[Federal Register Volume 87, Number 73 (Friday, April 15, 2022)]
[Rules and Regulations]
[Pages 22433-22436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08042]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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. 

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Federal Register / Vol. 87, No. 73 / Friday, April 15, 2022 / Rules 
and Regulations

[[Page 22433]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1207

[Doc. No. AMS-SC-21-0032]


Amendments to the United States Potato Board Membership and 
Assessment Methods

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule changes the approved data sources used to determine 
the number of National Potato Promotion Board (Board) seats, expands 
payment methods used to remit assessments to include electronic 
submission, and updates the table of Harmonized Tariff Schedule of the 
United States (HTS) codes and assessment rates for imported potatoes 
and potato products. Finally, this rule includes new language 
eliminating the need to amend the Potato Research and Promotion Plan to 
update the list of relevant HTS codes.

DATES: Effective May 16, 2022.

FOR FURTHER INFORMATION CONTACT: Alexandra Caryl, Branch Chief of Mid-
Atlantic Region, Market Development Division, Specialty Crop Program, 
AMS, USDA, Stop 0244, 1400 Independence Avenue SW, Room 1406-S, 
Washington, DC 20250-0244; telephone: (202) 253-4768; or electronic 
mail: <a href="/cdn-cgi/l/email-protection#53123f362b323d3721327d1032212a3f13262037327d343c25"><span class="__cf_email__" data-cfemail="b9f8d5dcc1d8d7ddcbd897fad8cbc0d5f9cccaddd897ded6cf">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This rule, affecting the Potato Research and 
Promotion Plan (Plan) (7 CFR part 1207) is authorized under the Potato 
Research and Promotion Act (Act) (7 U.S.C. 2611-2627).

Executive Orders 12866 and 13563

    The U.S. Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules and promoting flexibility. This action falls within a 
category of regulatory actions that the Office of Management and Budget 
(OMB) exempted from Executive Order 12866 review.

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. The Agricultural Marketing Service (AMS) has 
assessed the impact of this final rule on Indian tribes and determined 
that this rule will not have tribal implications that require 
consultation under Executive Order 13175. AMS hosts a quarterly 
teleconference with tribal leaders where matters of mutual interest 
regarding the marketing of agricultural products are discussed. 
Information about the changes to the regulations were shared during a 
quarterly call on April 9, 2020, and tribal leaders were informed about 
the revisions to the regulation and the opportunity to submit comments. 
AMS is committed to working with the USDA Office of Tribal Relations to 
ensure meaningful consultation is provided, as needed, with regards to 
this change to the Plan.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect.
    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).
    The Congressional Review Act provides that administrative 
proceedings must be exhausted before parties may file suit in court. 
Under section 311 of the Act (7 U.S.C. 2620), a person subject to a 
plan may file a petition with USDA stating that such plan, any 
provision of such plan, or any obligation imposed in connection with 
such plan, is not in accordance with law and request a modification of 
such plan or to be exempted therefrom. Such person is afforded the 
opportunity for a hearing on the petition. Thereafter, USDA will issue 
a ruling on the petition. The Congressional Review Act provides that 
the district court of the United States for any district in which the 
petitioner resides or conducts business shall have the jurisdiction to 
review a final ruling on the petition if the petitioner files a 
complaint for that purpose not later than 20 days after date of the 
entry of USDA's final ruling.

Background

    This rule amends the Plan's allowed sources of potato production 
data used to determine the number of Board seats to which each State is 
entitled. Additionally, this rule expands payment methods used to remit 
assessments to include electronic submission, and updates the table of 
HTS codes and assessment rates for imported potatoes and potato 
products. Finally, this rule inserts new language to avoid future 
amendments to the Plan if HTS numbers subject to assessment reflected 
in the table are changed and such changes are merely a replacement of 
previous numbers.

Data Sources for Board Membership

    The Plan became effective on March 9, 1972. Section 1207.320(b) of 
the Plan provides the formula used to determine how many Board member 
seats to which each State is entitled. Under the Plan every State is 
eligible to have a representative on the Board and is eligible to have 
additional members based on the potato production levels in that State. 
For each five million hundredweight of such production, or major 
fraction thereof, produced within each State, such State shall be 
entitled to one member.
    The Plan states potato production totals must come from the 
``latest Crop Production Annual Summary Report issued by the Crop 
Reporting Board, U.S. Department of Agriculture.'' See Sec.  
1207.320(b). The Crop Production Annual Summary Report is currently 
issued by the National Agricultural Statistics Service (NASS).
    In March 2020, USDA's NASS and AMS communicated to the Board that 
NASS will no longer be collecting potato production data for the 
following

[[Page 22434]]

ten states: Alaska, Illinois, Kansas, Maryland, Missouri, Montana, New 
Jersey, New York, North Carolina, and Virginia. In June 2020, NASS 
estimated the cost of collecting the data to approximately $80,000 per 
year. The Board considered this estimate and concluded that the cost to 
collect this information will exceed the value of assessments collected 
from the ten States. Subsequently, the Board decided to temporarily 
freeze the number of seats for those ten States at their 2019 
quantities so it could move forward with the assignment of Board member 
seats for 2020 nominations.
    At the July Board 2020 meeting, Board staff presented to the 
Board's Administrative Committee a summary of constraints related to 
the collection of production data. During a January 2021 meeting, Board 
staff further discussed the need to update the Plan with the 
Administrative Committee and made the recommendation to amend the Plan 
during a subsequent meeting on March 9, 2021.
    The Board recommended to use production data from audited 
assessment reports in place of NASS data for states that have not been 
included in NASS reports.
    As indicated in Table 1, this amendment will allow the Board to use 
audited assessment data in instances where NASS data is unavailable.

                                                  Table 1--NASS Production and Board Production (Board) and Number of Producer Members by State
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                     2020 NASS      2020 NASS &
                                                                     NASS 2016       NASS 2017       NASS 2018      Board 2018    2016-2018 NASS  2016-2018 NASS     number of     Board number
                              State                                    (cwt)           (cwt)           (cwt)           (cwt)        avg. (1,000    & Board avg.    members (cwt/    of members
                                                                                                                                       cwt)         (1,000 cwt)       5,000)        (cwt/5,000)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama (AL)....................................................  ..............  ..............  ..............              70  ..............  ..............               1               1
Illinois (IL)...................................................           2,812           3,321           2,850             394           2,994           2,176               1               1
Kansas (KS).....................................................           1,260           1,558           1,419             483           1,412           1,100               1               1
Maryland (MD)...................................................  ..............             913             510             389             474             651               1               1
Missouri (MO)...................................................           2,410           2,423           1,665           1,012           2,166           1,948               1               1
Montana (MT)....................................................           3,685           3,774           3,830             149           3,763           2,536               1               1
New Jersey (NJ).................................................  ..............             600             530             125             377             363               1               1
New York (NY)...................................................           3,552           4,032           4,118             899           3,901           2,828               1               1
North Carolina (NC).............................................           2,992           3,473           2,318           1,702           2,928           2,722               1               1
Virginia (VA)...................................................           1,189           1,193           1,034             450           1,139             944               1               1
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Assessment Payment Options

    This rule will allow electronic submission in the list of allowable 
methods of payment to remit assessments and remove references to drafts 
and money orders.
    The Board staff stated that allowing electronic submission (e.g., 
bank transfer payments (Automated Clearing House) (ACH) or wire 
transfer payments) of assessments will improve and streamline 
operations by lowering the cost of processing mailed checks. This 
change will remove references to drafts and money orders as handlers 
are no longer using these forms of payment.

Harmonized Tariff Schedule Table

    Section 1207.510(b)(3) of the Plan contains an HTS table that 
reflects outdated HTS codes, assessment rates, and potato categories 
for imports.
    Pursuant to Section 1207.327(b) of the Plan, the Board has the 
authority to recommend to AMS amendments to this Plan. To reduce 
Federal Register publication costs associated with amending the Plan to 
remain consistent with updated HTS codes, the Board recommended 
removing the actual HTS chart from the Plan and replacing the HTS chart 
with a reference to the HTS codes, assessment rates and potato 
categories for imports.
    AMS has adopted an alternative approach that includes amending the 
Plan by updating the current HTS chart and inserting new language to 
avoid future amendments to the Plan if an HTS number subject to 
assessment reflected in the table is changed and such change is merely 
a replacement of a previous number. This change will reduce future 
Federal Register publication costs associated with amending the Plan to 
remain consistent with future updated HTS numbers that have no impact 
on the description of potato involved.

Final Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the final rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on small entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. The Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural producers as those 
having annual receipts of no more than $1 million and small 
agricultural service firms (handlers) as those having annual receipts 
of no more than $30 million.
    According to the Board, there were approximately 60 importers, 955 
handlers, and 1,500 producers in 2020. These numbers are used in 
computations, explained in the following paragraphs, to develop 
estimates of the proportion of small and large businesses using the 
size criteria of the Small Business Administration.
    Large agricultural producers under the criteria established by the 
SBA are those with $1 million or more in annual sales. Producers that 
pay Board assessments have a minimum of 5 acres of potatoes.
    The 2017 Agricultural Census reported 2,420 farms with 5 or more 
harvested acres of potatoes, of which 1,283 (53 percent) had annual 
sales of $1,000,000 or more. Although there is a difference between the 
Board producer number and the Census farm number estimate, a majority 
the of potato producers responsible for paying assessments would likely 
be classified as large businesses according to the SBA criteria.
    The SBA threshold size for a large agricultural service firm is $30 
million in annual sales. The Board estimate of the number of potato 
handlers in 2020 was 955. According to NASS, the total value of the 
2020 U.S. potato crop was $3.9 billion. Dividing $3.9 billion by 955 
yields an annual estimate of potato sales per handler of approximately 
$4.1 million, well below the $30 million, threshold for a large 
agricultural service firm.
    Applying handler margins of twenty to fifty percent (representing a 
range of possible handler costs above the farm-level value) would 
increase that $4.1 million sales per handler number to between $4.9 and 
$6.2 million, still well below the $30 million SBA threshold. In

[[Page 22435]]

addition, the NASS $3.9 billion U.S. crop value for 2020 overstates to 
a moderate extent the crop value relevant to this computation because 
an unknown, but likely small, portion of that annual potato crop value 
was provided by farms with less than 5 harvested acres.
    With estimated average annual sales per handler in a moderate range 
above or below $4 million, it can be stated that a majority of potato 
handlers are small agricultural service firms, according to SBA 
criteria.
    The Board received approximately $14.5 million in 2020 assessments 
($0.03 per hundredweight, abbreviated as cwt) and reported that about 
20 percent of those assessments ($2.9 million) were paid by potato 
importers. Dividing $2.9 million by the $0.03 per cwt assessment rate 
yields a potato import quantity estimate of 96.67 million cwt. 
Multiplying the 96.67 million cwt imported quantity by the NASS 2020 
average U.S. grower price per cwt of $9.30 yields a 2020 import value 
estimate of $899 million. Dividing that imported potato value estimate 
by the number of importers (60) yields an average annual sales value 
per importer estimate of about $15 million.
    This average annual sales value per importer estimate was computed 
using an average farm-level price. It does not include a margin to 
account for importer costs of marketing, for which there is no publicly 
available information. Using the $15 million figure, and applying a 
possible range of importer margins of 20 to 50 percent, would yield an 
annual average sales value per importer range of $18.0 to $22.5 
million. Since these numbers are below the SBA threshold level of $30 
million, and assuming a normal distribution, a majority of potato 
importers are determined to be small agricultural service businesses.
    This rule will amend Sec. Sec.  1207.320, 1207.502, 1207.510 and 
1207.513.
    Regarding the economic impact of this final rule on affected 
entities, this action will impose no costs on producers, handlers, or 
importers. The changes are administrative in nature and will allow the 
Board to effectively carry out the requirements of the Plan.
    In response to the discontinuation of NASS collection of potato 
production data for 10 States, USDA considered the following 
alternatives to the chosen amendment language: Take no action and hold 
constant the production figures for the 10 States to the final year for 
which NASS published data; or fund NASS collection of data for the 10 
States using Board resources. The first of these alternatives will 
result in the potential for Board representation that is inconsistent 
with domestic production. Potato production sees relatively high 
fluctuation from year to year. Consequently, distribution of Board 
member seats based on a fixed production figure will prevent the Board 
from adequately reflecting the changes that occur in the industry over 
time; therefore, this is not a viable alternative. The second 
alternative will result in an annual cost to the Board of $80,000 to 
restore the collection of potato production data by NASS for the 10 
States which it has omitted. As this amount exceeds the total value of 
assessments collected from these 10 States, this is also not a viable 
alternative. The amendments encapsulated by this final rule will 
streamline and improve Board operations.
    In accordance with OMB regulation [5 CFR part 1320], which 
implements information collection requirements imposed by the Paperwork 
Reduction Act of 1995 [44 U.S.C. 3501 et seq.], there are no new 
requirements contained in this rule.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. 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.
    Regarding outreach efforts, all the Board's meetings are open to 
the public and interested persons are invited to participate and 
express their views. No concerns were raised.
    AMS has performed this final RFA analysis regarding the impact of 
this action on small entities.
    A proposed rule concerning this action was published in the Federal 
Register on September 16, 2021 (86 FR 51626). A 30-day comment period 
ending October 18, 2021, was provided to allow interested persons to 
submit comments.
    One comment was received in response to the proposed rule. This 
comment was immaterial to the topic of this rule. Therefore, no changes 
have been made to the proposed rule based on the comment received.
    After consideration of all relevant matters presented, including 
the information and recommendation submitted by the Board, the comments 
received, and other relevant information, AMS has determined that this 
rule, as hereinafter set forth, is consistent with and will effectuate 
the purposes of the Act.

List of Subjects in 7 CFR Part 1207

    Advertising, Agricultural research, Potatoes, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service amends 7 CFR part 1207 as follows:

PART 1207--POTATO RESEARCH AND PROMOTION PLAN

0
1. The authority citation for 7 CFR part 1207 continues to read as 
follows:

    Authority: 7 U.S.C. 2611-2627; 7 U.S.C. 7401.


0
2. Amend Sec.  1207.320 by revising paragraph (b) to read as follows:


Sec.  1207.320  Establishment and membership.

* * * * *
    (b) Producer membership upon the Board shall be determined on the 
basis of the potato production reported in the latest Crop Production 
Annual Summary Report issued by the National Agricultural Statistics 
Service of the U.S. Department of Agriculture. If a State's potato 
production data is not provided by the National Agricultural Statistics 
Service, the Board may use an alternative data source that reliably 
reflects potato production in the United States. Unless the Secretary, 
upon recommendation of the Board, determines an alternate basis, for 
each five million hundredweight of such production, or major fraction 
thereof, produced within each State, such State shall be entitled to 
one member. However, each State shall initially be entitled to at least 
one member.
* * * * *

0
3. Amend Sec.  1207.502 by revising paragraph (a) to read as follows:


Sec.  1207.502  Determination of membership.

    (a) Pursuant to Sec.  1207.320 and the recommendation of the Board, 
annual producer memberships on the Board shall be determined on the 
basis of the average potato production of the 3 preceding years in each 
State as set forth in the Crop Production Annual Summary Reports issued 
by the National Agricultural Statistics Service of the U.S. Department 
of Agriculture. If a State's potato production data is not provided by 
the National Agricultural Statistics Service, the Board may use an 
alternative data source that reliably

[[Page 22436]]

reflects potato production in the United States.
* * * * *

0
4. Amend Sec.  1207.510 by revising paragraph (b)(3) to read as 
follows:


Sec.  1207.510  Levy of assessments.

* * * * *
    (b) * * *
    (3) The Harmonized Tariff Schedule (HTS) categories and assessment 
rates on imported tablestock potatoes and frozen or processed potatoes 
for ultimate consumption by humans and on imported seed potatoes are 
listed in the following table. In the event that any HTS number subject 
to assessment is changed and such change is merely a replacement of a 
previous number and has no impact on the description of the potatoes, 
assessments will continue to be collected based on the new numbers.

------------------------------------------------------------------------
                                                    Assessment
Tablestock potatoes, frozen or processed -------------------------------
       potatoes, and seed potatoes           Cents/cwt       Cents/kg
------------------------------------------------------------------------
0701.10.0020............................             3.0           0.066
0701.10.0040............................             3.0           0.066
0701.90.1000............................             3.0           0.066
0701.90.5015............................             3.0           0.066
0701.90.5025............................             3.0           0.066
0701.90.5035............................             3.0           0.066
0701.90.5045............................             3.0           0.066
0701.90.5055............................             3.0           0.066
0701.90.5065............................             3.0           0.066
0710.10.0000............................             6.0           0.132
2004.10.4000............................             6.0           0.132
2004.10.8020............................             6.0           0.132
2004.10.8040............................             6.0           0.132
2005.20.0070............................           4.716           0.104
0712.90.3000............................          21.429           0.472
1105.10.0000............................          21.429           0.472
1105.20.0000............................          21.429           0.472
2005.20.0040............................          21.429           0.472
2005.20.0020............................          12.240            0.27
1108.13.0010............................            27.0           0.595
------------------------------------------------------------------------

* * * * *

0
5. Amend Sec.  1207.513 by revising paragraph (c)(1) to read as 
follows:


Sec.  1207.513  Payment of assessments.

* * * * *
    (c) * * * (1) Except as provided in paragraphs (b) and (d) of this 
section, each designated handler or importer shall remit assessments 
directly to the Board by check or electronic payment. Checks are to be 
made payable to the National Potato Promotion Board or the Board's 
official doing business as name. Payment is due not later than 10 days 
after the end of the month such assessment is due together with a 
report (preferably on Board forms) thereon.
* * * * *

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-08042 Filed 4-14-22; 8:45 am]
BILLING CODE 3410-02-P


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