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[Federal Register Volume 72, Number 60 (Thursday, March 29, 2007)]
[Rules and Regulations]
[Pages 14654-14657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5817]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 948

[Docket No. AMS-FV-06-0181; FV06-948-2 FIR]

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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule modifying 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 continues in effect the action that relaxed 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 continues in effect the action that changed 
the date minimum maturity requirements are implemented from August 25 
to August 1 of each year. These changes are intended to facilitate the 
handling and marketing of Colorado Area No. 2 potatoes.

DATES: Effective Date: April 30, 2007.

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: [email protected] or 
[email protected].
    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: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 97 and Marketing Order No. 948,

[[Page 14655]]

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.''
    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 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 rule adopts the interim rule that changed the minimum grade 
requirement for certain potatoes handled under the order and also 
changed the minimum maturity requirement implementation date. 
Specifically, this regulating action changed 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, the implementation date for the 
minimum maturity requirement was changed 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 authorizes an area committee to 
recommend to the Secretary modifications, 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 the handling of potatoes 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 assists 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 area, 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 does 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 recommended 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.

[[Page 14656]]

    This final rule also adopts from the interim rule the change in 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 Grades of 
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.

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 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 continues 
in effect the action that relaxed 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 continues in effect the action that changed 
the date minimum maturity requirements are implemented from August 25 
to August 1 of each year. 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 that changed the minimum maturity requirement 
implementation date to August 1 merely updated 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.
    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.
    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

[[Page 14657]]

reduce information requirements and duplication by industry and public 
sector agencies. In addition, as noted in the initial regulatory 
flexibility analysis, USDA has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this rule.
    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.
    An interim final rule concerning this action was published in the 
Federal Register on December 27, 2006 (71 FR 77583). Committee staff 
sent copies of the rule to all Committee members and Area No. 2 
handlers. In addition, the rule was made available through the Internet 
by USDA and the Office of the Federal Register. That rule provided for 
a 60-day comment period which ended February 26, 2007.
    One comment was received. The commenter stated that regulations 
were necessary, but believed that all potatoes should have the same 
requirements. However, the Committee believes that there are specific 
markets for certain varieties of potatoes, so requirements should be 
specific to the variety of potato. For example, some varieties of 
potatoes are better suited for the fresh market than the French fry or 
processed potato market. Furthermore, marketing order 948, Area No. 2, 
only regulates the handling of potatoes grown in Area No. 2 of 
Colorado, and not other U.S. potato producing areas.
    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 material presented, including 
the Committee's recommendation, and other information, it is hereby 
found that finalizing the interim final rule, without change, as 
published in the Federal Register (71 FR 77583, December 27, 2006), 
will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 948

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.

PART 948--IRISH POTATOES GROWN IN COLORADO

0
Accordingly, the interim final rule amending 7 CFR part 948 which was 
published at 71 FR 77583 on December 27, 2006, is adopted as a final 
rule without change.

    Dated: March 23, 2007.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
 [FR Doc. E7-5817 Filed 3-28-07; 8:45 am]
BILLING CODE 3410-02-P
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