E6-14108. Amendments to the Potato Research and Promotion Plan

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

The Department of Agriculture (USDA) is adopting, as a final rule, with correcting changes, an interim final rule to increase the assessment rate on handlers and importers of potatoes from 2 cents to 2.5 cents per hundredweight. The increase is authorized under the Potato Research and Promotion Plan (Plan). The Plan is authorized by the Potato Research and Promotion Act (Act). In order to sustain the three major programs currently conducted by the National Potato Promotion Board (Board), International Marketing, Domestic Marketing (which includes retail marketing), and a nutrition campaign at their present levels beyond June 2006, additional revenue is required.

DATES:

This rule is effective September 25, 2006.

FOR FURTHER INFORMATION CONTACT:

Jeanette Palmer, Research and Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., Stop 0244, Washington, DC 20250-0244; telephone [phone] or fax [phone].

SUPPLEMENTARY INFORMATION:

This rule is issued under the Potato Research and Promotion Plan (Plan) [7 CFR Part 1207], as amended. This rule will increase the assessment rate by 1/2 cent for handlers and importers. The Plan is authorized by the Potato Research and Promotion Act (Act) [7 U.S.C. 2611-2627].

Executive Order 12988

This rule has been reviewed under the 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 the Act, a person subject to the plan may file a petition with the Secretary of Agriculture (Secretary) stating that such plan, any provision of such plan, or any obligation imposed in connection with such plan is not in accordance with law; and requesting a modification of the plan or an exemption from the plan. Such person is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary will rule on the petition. The Act provides that the district court of the United States in any district in which such person is an inhabitant, or has principal place of business, has jurisdiction to review the Secretary's ruling on the petition, provided that a complaint is filed within 20 days after the date of entry of the ruling.

Executive Order 12866

The Office of Management and Budget (OMB) has waived the review process required by Executive Order 12866 for this action.

Regulatory Flexibility Act and Paperwork Reduction Act

In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 601 et seq.], the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this rule will not have a significant economic impact on a substantial number of small entities. The purpose of the RFA is to fit regulatory actions to scale of businesses subject to such action so that small businesses will not be disproportionately burdened.

There are approximately 1,353 handlers, 5,223 producers, and 300 importers of potatoes and potato products who are subject to the provisions of the Plan. The Small Business Administration (SBA) defines small agricultural businesses, which includes handlers and importers, as those whose annual receipts are less than $6.5 million, and small agricultural producers are defined as those having annual receipts of no more than $750,000 annually. Most of the producers and handlers, and some of the importers would be classified as small businesses under the criteria established by the SBA 13 CFR 121.201].

Currently, potato handlers and importers pay a mandatory assessment of 2 cents per hundredweight. Assessments under the program are used to fund promotional campaigns and to conduct research in the areas of U.S. marketing, and international marketing and to enable the Board to exercise its duties in accordance with the Plan. The 2 cents assessment generates about $8.5 million in annual revenues. The current assessment became effective when the Plan was amended in May 1984, to increase the maximum assessment rate from 1 cent per hundredweight to 0.5 percent of the previous 10-year average price received by growers. The Plan is administered by the National Potato Promotion Board (Board) under USDA supervision.

In order to sustain the three major programs currently conducted by the Board, International Marketing, Domestic Marketing (which includes retail marketing), and a nutrition campaign at their present levels beyond June 2006, additional revenue is required. The Board approved this increase in the assessment rate at its March 19, 2005, annual meeting. This increase is consistent with section 1207.342(a) of the Plan, which provides such assessments shall be levied at a rate fixed by the Secretary which shall not exceed one-half of one per centum of the immediate past ten calendar years United States average price received for potatoes by growers as reported by the Department of Agriculture. Further, not more than one such assessment may be collected on any potatoes.

The 1/2 cent assessment rate increase will bring in an estimated $1.5 to $2 million in new revenue, depending upon production levels. For 2005, domestic production was 420,879,000 hundredweight and imports represented 59,683,000 hundredweight. The new rate would allow the Board to maintain its investment in the nutrition campaign and marketing programs. It is estimated that the Board would collect approximately $10 million in assessments with a 2.5 cent per hundredweight assessment rate. Any additional costs should be offset by the benefits to be derived from the research and promotion programs. The Board has determined that the 1/2 cent increase in assessments would cost potato growers less than one-half of one percent (0.005%) of total production costs or approximately $1.75 per acre based on average yields.

Alternatives were also considered by the Board, which included cutting back funding of marketing programs and the nutrition campaign, or eliminating the nutrition campaign altogether. All of the alternatives were rejected by the Board because it was determined that continued funding of the marketing programs and the nutrition campaign were necessary to increase the demand for potatoes.

There are no relevant Federal rules that duplicate, overlap, or conflict with this rule.

In accordance with the OMB regulation [5 CFR Part 1320] which implements the Paperwork Reduction Act of 1995 [44 U.S.C. Chapter 35], the information collection and recordkeeping requirements that are imposed by the Plan have been previously approved under OMB control number 0581-0093. This rule does not result in a change to the information collection and recordkeeping requirements.

Background

The Plan became effective on March 9, 1972, after a national referendum among producers. Under the Plan, handlers and importers are assessed 2 cents per hundredweight. No assessment shall be levied on potatoes grown in the 50 States of the United States by producers of less than 5 acres of potatoes. Importers pay assessments on all tablestock potatoes imported for ultimate human consumption and on all imported seed potatoes. The program currently generates about $8.5 million in annual revenues, which is administered by the Board under USDA supervision. The Board administers a national program of research development, advertising, and promotion designed to strengthen potatoes' competitive position and to maintain and expand domestic and foreign markets for potatoes and potato products.

In order to sustain the three major programs being conducted by the Board, International Marketing, Domestic Marketing (which includes retail marketing), and a nutrition campaign at their present levels beyond June 2006, additional revenue to the Board is required. The 1/2 cent assessment rate increase will bring in an estimated $1.5 to $2 million in new revenue, depending upon production levels. For 2005, domestic production was 420,879,000 hundredweight and imports represented 59,683,000 hundredweight. The new rate would allow the Board to maintain its investment in the nutrition campaign and marketing programs. It is estimated that the Board would collect approximately $10 million in assessments with a 2.5 cents per hundredweight assessment rate. Any additional cost should be offset by the benefits to be derived from research and promotion programs.

The Board, whose members represent all potato producing states as well as importers, voted to increase the assessment rate at its March 19, 2005, annual meeting. Eighty-eight percent of the Board voted to increase the assessment rate. The majority of those that opposed the increase in assessment rate had a number of reasons, including a view that a State program is preferable over a national program and concern about the impact on growers.

This action will amend the rules and regulations issued under the Plan. The rate increase from 2 cents to 2.5 cents per hundredweight is within the formula allowed by section 1207.342 (a) of the Plan, which states the funds to cover the Board's expenses shall be acquired by the levying of assessments upon handler and importers as designated in regulations recommended by the Board and issued by the Secretary. Such assessments shall be levied at a rate fixed by the Secretary which shall not exceed one-half of one per centum of the immediate past ten calendar years United States average price received for potatoes by growers as reported by the Department of Agriculture. Further, not more than one such assessment may be collected on any potatoes. The average price was determined to be $5.88 using the years 1994-2003 and one-half of one per centum is 2.94 cents.

An interim final rule concerning this action was published in the Federal Register on March 8, 2006. Copies of the rule were made available through the Internet by USDA and the Office of the Federal Register. That rule provided a 60-day comment period which ended May 8, 2006. Eight comments were received.

Six favorable comments were received. The commenters' support the rule for an assessment increase to sustain the Board's three major program areas—International Marketing, Domestic Marketing (which includes retail marketing), and a nutrition campaign. The commenters' supported the implementation of the interim final rule as it was presented.

One unfavorable comment was received. The commenter recommends a reduction in spending and not to increase the assessment rate. The commenter indicated opposition to any increase in bureaucratic costs; however, the Board is industry-funded and no taxpayers' dollars are expended on this program.

Finally, one comment received did not address the assessment issue.

After consideration of all relevant material presented including comments, the Board's recommendation, and other information, the interim final rule, as published in the Federal Register (71 FR 11294) on March 8, 2006, is adopted as a final rule, with changes. In this final rule, two corrections are made to the harmonized tariff schedule codes in § 1207.510(b)(3) of the table and the authority citation also is corrected.

List of Subjects in 7 CFR Part 1207

• Administrative practice and procedure
• Advertising
• Consumer information
• Marketing agreements
• Potatoes
• Promotion
• Reporting and recordkeeping requirements

For the reasons set forth in the preamble, 7 CFR part 1207 is amended as follows:

1. The authority citation for part 1207 continues to read as follows:

Authority: 7 U.S.C. 2611-2627 and 7 U.S.C. 7401.

PART 1207—POTATO RESEARCH AND PROMOTION PLAN

2. In § 1207.510, paragraphs (a)(1), (b)(1) and the table immediately following paragraph (b)(3) are revised to read as follows:

§ 1207.510

Levy of assessments.

(a) * * *

(1) An assessment rate of 2.5 cents per hundredweight shall be levied on all potatoes produced within the 50 States of the United States.

* * * * *

(b) * * *

(1) An assessment rate of 2.5 cents per hundredweight shall be levied on all tablestock potatoes imported into the United States for ultimate consumption by humans and all seed potatoes imported into the United States. An assessment rate of 2.5 cents per hundredweight shall be levied on the fresh weight equivalents of imported frozen or processed potatoes for ultimate consumption by humans. The importer of imported tablestock potatoes, potato products, or seed potatoes shall pay the assessment to the Board through the U.S. Customs Service and Border Protection at the time of entry or withdrawal for consumption of such potatoes and potato products into the United States.

* * * * *

(3) * * *

Tablestock potatoes, frozen or processed potatoes, and seed potatoes	Assessment
	cents/cwt	cents/kg
0701.10.0020	2.50	0.0551
0701.10.0040	2.50	0.0551
0701.90.1000	2.50	0.0551
0701.90.5010	2.50	0.0551
0701.90.5020	2.50	0.0551
0701.90.5030	2.50	0.0551
0701.90.5040	2.50	0.0551
0710.10.0000	5.00	0.1103
2004.10.4000	5.00	0.1103
2004.10.8020	5.00	0.1103
2004.10.8040	5.00	0.1103
2005.20.0070	3.93	0.0866
0712.90.3000	17.86	0.3936
1105.10.0000	17.86	0.3936
1105.20.0000	17.86	0.3936
2005.20.0040	17.86	0.3936
2005.20.0020	10.20	0.2250
1108.13.0010	22.50	0.4961

* * * * *

Dated: August 21, 2006.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.