[Federal Register Volume 71, Number 248 (Wednesday, December 27, 2006)]
[Rules and Regulations]
[Pages 77583-77586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9897]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. AMS-FV-06-0182; FV06-948-2 IFR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule modifies the grade and maturity requirements for 
potatoes handled 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). This rule relaxes the 
minimum grade requirement from U.S. No. 1 grade to U.S. Commercial 
grade for all Area No. 2 potato varieties, other than round, red-
skinned varieties, measuring from 1 \1/2\-inch minimum diameter to 2 
\1/4\-inch maximum diameter (size B), and 1-inch minimum diameter to 1 
\3/4\-inch maximum diameter. This rule also changes from August 25 to 
August 1 of each year the date minimum maturity requirements are 
implemented. These changes are intended to facilitate the handling and 
marketing of Colorado Area No. 2 potatoes.

DATES: Effective December 28, 2006; comments received by February 26, 
2007 will be considered prior to issuance of a final rule.

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: <a href="/cdn-cgi/l/email-protection#781517191a561c171b131d0c1b141d0a13380d0b1c19561f170e"><span class="__cf_email__" data-cfemail="bcd1d3ddde92d8d3dfd7d9c8dfd0d9ced7fcc9cfd8dd92dbd3ca">[email protected]</span></a>; 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 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#95c1f0e7f0e6f4bbdde0e1f6fdfcfbe6fafbd5e0e6f1f4bbf2fae3"><span class="__cf_email__" data-cfemail="451120372036246b0d3031262d2c2b362a2b05303621246b222a33">[email protected]</span></a> or 
<a href="/cdn-cgi/l/email-protection#97d0f6e5eed3b9d8fbe4f8f9d7e2e4f3f6b9f0f8e1"><span class="__cf_email__" data-cfemail="034462717a472d4c6f706c6d43767067622d646c75">[email protected]</span></a>.
    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: <a href="/cdn-cgi/l/email-protection#4a002b33640d3f2f38282f380a3f392e2b642d253c"><span class="__cf_email__" data-cfemail="1d577c64335a68786f7f786f5d686e797c337a726b">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This 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 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 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

[[Page 77584]]

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 rule changes the minimum grade requirement for certain 
potatoes handled under the order and also changes the minimum maturity 
requirement implementation date. Specifically, this rule changes the 
minimum grade requirement from U.S. No. 1 grade to U.S. Commercial 
grade for all varieties of Area No. 2 potatoes, other than round, red-
skinned potatoes, 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. Furthermore, this rule changes the 
implementation date for the minimum maturity requirement from August 25 
to August 1 of each year. These changes were recommended by the 
Committee at a meeting held on August 10, 2006.
    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.
    Under the order, the State of Colorado is divided into three areas 
of regulation for marketing order purposes. These include: Area 1, 
commonly known as the Western Slope and consisting of Routt, Eagle, 
Pitkin, Gunnison, Hinsdale, La Plata Counties, and all counties west 
thereof; Area 2, commonly known as San Luis Valley, consists of 
Sanguache, Huerfano, Las Animas, Mineral, Archuleta Counties, and all 
counties south thereof; and, Area 3, which consists of the remaining 
counties in the State of Colorado not included in Area 1 or 2. The 
order currently regulates production in Areas 2 and 3 only; regulation 
for Area 1 is currently not active. Grade, size, and maturity 
regulations specific to the handling of potatoes grown in Area No. 2 
are contained in Sec.  948.386 of the order. For many years, consumer 
demand for small fresh market potatoes was relatively soft in 
comparison to demand for larger size potatoes. 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.
    Recently, 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, 
producers and handlers are concerned that they will not be able to 
supply this market if only U.S. No. 1 or better grade can be shipped 
under the order. The Colorado Area No. 2 potato industry has received 
requests from customers for additional small potatoes that grade U.S. 
Commercial or better. This action would better assist Area No. 2 
handlers in meeting their buyers' needs.
    Committee statistics show that approximately 62 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 that potato defects are scored based on the 
percentage of surface area affected on the individual potato. Because 
Size B and smaller potatoes have less surface, any defect inspected 
comprises a larger part of the total surface being scored relative to 
larger sized potatoes. 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 size B potatoes and 
potatoes measuring from 1-inch minimum diameter to 1 \3/4\-inch maximum 
diameter (commonly referred to as ``creamers'' by the potato industry) 
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 producers. Not only would more small potatoes 
enter the market, small potatoes typically sell for a premium price in 
today's marketplace. This change would not affect round, red-skinned 
potato varieties in the size B and 1-inch minimum diameter to 1 \3/4\-
inch maximum diameter size, which would continue to meet U.S. No. 1 
grade or better. The majority of round, red-skinned potato varieties 
produced in Area No. 2 supply the food service or restaurant market. 
This market demands high quality (U.S. No. 1 or better) round, red-
skinned potatoes. Therefore, the Committee recommends that the grade 
requirement for varieties of round, red-skinned potatoes in these size 
categories remain U.S. No. 1 grade or better.
    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 
23 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 requirement 
would not adversely effect the overall Area No. 2 potato market.
    This rule also changes the minimum maturity requirement 
implementation date from August 25 to August 1. The specified ending 
date of October 31 for the minimum maturity requirement remains 
unchanged, as do the actual minimum maturity requirements that U.S. No. 
2 grade potatoes are not more than ``moderately skinned'' and that all 
other grades are not more than ``slightly skinned'' (as defined in the 
U.S. Standards for Potatoes).
    The Committee recommended that the implementation date be moved to 
August 1 due to the increased use of early maturing potato varieties in 
this area of Colorado and earlier harvest requirements. Since the skin 
on most potato varieties has not substantially ``set'', or toughened, 
early in the season, potato skins have a tendency to more easily scrape 
off during harvest and the subsequent handling and packing process. By 
having the maturity requirements in place at the beginning of harvest, 
there is added assurance that a quality product will reach the 
consumer.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the

[[Page 77585]]

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 behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 80 handlers of Colorado Area No. 2 potatoes 
subject to regulation under the order and approximately 200 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 $6,500,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000.
    During the 2005-2006 marketing year, 17,213,202 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 
$11.45 per hundredweight, the Committee estimates that 73 Area No. 2 
handlers, or about 91 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, the average producer price for 
Colorado fall potatoes for 2005 was $9.25 per hundredweight. The 
average annual fresh potato revenue for each of the 200 Colorado Area 
No. 2 potato producers is therefore calculated to be approximately 
$796,112. Consequently, on average, the majority of the Area No. 2 
Colorado potato producers may not be classified as small entities.
    Excluding round, red-skinned potato varieties, this rule relaxes 
the minimum grade requirement from U.S. No. 1 grade to U.S. Commercial 
grade for Area No. 2 potatoes measuring from 1 \1/2\-inch minimum 
diameter to 2 \1/4\-inch maximum diameter (size B), and 1-inch minimum 
diameter to 1 \3/4\-inch maximum diameter. This rule also changes from 
August 25 to August 1 of each year the date minimum maturity 
requirements are implemented. Authority for this action is contained in 
Sec. Sec.  948.21, 948.22, 948.40, and 948.386.
    Since the grade relaxation is expected to benefit producers, 
handlers and consumers, any potential impact from this action would be 
positive. By allowing these small potatoes to meet U.S. Commercial 
grade or better, a potentially greater quantity of potatoes will meet 
the order's handling regulation. This is expected to translate into an 
increased market for small potatoes and thus greater returns for 
handlers and producers and more product choice for consumers. Further, 
small potatoes are a minor segment of the potato market served by the 
Area No. 2 production area. As such, the Committee believes that small 
potatoes do not compete directly with most of the potatoes produced in 
this area and that the grade requirement relaxation will not adversely 
effect the overall Area No. 2 potato market.
    Based on Committee records, roughly half of Area No. 2 handlers 
ship size B and smaller potatoes. Committee records also indicate that 
during the 2004-2005 fiscal period approximately 165,000 hundredweight 
(less than 1 percent of the total shipments) of size B and smaller were 
inspected and shipped. As a result of this rule, the Committee 
estimates that the marketable supply of size B and smaller potatoes 
will increase by 23 percent and add 37,950 hundredweight to the 
marketable supply of Area No. 2 potatoes.
    As previously noted, this relaxation does not affect round, red-
skinned potatoes in the same size categories. These potatoes will 
continue to pack-out as U.S. No. 1 grade or better to satisfy the 
quality conscious food service and restaurant markets.
    The action changing the minimum maturity requirement implementation 
date to August 1 merely updates the regulations so that they are in-
line with current cultural practices. Thus, any impact from this change 
on the producers, handlers, and consumers of Colorado potatoes is 
expected to be positive since assurance is being added that quality 
product--a product without undue skinning--will be packed and shipped 
into the market. The Committee supports the concept that a quality 
product promotes consumer confidence, thereby helping to protect 
producer returns.
    After discussing possible alternatives to this rule, the Committee 
determined that a relaxation in the grade requirement to U.S. 
Commercial grade or better for certain small potatoes would 
sufficiently meet the industry's current needs. The relaxation in the 
grade requirement for the affected small potatoes is expected to 
provide the greatest benefit to the industry by augmenting the 
developing market for these potatoes and thereby increasing producer 
returns. During its deliberations, the Committee also considered 
relaxing the grade requirement for small, round, red-skinned potato 
varieties. However, food service and restaurant market segments have a 
preference for round, red-skinned potatoes and demand high quality 
potatoes (U.S. No. 1 grade or better). The Committee, therefore, found 
that there were no other viable alternatives for the grade change 
except as recommended. Lastly, the maturity requirement implementation 
date change merely brings the regulations in-line with current cultural 
practices, and therefore, the Committee did not consider further 
alternatives to this recommended change.
    This rule 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. In addition, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
rule.
    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.
    Further, 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 10, 2006, meeting was a public meeting 
and all entities, both large and small, were able to express their 
views on this issue. Finally, interested persons are invited to submit 
information on 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.
    This rule invites comments on a modification of the grade and 
maturity requirement prescribed under the Colorado potato marketing 
order. Any comments received will be considered prior to the 
finalization of this rule.

[[Page 77586]]

    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is hereby 
found that this interim final rule, as hereinafter set forth, will tend 
to effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) Handlers are already shipping potatoes from the 2006-2007 
crop and want to take advantage of the grade relaxation aspect of this 
rule as soon as possible; (2) handlers are aware of this rule, which 
was recommended at a public meeting; and (3) this rule provides a 60-
day comment period and any additional comments received will be 
considered prior to finalization of this rule.

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), and the introductory 
text of paragraph (b) are revised to read as follows:


Sec.  948.386  Handling regulation.

* * * * *
    (a) * * *
    (3) 1 \1/2\-inch minimum to 2 \1/4\-inch maximum diameter (Size B). 
U.S. Commercial grade or better: Provided, That round, red-skinned 
varieties shall grade U.S. No. 1 or better.
    (4) 1-inch minimum diameter to 1 \3/4\-inch maximum diameter. U.S. 
Commercial grade or better: Provided, That round, red-skinned varieties 
shall grade U.S. No. 1 or better.
* * * * *
    (b) Maturity (skinning) requirements. From August 1 through October 
31 shall be:
* * * * *

    Dated: December 21, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-9897 Filed 12-21-06; 4:59 pm]
BILLING CODE 3410-02-P


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