[Federal Register Volume 62, Number 146 (Wednesday, July 30, 1997)]
[Rules and Regulations]
[Pages 40729-40731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20091]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / 
Rules and Regulations

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 80

[Docket No. FV-97-80-02]
RIN 0581-AA93


Regulations Governing the Fresh Irish Potato Diversion Program, 
1996 Crop

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, with 
changes, an interim final rule previously published in the Federal 
Register setting forth the Fresh Irish Potato Diversion Program (PDP) 
for the 1996 crop. This rule will allow the program to continue through 
August 27, 1997, to assist fresh Irish potato growers faced with 
oversupplies and low prices.

EFFECTIVE DATE: July 25, 1997.

FOR FURTHER INFORMATION CONTACT: Susan Proden, Acting Chief, Commodity 
Procurement Branch, Fruit and Vegetable Division, AMS, USDA, room 
2548--South Building, 1400 Independence Avenue, S.W., Washington, DC 
20250, (202) 720-6391.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The Department of Agriculture is issuing this rule in conformance 
with Executive Order 12866, and the Office of Management and Budget has 
determined that it is ``not a significant action.''

Executive Order 12988

    This final rule has been reviewed under USDA procedures established 
in accordance with Executive Order 12988, Civil Justice Reform. The 
provisions of the final rule do not preempt State law and are not 
retroactive. Before any judicial action may be brought regarding the 
provisions of this final rule, the appeal and mediation procedure in 7 
CFR part 780 must be exhausted.

Paperwork Reduction Act

    Information collection requirements contained in this part have 
been approved by the Office of Management and Budget (OMB) in 
accordance with the provisions of 44 U.S.C. chapter 35, and have been 
assigned OMB control number 0560-0145.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has determined that this action will not have a significant 
economic impact on a substantial number of small entities. The purpose 
of the RFA is to fit regulatory actions of the scale of business 
subject to such actions in order that small businesses will not be 
unduly or disproportionally burdened. The Small Business Administration 
(13 CFR 121.1) has defined small agricultural producers as those having 
gross revenue for the last three years of less than $500,000, and small 
agricultural service firms are defined as those whose gross annual 
receipts are less than $5,000,000. Because there is a preponderance of 
entities shipping fresh Irish potatoes that meet these growers revenue 
limitations, it is anticipated that the majority of the program 
participants could be classified as small entities without substantial 
regulatory restriction. Therefore, the provisions of the RFA are not 
applicable and no Regulatory Flexibility analysis is required.

Executive Order 12372

    PDP is not subject to the provisions of Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. See the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Executive Order 12612

    It has been determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on states or their political subdivisions, or 
on the distribution of power and responsibilities among the various 
levels of government.

Background Information

    On June 2, 1997, AMS issued an interim rule setting forth the terms 
for conducting PDP. See, 62 F.R. 29650 (June 2, 1997). PDP is 
authorized by clause (2) of section 32 of the Act of August 24, 1935, 
as amended (7 U.S.C. 612c) (Section 32). Section 32 authorizes the 
Secretary of Agriculture to ``encourage the domestic consumption of 
such [agricultural] commodities or products by diverting them, by the 
payment of benefits or indemnities or by other means, from the normal 
channels of trade and commerce * * *.'' Section 32 also authorizes the 
Secretary to use Section 32 funds ``at such times, in such manner, and 
in such amounts as the Secretary of Agriculture finds will effectuate 
substantial accomplishment of any one or more of the purposes of this 
section.'' Furthermore, ``determinations by the Secretary as to what 
constitutes diversion, and what constitutes normal channels of trade 
and commerce, and what constitutes normal production for domestic 
consumption shall be final.''
    USDA statistics indicated that as of May 1, 1997, that the supply 
of fresh Irish potatoes stored in 15 states exceeded by 32 percent the 
amount of stocks held on May 1, 1996. Based on these statistics the 
Secretary determined that the 1996 fresh Irish potato crop was in 
surplus supply, and that the domestic consumption of such potatoes 
would be encouraged by using section 32 funds to divert fresh Irish 
potatoes from the normal channels of trade and commerce under a 
diversion program. PDP encompasses all types and varieties of potatoes 
(except sweet potatoes) of U.S. Grade No. 2 (fairly clean) and U.S. 
Grade No. 2 Processing, including varieties commonly used for 
processing, chipping and table stock. Due to a need for expediency in 
implementing PDP and concern about undue delay in conducting 
environmental analysis and impact studies on composting, PDP was 
limited to charitable institutions and livestock feed.
    The price established for fresh Irish potatoes destined for animal 
feed included all costs, including transportation. The price 
established for fresh Irish potatoes destined for use by

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charitable institutions covered all costs except transportation. USDA 
arranged and paid for the transportation costs between the grower and 
the charitable institution because it believed that in most instances, 
it would be in a better position than the grower to match the grower 
efficiently and effectively with the charitable institutions already 
identified by USDA.

Summary of Comments

    The public had until July 2, 1997, to comment on the interim rule. 
USDA received comments from four Irish potato producers, three potato 
processors, and one trade association. These comments are on file in 
room 2548--South Building, 1400 Independence Avenue, S.W., Washington, 
DC 20250.
    Four comments opposed PDP on the grounds that such diversion 
purchases create more difficulties than they solve, distort market 
conditions, and only exacerbate negative economic conditions for most 
growers. Also, some growers felt that USDA should not provide price 
support for fresh Irish potatoes, and due to the late effective date of 
the program, many fresh Irish potatoes would not meet minimum grade for 
condition. Pursuant to Section 32, the Secretary found that 
establishment of the PDP would tend to benefit Irish potato producers 
given current supply and market conditions.
    Four comments expressed concern that composting was not offered as 
a diversion outlet in the PDP, and recommended that it be allowed. As 
stated in the preamble to the interim rule, including composting would 
have required an environmental impact study, and because of the time 
required to conduct such a study, inclusion of composting would have 
resulted in an undue delay in the implementation of PDP, to the 
detriment of potato producers.
    Four comments recommended that USDA make PDP retroactive to May 9, 
1997, the date the Secretary of Agriculture announced his intent to 
offer a diversion program. USDA had considered this option, but 
concluded that it would be difficult to ensure compliance with the 
program's requirements retroactively, and that a retroactive initial 
effective date would not have provided equitable treatment to all 
producers.
    One comment expressed concern that the PDP assists growers and not 
processors. The comment stated that no programs have been set up by 
USDA to address the hardships faced by fresh or refrigerated potato 
processors, and recommended that the final rule be revised to include a 
provision to assist this group. While USDA is sympathetic to these 
concerns, Section 32 is intended to assist only producers by diverting 
or purchasing surplus supplies of certain agricultural commodities. 
Therefore, no change is being made to the final rule based on this 
comment.
    Three comments questioned the amount of funds allocated to each 
state for PDP and recommended additional funds be allocated to certain 
states. Although $8.5 million has been allocated to this program, and 
applications have been approved to divert product, as of July 21, 1997, 
only $1.4 million had actually been paid to potato producers. Since 
producers have additional time to complete their diversions, it is not 
yet known how much money will actually be spent on the PDP.
    However, to further address these concerns, USDA has determined 
that potato producers need additional time to comply with the 
provisions of the PDP, including completing their diversions and 
submitting the required documentation to receive payment, and that 
additional changes are required to help ensure that PDP is available to 
as many producers as possible. These changes include placing deadlines 
on diversions and removing the packaging requirement. Accordingly, the 
provisions contained in the interim rule will remain in effect except 
for the following modifications:
    (1) PDP is extended for an additional 30 days through August 27, 
1997.
    (2) All producers receiving the approved form, Potato Diversion 
Program Application for Participation (FSA-117) dated May 29 through 
July 11 must complete the diversion and submit all required 
documentation by July 28, 1997. Any of these producers who have not 
completed the diversion and submitted the required documentation by 
July 28 will no longer be eligible for payment. However the producer 
may again apply for program participation.
    (3) All producers receiving approved FSA-117's dated July 14 
through July 28 will have until August 13, 1997, to complete the 
diversion and submit all required documentation. After August 13, any 
unused allocation will no longer be available to those producers.
    (4) Producers who receive FSA-117's from July 29 through August 27 
must complete their diversions and submit all required documentation by 
August 27, when the program ends.
    (5) Final dates to complete diversions and submit required 
documentation may be waived by USDA if it is determined that severe 
weather conditions prevented the completion of the diversion during the 
allotted time period.
    (6) Producers who registered for diversion during the original 
program dates of May 29 through July 28 and whose FSA-117's were not 
approved in whole or part because of a lack of funding need not 
register again. Producers who previously were approved and did not 
divert potatoes may again register to participate in the program.
    (7) Potatoes may also be shipped in bulk if the charitable 
institution agrees to accept bulk deliveries during the additional 30-
day period. For diversions of potatoes to charitable institutions that 
are not in bags or cartons, USDA will pay the producer $0.75 per 
hundredweight. In the event the charitable institution does not agree 
to accept bulk deliveries, producers may have the option to divert 
deliveries to charitable institutions in 50 lb cartons or bags.

List of Subjects in 7 CFR Part 80

    Administrative practice and procedures, Agriculture, Agricultural 
commodities, Reporting and recordkeeping requirements.

    Accordingly, the interim final rule amending 7 CFR part 80 which 
was published at 62 FR 29649 on June 2, 1997, is adopted as a final 
rule with the following changes:

PART 80--FRESH IRISH POTATO DIVERSION PROGRAM

    1. The authority citation for part 80 continues to read as follows:

    Authority: 7 U.S.C. 612c.

    2. In Sec. 80.4, the date ``July 28'' is revised to read ``August 
27,'' each time it appears and a new sentence is added at the end of 
the section to read as follows:


Sec. 80.4  Length of program.

    * * * Application for charitable diversions as well as for 
livestock feed will be accepted until August 27, 1997.
    3. In Sec. 80.5, paragraph (a) is revised to read as follows:


Sec. 80.5  Rate of payment.

    (a) The rate of payment for potatoes for charitable institutions 
will be $1.50 per hundredweight for fresh Irish potatoes if packed in 
bags or cartons, and will be $0.75 if shipped in bulk. All eligible 
fresh Irish potatoes intended for donation to charitable institutions 
must: Meet U.S. Grade No. 2 (fairly clean) requirements as certified by 
the AMS or the Federal-State Inspection Service; and be in a quantity 
of 40,000 pounds

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net or a multiple of 40,000 pounds net. Only transportation costs 
associated with donations to charitable institutions may be arranged 
for and paid by USDA. USDA will make no other payment with respect to 
such potatoes.
* * * * *
    4. In Sec. 80.6, paragraph (a)(5) is revised to read as follows:


Sec. 80.6  Eligibility for payment.

    (a) * * *
    (5) Diverts fresh Irish potatoes and submits required documentation 
by July 28, 1997, if Form FSA-117 is approved by USDA from May 29 
through July 11, 1997; or diverts fresh Irish potatoes and submits 
required documentation by August 13, 1997, if Form FSA-117 is approved 
by USDA from July 14 through July 28, 1997; or diverts fresh Irish 
potatoes and submits required documentation by August 27, 1997, if Form 
FSA-117 is approved by USDA from July 29 through August 27, 1997. 
Allocations unused by the applicable date will no longer be available 
for that producer. Final dates to complete diversions and submit 
documentation may be waived by USDA if it is determined that severe 
weather conditions prevented the completion of the diversion during the 
allotted time period.
* * * * *
    Dated: July 24, 1997.
Lon Hatamiya,
Administrator, Agricultural Marketing Service.
[FR Doc. 97-20091 Filed 7-25-97; 3:59 pm]
BILLING CODE 3410-02-P