter Russet potatoes. The Committee believes that the expected benefits of improved quality, increased purchases and sales volume, and increased returns received by producers would greatly outweigh the costs related to the regulation.

After discussing possible alternatives to this rule, the Committee determined that an increase in the minimum size for Russet varieties would increase returns to growers while supplying the market with a higher percentage of larger high quality potatoes. The Committee believes that the expected benefits are improved quality, increased purchases and sales volume, and increased returns received by producers. During its deliberations, the Committee also considered increasing the minimum size to 21/8 inches or 5 ounces in weight for Russet varieties. However, the Committee decided that increasing the minimum size from 17/8 inches diameter to 21/8 inches in diameter would be too restrictive at this time.

This proposed rule would increase the size requirements for Russet varieties of potatoes under the order. Accordingly, this action would not impose any additional reporting or recordkeeping requirements on either small or large Russet 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.

AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule.

In addition, the Committee's meeting was widely publicized throughout the Colorado Area No. 2 potato industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the August 16, 2007, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action 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.

A 15-day comment period is provided to allow interested persons to respond to this proposal. Fifteen days is deemed appropriate because this rule would need to be in place as soon as possible since handlers are already shipping potatoes from the 2007-2008 crop. All written comments timely received will be considered before a final determination is made on this matter.

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. Section 948.386 is amended by revising paragraph (a)(2) to read as follows:

§ 948.386

Handling Regulation.

* * * * *

(a) * * *

(2) All other varieties. U.S. No. 2, or better grade, 2 inches minimum diameter or 4 ounces minimum weight.

* * * * *

Dated: December 4, 2007.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.