This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

40729

Vol. 62, No. 146

Wednesday, July 30, 1997

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.

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
40730 Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / Rules and Regulations

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 § 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:

§ 80.4 Length of program.

* * * Application for charitable

diversions as well as for livestock feed

will be accepted until August 27, 1997.

3. In § 80.5, paragraph (a) is revised to

read as follows:

§ 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
Federal Register / Vol. 62, No. 146 / Wednesday, July 30, 1997 / Rules and Regulations 40731

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 § 80.6, paragraph (a)(5) is revised

to read as follows:

§ 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

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 329

RIN 3064–AC09

Prohibition Against Payment of

Interest on Demand Deposits

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Interpretive rule.

SUMMARY: The FDIC has amended an

interpretive rule to provide an

additional exception to the limitations

on premiums that may be given in

connection with demand deposits.

Section 18(g) of the Federal Deposit

Insurance Act (FDI Act) requires that the

FDIC by regulation prohibit the payment

of interest or dividends on demand

deposits. 12 CFR part 329 implements

this prohibition. As an exception to the

prohibition, an interpretive rule permits

premiums of up to $10 for deposits of

less than $5000 and up to $20 for

deposits of $5000 or more not more than

twice per year. The interpretive rule

also limits the timing of such premiums

to the opening of a new account or an

addition to an existing account.

The FDIC has amended the

interpretive rule to provide an

additional exception that permits

premiums which are unrelated to the

balance in a demand deposit account

and the duration of the account balance.

Therefore, insured nonmember banks

and insured branches of foreign banks

are now permitted to give premiums on

demand deposits, without limitation as

to the amount of the premium, provided

that the premiums are not related to, or

dependent upon, the balance in the

account and the duration of the account

balance. This amendment maintains

substantial parity with Regulation Q, 12

CFR Part 217, as recently amended by

the Board of Governors of the Federal

Reserve System (FRB).

DATES: Effective July 30, 1997.

FOR FURTHER INFORMATION CONTACT:

Marc Goldstrom, Counsel, Regulation

and Legislation Section, Legal Division,

(202–898–8807); Louise Kotoshirodo,

Review Examiner, Division of

Compliance and Consumer Affairs,

(202–942–3599).

SUPPLEMENTARY INFORMATION:

Background

Section 18(g) of the FDI Act provides

that the Board of Directors of the FDIC

shall by regulation prohibit the payment

of interest or dividends on demand

deposits in insured nonmember banks

and in insured branches of foreign

banks. (12 U.S.C. 1828(g)). Accordingly,

the FDIC promulgated regulations

prohibiting the payment of interest or

dividends on demand deposits at 12

CFR part 329. The Board of Governors

of the Federal Reserve System (FRB) has

a corresponding prohibition for member

banks at 12 CFR part 217 (Regulation Q).

As an exception to the prohibition, the

FDIC issued an interpretive rule that

generally permits (1) premiums only at

the time of the opening of a new

account or an addition to, or renewal of,

an existing account; (2) no more than

two premiums per deposit in any

twelve-month interval; and (3) that the

value of the premiums does not exceed

$10 for deposits of less than $5000 and

$20 for deposits of $5000 or more. (12

CFR 329.103). The FRB has a

corresponding exception for member

banks at 12 CFR 217.101.

Section 18(g) of the FDI Act also

provides that the FDIC shall make such

exceptions to this prohibition as are

prescribed with respect to demand

deposits in member banks by section 19

of the Federal Reserve Act, as amended,

or by regulation of the FRB. (12 U.S.C.

1828(g)). The FRB has recently amended

its interpretation to establish an

additional exception with respect to

member banks. The amendment permits

member banks to give premiums on

demand deposits, without regard to the

amount of the premium, provided that

the premiums are not related to, or

dependent upon, the balance in an

account and the duration of the account

balance. (12 CFR 217.101(b)). The FDIC

is now amending its interpretive rule to

provide a similar exception for state

nonmember banks and insured branches

of foreign banks.

Premium limitations were first

adopted by the FDIC and the FRB in

1970. These premium limitations

originally applied to all types of

deposits and were established in part to

prevent evasion of interest rate ceilings

at a time when interest rates were

regulated. The Depository Institutions

Deregulation and Monetary Control Act

of 1980 deregulated interest rates on

time and savings deposits (including

NOW accounts). In 1980, the Depository

Institutions Deregulation Committee

adopted these premium limitations with

respect to time and savings deposits in

an effort to preserve a relatively level

playing field during the period of

deposit interest rate deregulation, which

ended in 1986. Since then, banks have

been permitted to offer premiums on

interest-bearing accounts, including

NOW, time, and savings accounts,

without regard to the premium

limitations. The premium limitations,

therefore, have only applied to demand

deposit accounts.

Because the preexisting exception is

restricted to the opening of, addition to,

or renewal of, a deposit account, it has

constrained the ability of depository

institutions to offer incentives to use

their products, including the use of new

services such as ATM or debit cards. In

the past, the exception has prevented a

bank from offering incentives to existing

demand deposit customers who signed

up for an ATM card because the

incentives did not coincide with the

opening of, addition to, or renewal of,

an account. For the same reason the

exception has prevented another bank

from offering incentives to encourage

deposit customers to use an ATM card

more than three times per month.

Premiums from the use of a debit card,

which reduces the amount on deposit,

would also constitute interest on the

deposit under the preexisting exception,

since they are also not paid upon the