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###### Department of Agriculture

###### Agricultural Marketing Service

          - 7 CFR Parts 948, 953, and 980
          - [Doc. No. AMS-FV-08-0018; FV08-980-1 PR]

# AGENCY:

Agricultural Marketing Service, USDA.

# ACTION:

Proposed rule.

# SUMMARY:

This rule invites comments on proposed modifications to the import regulations for Irish potatoes. This rule is implemented in accordance with section 608(e) (hereinafter referred to as “section 8e”) of the Agricultural Marketing Agreement Act of 1937, which requires imported potatoes to meet the same or comparable grade, size, quality, and maturity requirements as those established under Federal marketing order regulations. This rule would: Reduce the number of marketing order areas determined as being in the most direct competition with imported potatoes from five to three; exempt U.S. No. 1 grade potatoes imported in certain small containers from size requirements; and remove certain language from Marketing Orders No. 948 and 953 that reference the regulation of imported Irish potatoes. In addition, this rule would make minor administrative changes to the potato, onion, and tomato import regulations to update informational references. The proposed modifications to the import regulations are expected to benefit potato importers and consumers.

# DATES:

Comments must be received by July 28, 2009.

# ADDRESSES:

                        Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet:                         *http://www.regulations.gov.*                         All comments should reference the document number and the date and page number of this issue of the                         **Federal Register**                         and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at:                         *http://www.regulations.gov.*                         All comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the Internet at the address provided above.                    

# FOR FURTHER INFORMATION CONTACT:

                        Barry Broadbent or Gary D. Olson, Northwest Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, Suite 385, Portland, OR 97204; Telephone: (503) 326-2724, Fax: (503) 326-7440, or E-mail:                         *Barry.Broadbent@usda.gov*                         or                         *GaryD.Olson@usda.gov.*

                        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:                         *Jay.Guerber@usda.gov.*

# SUPPLEMENTARY INFORMATION:

This proposed rule is issued under section 8e of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” which provides that whenever certain specified commodities, including potatoes produced in certain areas, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements as those in effect for the domestically produced commodity. The import regulations for vegetables issued under section 8e, which cover imports of Irish potatoes, onions, and tomatoes, are contained in 7 CFR part 980.

This proposed rule is also issued under Marketing Agreement No. 97 and Marketing Order No. 948, both as amended (7 CFR part 948), regulating the handling of Irish potatoes grown in Colorado, and Marketing Agreement No. 104 and Marketing Order No. 953, both as amended (7 CFR part 953), regulating the handling of Irish potatoes grown in two southeastern States (Virginia and North Carolina). Both orders are effective under 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. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of import regulations issued under section 8e of the Act.

Section 8e provides authority to regulate certain imported commodities whenever those same commodities are regulated by a domestic marketing order. Potatoes are one of the commodities specifically covered by section 8e in the Act. In addition, section 8e provides that whenever two or more such marketing orders regulating the same agricultural commodity produced in different areas are concurrently in effect, imports must comply with the provisions of the order which regulates the commodity produced in the area with which the imported commodity is in the “most direct competition.” Currently, five marketing orders are determined to be in most direct competition with Irish potato imports, varying by the type of potato and the shipping season. Section 980.1(a) reflects this determination.

                    This proposed rule invites comments on the modification of the Irish potato import regulations that would reduce the number of domestic marketing order areas determined as being in the most direct competition with imported Irish potatoes from five to three. This rule would also exempt U.S. No. 1 grade potatoes that are imported in three pound or less containers from any concurrent marketing order size requirements. Additionally, this rule would remove language contained in Marketing Orders No. 948 and 953 that would become obsolete upon the implementation of this proposed rule.                           ( print page 25679)                        Finally, this rule would make minor changes to update certain informational references contained in the Irish potato, onion, and tomato import regulations.                

Currently, five marketing orders are determined to be in most direct competition with imported Irish potatoes and act as the basis for the establishment of minimum grade, size, quality, and maturity requirements for imported Irish potatoes, as set forth in the import regulations issued under section 8e. The marketing order areas determined to be in most direct competition are as follows: Marketing Order No. 946 (Irish Potatoes Grown in Washington) for imports of red-skinned, round type potatoes during the period July through September; Marketing Order No. 948 (Area II) for imports of red-skinned, round type potatoes during the period October through the following June; Marketing Order No. 953 for imports of round white potatoes during the period June 5 through July 31; Marketing Order No. 948 (Area III) for imports of all other round type potatoes during the period August 1 through June 4 of the following year; and Marketing Order No. 945 for imports of long type potatoes during each month of the marketing year.

These determinations as to most direct competition need to be updated to reflect current production trends. With this rule, USDA is proposing to reduce the number of marketing orders determined to be in most direct competition with Irish potato imports from five to three: One for red-skinned, round type potatoes; one for all other varieties of round potatoes; and one for long type potatoes. Consequently, the import regulations for Irish potatoes (7 CFR 980.1) would be revised by determining Marketing Order No. 946 as the production area in most direct competition with imports of red-skinned, round type potatoes through the entire year and Marketing Order No. 948 (Area II) as the production area in most direct competition with imports of all other round type potatoes through the entire year. Marketing Order No. 945 would continue to be the area determined to be in most direct competition with imports of long type potatoes through the entire year.

Production trends in recent years justify the proposed changes to the designation of the area in most direct competition with imported potatoes. The production area for Irish potatoes grown in Washington, Marketing Order No. 946, has emerged as the clear domestic shipping leader for fresh packed red-skinned, round type potatoes, shipping more than three times the quantity as any other domestic area. Based on marketing order records for the years 2003-2007, the production area for Marketing Order No. 946 shipped an average of 1,370,410 hundredweight of red-skinned, round type, fresh packed potatoes. The next highest marketing order production area was the San Luis Valley of Colorado, covered by Marketing Order No. 948 (Area II). Based on marketing order statistics for the same period, the area shipped an average of 405,083 hundredweight of red-skinned, round type, fresh packed potatoes. Furthermore, handlers in the Marketing Order No. 946 production area shipped in all 12 months of the year. 

Marketing Order 948 (Area II) ships a larger volume of red-skinned, round type, fresh packed potatoes a few months a year during its peak shipping season. However, Marketing Order 946 should be established as the order in most direct competition year round. This is due to its dominance in shipping volumes and year round availability. Establishing one marketing order as the order in most direct competition for red-skinned, round type potatoes would more accurately reflect current production trends and would simplify the process for importers by having the same regulations established on a year round basis. Consequently, USDA has determined that Marketing Order No. 946 should be designated as the area determined to be in most direct competition with imports of red-skinned, round type potatoes for the entire year.

Likewise, the production area for Irish potatoes grown in the San Luis Valley of Colorado, Marketing Order No. 948 (Area II), has become the predominant domestic shipping area of all other round type, fresh packed potatoes, shipping more than double the quantity as any other area. Based on marketing order statistics for the years 2003-2007, the production area for Marketing Order No. 948 (Area II) shipped an annual average of 1,671,810 hundredweight of all other round type, fresh packed potatoes. In addition, handlers in Area II shipped all other round type potatoes in all 12 months of the year. Following Colorado Area II in the quantity handled of all other round type, fresh potatoes was the Marketing Order No. 946 production area, where an annual average of 778,400 hundredweight was shipped during this four year period.

Prior to this proposal, USDA had determined that the production areas for Marketing Orders No. 948 (Area III) and No. 953 were in most direct competition with imports of all other round type potatoes during certain periods of the year and were designated as such in the import regulations. However, these production areas no longer ship fresh Irish potatoes in quantities that warrant the continuation of such a designation. Marketing order committee statistics show that handlers in the production area for Marketing Order No. 948 (Area III) shipped an annual average of 203,115 hundredweight of all other round type, fresh potatoes for the years 2003-2007, or approximately 12 percent of the amount shipped by the leading shipping area. Similarly, based on marketing order committee statistics, handlers in the production area for Marketing Order No. 953 shipped an annual average of 303,558 hundredweight of all other round type, fresh potatoes during the years 2005-2007, which is approximately 18 percent of the amount shipped by the leading shipping area.

Marketing Order 946 ships a larger volume of other round type, fresh packed potatoes a few months a year during its peak shipping season. However, Marketing Order 948 (Area II) should be established as the order in most direct competition year round. This is due to its dominance in shipping volumes and year round availability. Establishing one marketing order as the order in most direct competition for other round type potatoes would more accurately reflect current production trends and would simplify the process for importers by having the same regulations established on a year round basis. Consequently, USDA has determined that, based on recent shipment statistics, Marketing Order No. 948 (Area II) should be designated as the area determined to be in most direct competition with imports of all other round type potatoes for the entire year.

The production area for Irish potatoes grown in certain designated counties in Idaho, and Malheur County, Oregon, covered by Marketing Order No. 945, has been, and is expected to continue to be, the production and shipping leader for long type potatoes. As such, the determination of the area in most direct competition with long type Irish potato imports as currently contained in the import regulations would continue unchanged.

                    This rule would also exempt U.S. No. 1 grade potatoes of any type imported in 3 pound or less containers from the size requirements otherwise specified in the potato import regulations. Marketing Order No. 946, which covers potato production in the state of Washington, contains this exemption in the handling regulation. Washington is the only domestic potato production area to ship U.S. No. 1 grade potatoes in 3 pound or less containers without regard to size.                           ( print page 25680)                        However, they are marketed throughout the year. Therefore, the exemption from size requirements for imported potatoes in 3 pound or less containers should be based upon the regulation established under Marketing Order 946 for the entire year. This change would allow importers to import potatoes under comparable regulation.                

Additionally, as a result of the proposed changes delineated above, this proposed rule would remove §§ 948.387(h) and 953.322(g) from the respective marketing orders. The respective sections of each marketing order, specifically addressing “Applicability to imports”, would no longer be relevant with a change in the determination of areas in most direct competition with imported potatoes.

Marketing Orders No. 948 (Area III) and No. 953 would continue to be viable marketing orders in providing for the orderly marketing of Irish potatoes in the respective production areas. This proposed action would have no direct bearing on the operation of those programs. The proposed change of determination would simply mean that those marketing orders would no longer be used as a basis for establishing Irish potato import requirements and, as such, any language in the marketing orders that link the orders to the potato import regulations would be rendered obsolete.

Lastly, this rule would make minor changes to certain reference information included in the import regulations covering potatoes, onions, and tomatoes that either require updating or have become obsolete since the subpart was last amended. Specifically, the designation of governmental inspection services would be amended to reflect agency name changes, references to certain Code of Federal Regulations citation numbers would be updated to acknowledge changes, and outdated address information would be brought current.

USDA believes that the proposed modifications specified above would streamline the import regulations that potato importers are subject to. It is expected that these changes would benefit importers of Irish potatoes and consumers.

## Initial Regulatory Flexibility Analysis

Pursuant to the 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 initial 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 rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

Small agricultural producers are defined as those whose annual receipts are less than $750,000, and small agricultural service firms, including potato importers, are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $7,000,000. There are approximately 255 importers of all types of potatoes who are subject to regulation under the Act. The majority of potato importers may be classified as small entities.

This proposal would modify the import regulations for Irish potatoes (7 CFR 980.1) by reducing the number of areas designated as being in most direct competition with Irish potato imports from five to three due to changes in production trends. This proposed rule would designate Marketing Order No. 946 as the sole production area in most direct competition with imports of red-skinned, round type potatoes, whereas the previous determination was that both Marketing Orders No. 946 and No. 948 (Area II) were the areas in most direct competition during certain specific periods of the year. This rule would also designate Marketing Order No. 948 (Area II) as the production area in most direct competition with imports of all other round type potatoes, whereas the previous determination was that Marketing Orders No. 948 (Area III) and No. 953 were the areas in most direct competition during certain specific periods of the year.

Section 8e of the Act provides authority for the regulation of imported Irish potatoes, whenever similar type potatoes are regulated by a domestic marketing order. In addition, section 8e provides that whenever two or more such marketing orders regulating the same agricultural commodity produced in different areas are concurrently in effect, imports must comply with the provisions of the marketing order which regulates the commodity produced in the area with which the imported commodity is in the “most direct competition.”

Currently, the Irish potato import regulations require importers to comply with the grade, size, quality, and maturity requirements of five marketing orders (Marketing Orders No. 945, No. 946, No. 948 (Area II and Area III), and No. 953) depending on the type of potato and the time period when shipped. This proposal would reduce that number to three by eliminating Marketing Orders No. 948 (Area III) and No. 953 from the determinations in § 980.1(a). Marketing Order No. 946 would be determined as the area in most direct competition with imports of red-skinned, round type potatoes, and Marketing Order No. 948 (Area II) would be determined as the area in most direct competition with imports of all other round type potatoes. Marketing Order No. 945 would continue as the area in most direct competition with imports of all long type potatoes.

Designating just three marketing orders as being generally in most direct competition with imported potatoes of similar type would more accurately reflect current domestic production trends. Statistics from recent years show that the production area of Marketing Order No. 946 (Irish potatoes grown in Washington) has emerged as the clear leader in the production of red-skinned, round type potatoes, nearly tripling the next largest production area (Marketing Order No. 948 (Area II)). Likewise, the production area of Marketing Order No. 948 (Area II) (Irish potatoes grown in the San Luis Valley of Colorado) has become the production leader of all other round type potatoes, producing over twice the quantity of these type potatoes than the next largest domestic producing region (Marketing Order No. 946). The production area for Marketing Order No. 945 (Irish potatoes grown in certain designated counties in Idaho, and Malheur County, Oregon) continues to be the production leader of long type potatoes.

This rule would also exempt U.S. No. 1 grade potatoes of any type imported in 3 pound or less containers from the size requirements otherwise specified in the potato import regulations. Marketing Order No. 946, which covers the only domestic potato production area that ships such potatoes, currently contains this exemption. However, they are marketed throughout the year. Therefore, the exemption from size requirements for imported potatoes in 3 pound or less containers should be based upon the regulation established under Marketing Order 946 for the entire year. This change would allow importers to import potatoes under comparable regulation.

                    Additionally, as a result of the proposed changes to the import regulations as delineated above, this rule would remove §§ 948.387(h) and 953.322(g) from the respective marketing orders. These sections of each marketing order, specifically addressing “Applicability to imports”, would no                           ( print page 25681)                        longer be necessary should the determination of areas in most direct competition with imported potatoes be modified as proposed.                

Lastly, this rule would make minor changes to certain informational references included in the import regulations covering potatoes, onions, and tomatoes that require updating since the subpart was last amended. Specifically, the designation of the governmental inspection service would be amended to reflect agency name changes, references to certain Code of Federal Regulations citation numbers would be updated to acknowledge changes, and outdated address information would be brought current.

In most cases, the proposed changes to the potato import regulations would constitute a relaxation of the regulatory requirements that potato imports are subject to. In all other cases, the proposed action would be a continuation of the current regulatory requirements. Therefore, the proposed changes are expected to either maintain or reduce the regulatory burden on potato importers.

Imports of red-skinned, round type potatoes, currently subject to the requirements of Marketing Orders No. 946 and 948 (Area II), would only be subject to the requirements of Marketing Order No. 946. The minimum size requirements in Marketing Order No. 946 are less restrictive than the size requirements in Marketing Order No. 948 (Area II).

Likewise, imports of all other round type potatoes, currently subject to the requirements of Marketing Orders No. 948 (Area III) and 953, would only be subject to the requirements of Marketing Order No. 948 (Area II). The minimum size requirements in Marketing Order No. 948 (Area II) are less restrictive than the requirements of both Marketing Orders No. 948 (Area III) and 953.

Exempting U.S. No. 1 grade potatoes handled in 3 pound or less containers from size requirements is also considered a relaxation of the current regulations.

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 would not impose any additional reporting or recordkeeping requirements on either small or large potato importers. As with all Federal marketing order programs and corresponding import regulations, 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 proposed rule.

Interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

                    A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at the following Web site:                     *http://www.ams.usda.gov/​AMSv1.0/​ams.fetchTemplateData.do?​template=​TemplateN&​page=​MarketingOrdersSmallBusinessGuide.*                     Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the                     **FOR FURTHER INFORMATION CONTACT**                     section.                

In accordance with section 8e of the Act, the United States Trade Representative has concurred with the issuance of this proposed rule.

A 60-day comment period is provided to allow interested persons to respond to this proposal. All written comments timely received will be considered before a final determination is made on this matter.

# List of Subjects

### 7 CFR Part 948

      - Marketing agreements
      - Potatoes
      - Reporting and recordkeeping requirements

### 7 CFR Part 953

      - Marketing agreements
      - Potatoes
      - Reporting and recordkeeping requirements

### 7 CFR Part 980

      - Food grades and standards
      - Imports
      - Marketing agreements
      - Onions
      - Potatoes
      - Tomatoes

For the reasons set forth in the preamble, 7 CFR parts 948, 953, and 980 are proposed to be amended as follows:

1. The authority citation for 7 CFR part 948, 953, and 980 continues to read as follows:

Authority:7 U.S.C. 601-674.

# PART 948—IRISH POTATOES GROWN IN COLORADO

§ 948.387

2. In § 948.387, paragraph (h) is removed.

# PART 953—IRISH POTATOES GROWN IN SOUTHEASTERN STATES

§ 953.322 

3. In § 953.322, paragraph (g) is removed.

# PART 980—VEGETABLES; IMPORT REGULATIONS

4. In § 980.1, paragraphs (a)(2)(i), (a)(2)(ii), (b)(1), (b)(2), and (j) are revised to read as follows:

§ 980.1

(a) * * *

(2) * * *

(i) Imports of red-skinned, round type potatoes during each month of the marketing year are in most direct competition with potatoes of the same type produced in the area covered by Marketing Order No. 946 (part 946 of this chapter).

(ii) Imports of all other round type potatoes during each month of the marketing year are in most direct competition with potatoes of the same type produced in Area 2, Colorado (San Luis Valley) covered by Marketing Order No. 948, as amended (part 948 of this chapter).

* * * * *

(b) * * *

(1) Through the entire year, the grade, size, quality, and maturity requirements of Marketing Order No. 946, as amended (part 946 of this chapter), applicable to potatoes of the red-skinned, round type shall be the respective grade, size, quality, and maturity requirements for all imported red-skinned, round type potatoes.

(2) Through the entire year, the grade, size, quality, and maturity requirements of Area II, Colorado (San Luis Valley) covered by Marketing Order No. 948, as amended (part 948 of this chapter), applicable to potatoes of the round type, other than red-skinned varieties, shall be the respective grade, size, quality, and maturity requirements for imports of all other round type potatoes.

* * * * *

                            (j)                             *Exemptions.*                             (1) The grade, size, quality and maturity requirements of this section shall not be applicable to potatoes imported for canning, freezing, other processing, livestock feed, charity, or relief, but such potatoes shall be subject to the safeguard provisions contained in § 980.501. Processing includes canning, freezing, dehydration, chips, shoestrings, starch and flour. Processing does not include potatoes that are only peeled, or cooled, sliced, diced, or treated to prevent oxidation, or made into fresh potato salad.                        

                            (2) There shall be no size requirements for potatoes that are                                   ( print page 25682)                                imported in containers with a net weight of 3 pounds or less, if the potatoes are otherwise U.S. No. 1 grade or better.                        

5. Section 980.117 is amended as follows:

a. Paragraph (e) is revised;

b. In paragraph (f)(2), remove the reference “(7 CFR 2851)” and add in its place the reference “(7 CFR part 51).”

c. In paragraph (h), remove the references “(7 CFR 2851.3195 through 2851.3209),” “(7 CFR 2851.3955 through 2851.3970),” and “(7 CFR 2851.3195 through 2851.3209)” and add in their places the references “(7 CFR 51.3195 through 51.3209),” “(7 CFR 51.3955 through 51.3970),” and “(7 CFR 51.3195 through 51.3209),” respectively.

§ 980.117

* * * * *

                            (e)                             *Designation of governmental inspection service.*                             The Federal or Federal-State Inspection Service, Fruit and Vegetable Programs, Agricultural Marketing Service, U.S. Department of Agriculture and the Food of Plant Origin Division, Plant Products Directorate, Canadian Food Inspection Agency, are hereby designated as governmental inspection services for the purpose of certifying the grade, size, quality, and maturity of onions that are imported, or to be imported, into the United States under the provisions of section 8e of the Act.                        

* * * * *

8. In § 980.212:

a. Paragraph (e) is revised;

b. In paragraph (f)(2), remove the reference “(7 CFR 2851)” and add in its place the reference “(7 CFR part 51).”

c. In paragraph (h), remove the words “(7 CFR 2851.1855 through 2851.1877; title 7, chapter I, part 51 was redesignated title 7, chapter 28, part 2851 on June 27, 1977)” and add in their place the words “(7 CFR 51.1855 through 51.1877).”

§ 980.212

* * * * *

                            (e)                             *Designation of governmental inspection service.*                             The Federal or Federal-State Inspection Service, Fruit and Vegetable Programs, Agricultural Marketing Service, U.S. Department of Agriculture and the Food of Plant Origin Division, Plant Products Directorate, Canadian Food Inspection Agency, are hereby designated as governmental inspection services for the purpose of certifying the grade, size, quality, and maturity of tomatoes that are imported, or to be imported, into the United States under the provisions of section 8e of the Act.                        

* * * * *

§ 980.501

9. Amend § 980.501 in paragraph (a)(4) by removing the words “Fruit and Vegetable Division” in the first and second sentences and adding in their places the words “Fruit and Vegetable Programs.”; and in paragraph (d), remove the address “Marketing Order Administration Branch, USDA, AMS, P.O. Box 96456, room 2523-S, Washington, DC 20090-6456, telephone (202) 720-4607” and add in its place the address “Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237, telephone (202) 720-2491.”

Dated: May 20, 2009.

Robert C. Keeney,

Acting Associate Administrator.

[FR Doc. E9-12186 Filed 5-28-09; 8:45 am]

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