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[Federal Register Volume 76, Number 204 (Friday, October 21, 2011)]
[Rules and Regulations]
[Pages 65360-65362]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27275]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 953

[Doc. No. AMS-FV-11-0027; FV11-953-1 FR]

Irish Potatoes Grown in Southeastern States; Suspension of 
Marketing Order Provisions

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule continues in effect the interim rule that suspended 
the marketing order for Irish potatoes grown in Southeastern states 
(order), and the rules and regulations implemented thereunder, through 
March 1, 2014. The order regulates the handling of Irish potatoes grown 
in Southeastern states and is administered locally by the Southeastern 
Potato Committee (Committee). The Committee believes advances in 
farming technology and production quality have reduced the need for the 
order. When considering the costs associated with continuing the order, 
the Committee unanimously recommended that the order be suspended.

DATES: Effective Date: October 22, 2011 through March 1, 2014.

FOR FURTHER INFORMATION CONTACT: Dawana J. Clark, Marketing Specialist, 
or Kenneth G. Johnson, Regional Manager, DC Marketing Field Office, 
Marketing Order and Agreement Division, Fruit and Vegetable Programs, 
AMS, USDA; Telephone: (301) 734-5243, Fax: (301) 734-5275, or E-mail: 
Dawana.Clark@ams.usda.gov or Kenneth.Johnson@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Laurel May, Marketing Order and Agreement 
Division, 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: Laurel.May@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 104 and Marketing Order No. 953, both as amended (7 CFR 
part 953), regulating the handling of Irish potatoes grown in 
Southeastern states, 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 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 continues in effect the interim rule that suspended the 
order and all provisions prescribed thereunder through March 1, 2014. 
The suspension includes, but is not limited to, grade, size, quality, 
assessment, reporting, and inspection requirements. The Committee 
believes advances in farming technology and production quality have 
reduced the need for the order. When considering the costs associated 
with continuing the order, the Committee agreed that the order should 
be suspended. The Committee met on February 17, 2011, and unanimously 
recommended suspending the order for three years, through March 1, 
2014.
    The order was promulgated in 1948, and regulates the handling of 
Irish potatoes grown in designated counties of Virginia and North 
Carolina. The order has been used to provide the industry with grade, 
size, quality, and inspection requirements. The order also authorizes 
reporting and recordkeeping functions required for the operation of the 
order. The program is funded by assessments imposed on handlers.
    Over the past several years, the Southeastern potato industry has 
been in decline, with acreage and production trending downward. 
Production has fallen from an estimated 1,600,000 hundredweight for the 
1996-97 season, to a current estimate of 600,000 hundredweight for the 
2010-11 season. In 1996, there were approximately 150 growers and 60 
handlers in the production area. Currently, there are approximately 20 
growers and 10 handlers covered in the production area.
    The Committee met February 17, 2011, to discuss the continued need 
for the order. During the discussion, several members mentioned that 
the order was promulgated at a time when the industry was having an 
issue with the quality of potatoes being produced. The purpose of the 
order was to establish standards to improve the quality of marketed 
product.
    Since the implementation of the order, the quality of Southeastern 
potatoes has greatly improved. Advances in farm machinery and 
improvements in the grading process have helped to ensure that only 
quality product is being shipped to buyers. Concerns the industry 
previously had prior to implementation of the order are no longer an 
issue, and for the past several years, some industry members have 
started questioning the continued need for the order and its associated 
costs.
    At the meeting, members were informed that to maintain the order, 
the Committee would have to incur some additional administrative 
expenses. To cover these costs, the Committee would need to increase 
the assessment rate. Committee members agreed that the industry would 
not support an assessment increase.
    In addition to the assessment costs, comments were also made 
regarding the cost of inspection by the Committee required under the 
order. It was stated that some industry members see the cost of 
mandatory inspection as an unnecessary burden. Other Committee members 
expressed concern over whether inspection would still be available if 
the order was suspended. This issue was resolved when members were 
assured that inspection would still

[[Page 65361]]

be available for those who request it, regardless of the status of the 
order.
    Based on discussion at the meeting, and on letters from growers who 
were not able to attend, changes in the industry and industry practices 
have diminished the need for the order. Further, there are concerns 
regarding the costs associated with maintaining the order, and no 
industry support for raising assessments to cover increasing 
administrative costs. Therefore, the Committee unanimously recommended 
suspending the order for three years, through March 1, 2014.
    The Committee recommended suspension of the order, not termination, 
to allow the industry an opportunity to review the effectiveness of 
operating without order requirements. If problems develop, Committee 
members wanted the industry to have the alternative of reactivating the 
order. During the suspension period, the industry will be able to 
monitor the Southeastern potato industry to determine if quality issues 
reoccur. A meeting will be held prior to March 1, 2014, to review the 
state of the industry and determine whether to continue the suspension, 
or to reactivate or terminate the order.
    It is hereby determined that Federal Marketing Order No. 953, and 
the rules and regulations issued thereunder, do not tend to effectuate 
the declared policy of the Act. This action continues to suspend, 
through March 1, 2014, the provisions of Federal Marketing Order No. 
953, and the rules and regulations issued thereunder, including but not 
limited to: Provisions of the order dealing with the establishment and 
the responsibilities of the Committee; provisions of the order dealing 
with expenses and the collection of assessments; all rules and 
regulations; and, all information collection and reporting 
requirements.

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 the 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 approximately 10 handlers of Irish potatoes grown in 
Southeastern states who are subject to regulation under the order and 
approximately 20 potato producers in the regulated area. Small 
agricultural service firms are defined by the Small Business 
Administration (SBA) 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 (13 CFR 121.201).
    Using AMS Market News Service reported prices, the average f.o.b. 
price for Southeastern potatoes for the 2010 marketing season was 
around $20 per hundredweight. The Committee estimated production for 
the 2010-11 season at approximately 600,000 hundredweight of potatoes. 
Based on this information, average annual receipts for handlers would 
be less than $7,000,000. Information provided by the National 
Agricultural Statistics Service indicates that the average producer 
price for Irish potatoes grown in North Carolina and Virginia in 2010 
was approximately $11.63 per hundredweight. Considering estimated 
production, average producer revenue would be about $350,000 for the 
2010-11 season. Therefore, the majority of Southeastern potato handlers 
and producers may be classified as small entities.
    This rule continues in effect the action that suspended the order 
and the rules and regulations implemented thereunder through March 1, 
2014. The Committee believes advances in farming technology and 
production quality have reduced the need for the order. When 
considering the costs associated with continuing the order, the 
Committee unanimously recommended that the order be suspended. The 
Committee made this recommendation on February 17, 2011. Authority for 
this action is provided in section 8c(16)(A) of the Act.
    Suspension of the order and its corresponding regulations relieves 
handlers of quality, inspection, and assessment burdens during the 
suspension period. Also, handler reports will not be required. 
Additionally, growers may be relieved of some costs, such as assessment 
expenses, which are often passed onto them by handlers. Suspension of 
the order is therefore expected to reduce the regulatory burden on 
handlers and growers of all sizes.
    The Committee considered alternatives to this rule, including 
maintaining the order or terminating it rather than suspending. Support 
was not shown for either of these options. Therefore these alternatives 
were rejected.
    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
chapter 13), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178). No changes in those requirements as a 
result of this action are necessary. Should any changes become 
necessary, they would be submitted to OMB for approval.
    This final rule will not impose any additional reporting or 
recordkeeping requirements on either small or large Southeastern 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 Southeastern potato industry and all interested persons were 
invited to attend the meeting and participate in Committee 
deliberations. Like all Committee meetings, the February 17, 2011, 
meeting was a public meeting and all entities, both large and small, 
were able to express their views on this issue.
    An interim rule concerning this action was published in the Federal 
Register on June 10, 2011 (76 FR 33967). Copies of the rule were mailed 
or sent via facsimile to all Committee members and potato handlers. 
Finally, the rule was made available through the Internet by USDA and 
Office of the Federal Register. A 60-day comment period ending August 
9, 2011, was provided to allow interested persons to respond to the 
rule.
    One comment was received during the comment period in response to 
the rule. The commenter supported suspending the marketing order for 
Irish potatoes, but added that the better choice would be to terminate 
the marketing order in its entirety as it is anti-competitive and 
raises prices for consumers.
    The points made by the commenter were thoroughly discussed prior to 
the Committee vote. During its discussions, the Committee determined 
they would like to provide the industry an

[[Page 65362]]

opportunity to operate without marketing order requirements in order to 
review the effectiveness of the order. During the suspension period, 
the industry will be able to monitor the quality of potatoes being 
shipped. Should problems develop, suspension of the order will provide 
the Committee the alternative of reactivating the order. Therefore, the 
Committee voted to suspend, rather than terminate, the marketing order.
    Accordingly, no changes will be made to the rule, based on the 
comment received.
    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 Laurel May at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that the order suspended by 
this final rule, as hereinafter set forth, does not tend to effectuate 
the declared policy of the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are aware of this 
rule, which was recommended at a public meeting. Also, a 60-day comment 
period was provided for in the interim rule.

List of Subjects in 7 CFR Part 953

    Marketing agreements, Potatoes, Reporting and recordkeeping 
requirements.
    Accordingly, the interim rule that suspended 7 CFR part 953 and 
that was published at 76 FR 33967 on June 10, 2011, is adopted as a 
final rule, without change.

    Dated: October 14, 2011.
David R. Shipman,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2011-27275 Filed 10-20-11; 8:45 am]
BILLING CODE 3410-02-P
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