[Federal Register Volume 75, Number 239 (Tuesday, December 14, 2010)]
[Rules and Regulations]
[Pages 77749-77753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31202]



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Rules and Regulations
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Federal Register / Vol. 75, No. 239 / Tuesday, December 14, 2010 / 
Rules and Regulations

[[Page 77749]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 946

[Doc. No. AMS-FV-10-0052; FV10-946-1 FIR]


Irish Potatoes Grown in Washington; Temporary Change to the 
Handling Regulations and Reporting Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, with changes, the provisions of an interim rule that suspended, 
for the 2010-2011 season only, the minimum quality, maturity, pack, 
marking, and inspection requirements currently prescribed for russet 
potato varieties under the Washington potato marketing order. The 
marketing order regulates the handling of Irish potatoes grown in 
Washington, and is administered locally by the State of Washington 
Potato Committee (Committee). This rule continues in effect the action 
that suspended regulation for russet potatoes for the 2010-2011 season 
and established temporary reporting requirements for russet potato 
handlers during the suspension. These changes are needed to reduce 
overall industry expenses and increase net returns to producers and 
handlers while allowing the industry to explore alternative marketing 
strategies. Changes to the interim rule clarify that assessment reports 
are required for russet potatoes handled beginning on July 24, 2010, 
and restore regulatory text that was inadvertently deleted from the 
regulation when the interim rule was published.

DATES: Effective Date: Effective January 13, 2011.

FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson or Gary Olson, 
Northwest Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, Telephone: (503) 326-
2724, Fax: (503) 326-7440, or E-mail: <a href="/cdn-cgi/l/email-protection#beeadbccdbcddf90f6cbcaddd6d7d0cdd1d0fedfd3cd90cbcddadf90d9d1c8"><span class="__cf_email__" data-cfemail="a2f6c7d0c7d1c38cead7d6c1cacbccd1cdcce2c3cfd18cd7d1c6c38cc5cdd4">[email protected]</span></a> or 
<a href="/cdn-cgi/l/email-protection#9fd8feede6dbb1d0f3ecf0f1dffef2ecb1eaecfbfeb1f8f0e9"><span class="__cf_email__" data-cfemail="f4b395868db0dabb98879b9ab4959987da81879095da939b82">[email protected]</span></a>.
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, 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: 
<a href="/cdn-cgi/l/email-protection#2e6f405a4147404b5a5a4b006d4f5c5a4b5c6e4f435d005b5d4a4f00494158"><span class="__cf_email__" data-cfemail="f8b9968c9791969d8c8c9dd6bb998a8c9d8ab899958bd68d8b9c99d69f978e">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 946, as amended (7 CFR part 946), regulating the handling of Irish 
potatoes grown in Washington, 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect.
    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 there from. 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.
    In an interim rule published in the Federal Register on July 23, 
2010 (75 FR 43042), the order's handling regulations for russet potato 
varieties were suspended for the 2010-2011 season. This rule continues 
in effect that action. This change allows the Washington potato 
industry to market russet potatoes for one year without regard to the 
minimum quality, maturity, pack, marking, and inspection requirements 
prescribed under the Washington potato marketing order. The suspension 
was effective July 24, 2010, and will continue through June 30, 2011. 
After June 30, 2011, regulation will again be in effect for the 2011-
2012 season and will continue indefinitely unless modified, suspended, 
or terminated.
    This rule also continues in effect the action that established 
reporting requirements for russet potato handlers during the same 12-
month suspension period. The Committee will continue to collect 
assessments on all fresh russet potatoes handled during the suspension 
period. The reporting requirements allow the Committee to obtain 
information necessary to facilitate assessment collection.
    Section 946.52 of the order authorizes the establishment of grade, 
size, quality, or maturity regulations for any variety or varieties of 
potatoes grown in the production area. Section 946.52 also authorizes 
regulation of 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. Section 946.51 further 
authorizes the modification, suspension, or termination of regulations 
issued under Sec.  946.52. Section 946.60 provides that whenever 
potatoes are regulated pursuant to Sec.  946.52 such potatoes must be 
inspected by the Federal State Inspection Program (FSIP) and certified 
as meeting the applicable requirements of such regulations.
    Section 946.70 authorizes the Committee, with the approval of USDA, 
to require information from handlers that will enable the Committee to 
fulfill its duties under the order.
    Section 946.336 of the order's administrative rules and regulations 
prescribes the grade, size, quality, cleanness, maturity, pack, 
marking, and inspection requirements for fresh market Washington 
potatoes.
    The Committee meets regularly to consider recommendations for 
modification, suspension, or termination of the regulatory

[[Page 77750]]

requirements for Washington potatoes, which have been issued on a 
continuing basis. Committee meetings are open to the public, and 
interested persons may express their views at these meetings. USDA 
reviews Committee recommendations, information submitted by the 
Committee, and other available information, and determines whether 
modification, suspension, or termination of the regulatory requirements 
would tend to effectuate the declared policy of the Act.
    At its January 26, 2010, meeting, the Committee was asked to 
evaluate the benefits of handling regulations and mandatory inspection 
for Washington potatoes. As a consequence, the Committee formed a 
subcommittee that met on May 11, 2010, to consider the implications of 
regulatory and inspection requirement suspension. Subsequently, at its 
June 1, 2010, meeting, the Committee unanimously recommended suspending 
the handling regulation for russet potatoes for the 2010-2011 fiscal 
period, which ends on June 30, 2011. The Committee also recommended 
establishing a requirement that handlers report their russet potato 
shipments during this period to the Committee on a specially developed 
form.
    Historically, an objective of the order's handling regulations has 
been to ensure that only quality Washington potatoes enter the fresh 
market, thereby ensuring consumer satisfaction, increased sales, and 
improved returns to producers. While the industry continues to support 
quality as an important factor in maintaining sales, the Committee 
believes the cost of inspection (mandated when the handling regulations 
are in effect) may exceed the benefits currently derived from the 
russet potato quality regulations.
    With russet potato prices reportedly at low levels in recent years, 
the Committee, as noted earlier, has been studying the possibility of 
reducing costs through the elimination of mandatory inspection. In 
evaluating the relative benefits of quality control versus a 
regulation-free market, some concern was expressed at the meeting that 
elimination of the quality requirements could result in low quality 
potatoes being shipped to the fresh market, thereby negatively 
affecting consumer demand. Also, there was some concern that overall 
quality of the product may decline, and that the Washington potato 
industry could lose russet potato sales to production areas that are 
covered by quality and inspection requirements. Furthermore, because 
russet potatoes comprise about 76 percent of the fresh market 
Washington potato crop, the Committee is concerned about future 
availability of inspection services if the FSIP reduced staff as a 
result of the decrease in the demand for their services. With these 
concerns in mind, and having the desire to explore the benefits of non-
regulation, the Committee recommended temporarily suspending the russet 
potato handling regulation for one season only. This would enable the 
Committee to study the impacts of the suspension and consider 
appropriate actions for ensuing seasons.
    This rule continues in effect the action that permits handlers to 
ship russet potatoes without regard to minimum quality, maturity, pack, 
marking, and inspection requirements for 2010-2011 fiscal period, which 
ends June 30, 2011. Although russet potato handlers may temporarily 
decrease their total costs by choosing not to have their potatoes 
inspected during the suspension period, handlers may continue to seek 
inspection on a voluntary basis. The Committee will evaluate the 
effects of the temporary regulatory suspension at its next meeting.
    Suspension of mandatory inspections resulted in the suspension of 
the monthly FSIP inspection report for russet potatoes. The Committee 
typically uses these monthly reports, which are compiled by the FSIP 
from inspection certificates, as a basis for assessment collection. 
During the suspension of the regulations for russet potatoes, the 
Committee will instead require handlers to file the newly established 
report specific to russet potato shipments so that the Committee may 
calculate assessments and compile statistics.
    For that purpose, a new Sec.  946.143--Assessment reports, was 
added to the administrative rules and regulations requiring each person 
handling russet type potatoes to submit a monthly report to the 
Committee containing the following information: (a) The name and 
address of the handler; (b) the date and quantity of russet potatoes 
shipped; (c) the assessment payment due; and (d) other information as 
may be requested by the Committee. Each handler's first assessment 
report shall include all the required information pertaining to 
shipments from the beginning of the regulatory suspension period 
through the end of December 2010.
    Authorization to assess handlers enables the Committee to incur 
expenses that are reasonable and necessary to administer the program. 
This reporting requirement enables the Committee to continue collecting 
the funds needed to cover necessary program costs.
    The beginning date of the additional reporting requirements should 
have been the same date as the beginning date of the regulatory 
suspension, which is July 24, 2010. However, the interim rule 
erroneously provided that the new reporting requirements would cover 
handling starting on July 26, 2010. This rule makes a change to the 
interim rule by establishing July 24, 2010, as the beginning date for 
the new reporting requirements.
    In addition to adding a new Sec.  946.143 containing the additional 
reporting requirements, the interim rule revised Sec.  946.336 by 
adding a provision that russet type potatoes are exempt from the 
handling requirements of that section during the 2010-2011 fiscal 
period. However, several paragraphs of Sec.  946.336 were inadvertently 
deleted when the interim rule was published. Therefore, this rule makes 
a change to the interim rule by revising only the introductory 
paragraph of Sec.  946.336 and by adding paragraphs (a) through (h), 
which were inadvertently deleted when the interim rule was published, 
back into the section.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), 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 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 45 handlers of Washington potatoes subject to regulation 
under the order (inclusive of the 33 russet potato handlers) and 
approximately 267 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 $7,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000.
    During the 2008-2009 marketing year, the Committee reported that 
10,279,734 hundredweight of Washington potatoes were shipped into the 
fresh market. Based on the USDA Economic Research

[[Page 77751]]

Service estimate that the 2008 average f.o.b. price for fresh domestic 
potatoes was $8.42 per hundredweight, the average gross returns for 
each of the 45 handlers was less than $2,000,000.
    In addition, based on information provided by the National 
Agricultural Statistics Service, the average producer price for 
Washington potatoes for 2009 was $7.10 per hundredweight. The average 
gross annual revenue for each of the 267 Washington potato producers is 
therefore calculated to be approximately $273,356. In view of the 
foregoing, the majority of Washington potato handlers and producers may 
be classified as small entities.
    This rule continues in effect the action that suspended the 
handling regulation and established reporting requirements for handlers 
of russet type potatoes for the 2010-2011 fiscal period, which ends 
June 30, 2011. These changes are expected to reduce overall industry 
expenses while providing the industry with the opportunity to explore 
alternative marketing strategies.
    The authority for regulation is provided in Sec.  946.52 of the 
order, while authority for reports and records is provided in Sec.  
946.70. The handling regulation is specified under Sec.  946.336 of the 
order's administrative rules and regulations. The new reporting 
requirement is specified in Sec.  946.143.
    The Committee anticipates that this rule will not negatively impact 
small businesses. This rule continues to suspend minimum quality, 
maturity, pack, marking, and inspection requirements. Though 
inspections will not be mandated for russet potatoes handled under the 
order during the 2010-2011 season, handlers may at their discretion 
choose to have their potatoes inspected. Handlers are thus able to 
control costs--which are generally passed on to producers--based on the 
demands of their customers. The Committee reports that during the 2008-
2009 season, the total cost of inspection--at $0.07 per hundredweight 
for the approximately 7,800,000 hundredweight of Washington russet 
potatoes shipped--was about $546,000. This represents approximately 
$12,133 per handler.
    The Committee discussed alternatives to this recommendation. In 
addition to making no changes to the regulations, the Committee 
considered temporarily suspending the handling regulation for all types 
of potatoes, not just russet type potatoes. However, the Committee 
believes that it is beneficial to the industry to maintain the handling 
regulation and inspection requirements for round type potatoes. The 
Committee reports that round type potatoes generally command premium 
prices. The Washington potato industry believes that the order's round 
potato quality regulations, in conjunction with mandatory inspections, 
are valuable marketing tools. Therefore, the Committee recommended 
suspending the handling regulation for russet potatoes only.
    An alternative to establishing the alternative reporting 
requirements would have been relieving handlers from paying assessments 
on shipments of russet potatoes. However, approximately 76 percent of 
the fresh potato shipments in Washington are comprised of russet 
varieties (as opposed to round white and round red or long white type 
potatoes), which generates a substantial portion of the Committee's 
revenue. The Committee determined that it would not be able to cover 
the cost of its operation if shipments of russet potatoes were not 
assessed.
    This rule continues in effect the action that established a monthly 
reporting requirement for russet potato handlers. The report will 
provide the Committee with information necessary to track shipments and 
collect assessments. While this rule establishes new reporting 
requirements for russet potato shipments, the suspension of the 
handling regulation for russet potatoes also temporarily suspends the 
more frequent reporting requirements that are specified under the 
safeguard requirements for russet potatoes shipped under the order's 
special purpose shipment exemptions (Sec.  946.336(d) and (e)). Under 
these paragraphs, handlers are required to provide detailed reports 
whenever they divert regulated potatoes for livestock feed, charity, 
seed, prepeeling, processing, grading and storing in specified counties 
in Oregon, and for experimentation.
    The burden of additional reporting or recordkeeping requirements on 
either small or large russet potato handlers is expected to be offset 
by the temporary suspension of other reporting requirements normally in 
effect. Also, the suspension of the handling regulation and inspection 
requirements for russet potatoes is expected to further reduce industry 
expenses.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this rule.
    The Committee's meetings were widely publicized throughout the 
Washington potato industry and all interested persons were invited to 
participate in Committee deliberations. Like all committee meetings, 
the January 26, May 11, and June 1, 2010, meetings were public 
meetings, and all entities, both large and small, were able to express 
views on this issue.
    An interim rule concerning this action was published in the Federal 
Register on July 23, 2010 (75 FR 43042). Copies of the rule were 
provided to handlers by the Committee's staff. In addition, the rule 
was made available through the Internet by the Office of the Federal 
Register. That rule provided for a 60-day comment period, which ended 
September 21, 2010. No comments were received on the regulatory or 
information collection aspects of this rule.
    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/MarketingOrdersSmallBusinessGuide. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), the additional information collection burden and form 
associated with the new reporting requirements have been approved by 
the Office of Management and Budget (OMB) and merged into OMB No. 0581-
0178, Generic OMB Vegetable and Specialty Crops.
    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.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
finalizing the interim rule, with the following changes, will tend to 
effectuate the declared policy of the Act.
    The interim rule added Sec.  946.143 to the order's administrative 
rules and regulations and specified that handlers would be required to 
report russet potato shipments beginning on July 26, 2010. This final 
interim rule revises Sec.  946.143 to specify that the first assessment 
report from handlers shall contain the required information for russet 
potatoes handled beginning on July 24, 2010.

[[Page 77752]]

    In addition, when the interim rule was published, several 
paragraphs of the regulatory text of Sec.  946.336 were inadvertently 
deleted. This rule corrects Sec.  946.336 by adding the deleted 
paragraphs back into the regulation.

List of Subjects in 7 CFR Part 946

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

0
Accordingly, the interim rule amending 7 CFR part 946, which was 
published at 75 FR 43042 on July 23, 2010, is adopted as a final rule 
with the following changes:

PART 946--IRISH POTATOES GROWN IN WASHINGTON

0
1. The authority citation for 7 CFR part 946 continues to read as 
follows:

    Authority:  7 U.S.C. 601-674.


Sec.  946.143  [Amended]

0
2. Amend the introductory text of Sec.  946.143 by removing the words 
``July 26, 2010'' and adding in their place the words ``July 24, 
2010.''

0
3. Section 946.336 is revised to read as follows:


Sec.  946.336  Handling regulation.

    No person shall handle any lot of potatoes unless such potatoes 
meet the requirements of paragraphs (a), (b), (c), and (g) of this 
section or unless such potatoes are handled in accordance with 
paragraphs (d) and (e), or (f) of this section, except that shipments 
of the blue or purple flesh varieties of potatoes shall be exempt from 
both this handling regulation and the assessment requirements specified 
in Sec.  946.41: Provided, That from July 24, 2010, through June 30, 
2011, russet type potatoes shall be exempt from the requirements of 
paragraphs (a), (b), (c), (d), (e), and (g) of this section.
    (a) Minimum quality requirements--(1) Grade: All varieties--U.S. 
No. 2 or better grade.
    (2) Size: (i) At least 1\7/8\ inches in diameter, except that all 
red, yellow fleshed, and white types may be \3/4\ inch (19.1 mm) 
minimum diameter, if they otherwise meet the requirements of U.S. No. 
1.
    (ii) All Russet types, 2 inches (54.0 mm) minimum diameter, or 4 
ounces minimum weight.
    (iii) Any type of any size may be packed in a 3-pound or less 
container if the potatoes otherwise meet the requirements of U.S. No. 1 
grade or better at the time of packing.
    (iv) Tolerances--The tolerance for size contained in the U.S. 
Standards for Grades of Potatoes shall apply.
    (3) Cleanness: All varieties and grades--as required in the United 
States Standards for Grades of Potatoes. For example: U.S. No. 2--``not 
seriously damaged by dirt,'' and U.S. No. 1--``fairly clean.''
    (b) Minimum maturity requirements--(1) Red, yellow fleshed and 
white types: Not more than ``moderately skinned.''
    (2) Russet types: Not more than ``slightly skinned.''
    (c) Pack and marking:
    (1) Domestic: Potatoes packed in cartons shall be either:
    (i) U.S. No. 1 grade or better, except that potatoes which fail to 
meet the U.S. No. 1 grade only because of internal defects may be 
shipped without regard to this requirement provided the lot contains no 
more than 10 percent damage by any internal defect or combination of 
internal defects but not more than 5 percent serious damage by any 
internal defect or combination of internal defects.
    (ii) U.S. No. 2 grade, provided the cartons are permanently and 
conspicuously marked as to grade. This marking requirement does not 
apply to cartons containing potatoes meeting the requirements of 
(c)(1)(i).
    (2) Export: Potatoes packed in cartons shall be U.S. No. 1 grade or 
better.
    (d) Special purpose shipments. (1) The minimum grade, size, 
cleanness, maturity, and pack requirements set forth in paragraphs (a), 
(b), and (c) of this section shall not apply to shipments of potatoes 
for any of the following purposes:
    (i) Livestock feed;
    (ii) Charity;
    (iii) Seed;
    (iv) Prepeeling;
    (v) Canning, freezing, and ``other processing'' as hereinafter 
defined;
    (vi) Grading or storing at any specified location in Morrow or 
Umatilla Counties in the State of Oregon;
    (vii) Experimentation.
    (2) Shipments of potatoes for the purposes specified in paragraphs 
(d)(1)(i) through (vii) of this section shall be exempt from the 
inspection requirements specified in paragraph (g) of this section, 
except that shipments pursuant to paragraph (d)(1)(vi) of this section 
shall comply with the inspection requirements of paragraph (e)(2) of 
this section. Shipments specified in paragraphs (d)(1)(i), (ii), (iii), 
(v) and (vii) of this section shall be exempt from assessment 
requirements as specified in Sec.  946.248 and established pursuant to 
Sec.  946.41.
    (e) Safeguards. (1) Handlers desiring to make shipments of potatoes 
for prepeeling shall:
    (i) Notify the committee of intent to ship potatoes by applying on 
forms furnished by the committee for a certificate applicable to such 
special purpose shipments;
    (ii) Prepare on forms furnished by the committee a special purpose 
shipment report on each such shipment, a copy of which must also 
accompany each shipment. The handler shall forward copies of each such 
special purpose shipment report to the committee office and to the 
receiver with instructions to the receiver to sign and return a copy to 
the committee office. Failure of the handler or receiver to report such 
shipments by promptly signing and returning the applicable special 
purpose shipment report to the committee office shall be cause for 
cancellation of such handler's certificate applicable to such special 
purpose shipments and/or the receiver's eligibility to receive further 
shipments pursuant to such certificate. Upon cancellation of such 
certificate, the handler may appeal to the committee for 
reconsideration; such appeal shall be in writing;
    (iii) Before diverting any such special purpose shipment from the 
receiver of record as previously furnished to the committee by the 
handler such handler shall submit to the committee a revised special 
purpose shipment report.
    (2) Handlers desiring to ship potatoes for grading or storing to 
any specified location in Morrow or Umatilla Counties in the State of 
Oregon shall:
    (i) Notify the committee of intent to ship potatoes by applying on 
forms furnished by the committee for a certificate applicable to such 
special purpose shipment. Upon receiving such application, the 
committee shall supply to the handler the appropriate certificate after 
it has determined that adequate facilities exist to accommodate such 
shipments and that such potatoes will be used only for authorized 
purposes;
    (ii) If reshipment is for any purpose other than as specified in 
paragraph (d) of this section, each handler desiring to make reshipment 
of potatoes which have been graded or stored shall, prior to 
reshipment, cause each such shipment to be inspected by an authorized 
representative of the Federal-State Inspection Service. Such shipments 
must comply with the minimum grade, size, cleanness, maturity, and pack 
requirements specified in paragraphs (a), (b), and (c) of this section;
    (iii) If reshipment is for any of the purposes specified in 
paragraph (d) of this section, each handler making reshipment of 
potatoes which have been graded or stored shall do so in accordance 
with the applicable safeguard requirements specified in paragraph (e) 
of this section.

[[Page 77753]]

    (3) Each handler making shipments of potatoes for canning, 
freezing, or ``other processing'' pursuant to paragraph (d) of this 
section shall:
    (i) First apply to the committee for and obtain a Special Purpose 
Certificate to make shipments for processing;
    (ii) Make shipments only to those firms whose names appear on the 
committee's list of canners, freezers, or other processors of potato 
products maintained by the committee, or to persons not on the list 
provided the handler furnishes the committee, prior to such shipment, 
evidence that the receiver may reasonably be expected to use the 
potatoes only for canning, freezing, or other processing;
    (iii) Upon request by the committee, furnish reports, or cause 
reports to be furnished, for each shipment pursuant to the applicable 
Special Purpose Certificate;
    (iv) Mail to the office of the committee a copy of the bill of 
lading for each Special Purpose Certificate shipment promptly after the 
date of shipment unless other arrangements are made;
    (v) Bill each shipment directly to the applicable processor.
    (4) Each receiver of potatoes for processing pursuant to paragraph 
(d) of this section shall:
    (i) Complete and return an application form for consideration of 
approval as a canner, freezer, or other processor of potato products;
    (ii) Certify to the committee and to the Secretary that potatoes 
received from the production area for processing will be used for such 
purpose and will not be placed in fresh market channels;
    (iii) Report on shipments received as the committee may require and 
the Secretary approve.
    (5) Each handler desiring to make shipments of potatoes for 
experimentation shall:
    (i) First apply to the committee for and obtain a Special Purpose 
Certificate to make shipments for experimentation;
    (ii) Upon request by the committee, furnish reports of each 
shipment pursuant to the applicable Special Purpose Certificate.
    (6) Handlers diverting potatoes to livestock feed are not required 
to apply for a Special Purpose Certificate nor report such shipments to 
the committee.
    (7) Each handler desiring to make shipments of potatoes for charity 
shall:
    (i) First apply to the committee for, and obtain, a Special Purpose 
Certificate for the purpose of making shipments for charity: Provided, 
That shipments for charity of 1,000 pounds or less are exempt from the 
application and reporting requirements: And provided further, That 
potatoes previously graded, assessed, and inspected in preparation for 
shipment to the fresh market are exempt from the application and 
reporting requirements.
    (ii) Each handler shipping potatoes to charity must inform the 
recipient that the potatoes cannot be resold or otherwise placed in 
commercial market channels.
    (8) Each handler making shipments of seed potatoes shall furnish, 
at the request of the committee, reports on the total volume of seed 
potatoes handled.
    (f) Minimum quantity exemption. Each handler may ship up to, but 
not to exceed 5 hundredweight of potatoes per day without regard to the 
inspection and assessment requirements of this part, but this exception 
shall not apply to any shipment over 5 hundredweight of potatoes.
    (g) Inspection. (1) Except when relieved by paragraphs (d) or (f) 
of this section, no person may handle any potatoes unless a Federal-
State Inspection Notesheet or certificate covering them has been issued 
by an authorized representative of the Federal-State Inspection Service 
and the document is valid at the time of shipment.
    (2) U.S. No. 1 grade or better potatoes in the State of Washington 
which are resorted or repacked within 72 hours of being inspected and 
certified are exempt from reinspection.
    (h) Definitions. The terms U.S. No. 1, U.S. No. 2, not seriously 
damaged by dirt, fairly clean, slightly skinned, and moderately skinned 
shall have the same meaning as when used in the United States Standards 
for Grades of Potatoes (7 CFR 51.1540-51.1566), including the 
tolerances set forth in it. The term prepeeling means the commercial 
preparation in the prepeeling plant of clean, sound, fresh tubers by 
washing, peeling or otherwise removing the outer skin, trimming, 
sorting, and properly treating to prevent discoloration preparatory to 
sale in one or more of the styles of peeled potatoes described in Sec.  
52.2422 United States Standards for Grades of Peeled Potatoes (7 CFR 
52.2421-52.2433). The term other processing has the same meaning as the 
term appearing in the Act and includes, but is not restricted to, 
potatoes for dehydration, chips, shoestrings, starch, and flour. It 
includes the application of heat or cold to such an extent that the 
natural form or stability of the commodity undergoes a substantial 
change. The act of peeling, cooling, slicing, dicing, or applying 
material to prevent oxidation does not constitute ``other processing.'' 
Other terms used in this section have the same meaning as when used in 
the marketing agreement, as amended, and this part.

    Dated: December 7, 2010.
David R. Shipman,
Acting Administrator.
[FR Doc. 2010-31202 Filed 12-13-10; 8:45 am]
BILLING CODE P


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