Irish Potatoes Grown in Colorado; Increased Assessment Rate

Summary:

This rule increases the assessment rate established for the Colorado Potato Administrative Committee, Area II (Committee), for the 2001-02 and subsequent fiscal periods from $0.0015 to $0.0035 per hundredweight of potatoes handled. The Committee locally administers the marketing order, which regulates the handling of potatoes grown in Colorado. Authorization to assess potato handlers enables the Committee to incur expenses that are reasonable and necessary to administer the program. The fiscal period began September 1 and ends August 31. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

For further information contact:

Dennis L. West, Northwest Marketing Field Office, Marketing OrderAdministration Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW. Third Avenue, suite 385, Portland, Oregon 97204-2807; telephone: (503) 326-2724, Fax: (503) 326-7440; or George Kelhart, Technical Advisor, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-8938.

Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.

Supplementary information:

This rule is issued under Marketing Agreement No. 97 and Order No. 948, both as amended (7 CFR part 948), regulating the handling of Irish potatoes grown in Colorado, 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 (Department) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the order now in effect, Colorado potato handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable potatoes for the 2001-02 fiscal period, which began on September 1, 2001, and will continue in effect until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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 the Secretary 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. Such handler is afforded the opportunity for a hearing on the petition. After the hearing the Secretary 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 the Secretary'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 increases the assessment rate established for the Committee for the 2001-02 and subsequent fiscal periods from $0.0015 to $0.0035 per hundredweight of potatoes handled.

The Colorado potato order provides authority for the Committee, with the approval of the Secretary, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of Colorado Area II potatoes. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 1998-99 and subsequent fiscal periods, the Committee recommended, and the Department approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by the Secretary upon recommendation and information submitted by the Committee or other information available to the Secretary.

The Committee met on May 17, 2001, and unanimously recommended 2001-02 expenditures of $73,618 and an assessment rate of $0.0035 per hundredweight of potatoes handled. In comparison, last year's budgeted expenditures were $71,132. The assessment rate of $0.0035 is $0.002 higher than the rate in effect prior to this final rule. For budget purposes, the committee projected the quantity of assessable potatoes for 2001-02 at 16,500,000 hundredweight and assessment revenue of $57,750 ($0.0035 × 16,500,000 hundredweight). The Committee recommended the increased assessment rate because the prior rate of $0.0015 would not have generated enough income to adequately administer the program through the 2001-02 fiscal period.

The major expenditures recommended by the Committee for the 2001-02 year include $40,793 for salaries, $9,950 for office expenses, which include telephone service, supplies and postage, $7,650 for building maintenance, and $15,225 for miscellaneous expenses. Budgeted expenses for these items in 2000-01 were $39,793, $10,700, $6,250, and $14,389, respectively.

The Committee developed the $0.0035 assessment rate recommendation by taking into consideration the 2001-02 budget, the estimated 2001-02 potato crop, the relatively small size of the monetary reserve ($32,000), and other factors such as the recent attrition in the number of farms and handlers. Although the increase more than doubles the assessment rate, the Committee may need to draw up to an additional $15,868 from its reserves to meet budgeted expenses. The reserve of approximately $32,000 is below the maximum amount authorized by the order of approximately two fiscal periods' expenses (§ 948.78).

As mentioned earlier, based on projected shipments of 16,500,000 hundredweight, the recommended assessment rate of $0.0035 should provide $57,750 in assessment income. Income from such handler assessments, combined with interest income and funds from the Committee's authorized reserve, will be adequate to meet budgeted expenses for the 2001-02 fiscal period.

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by the Secretary upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate will be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or the Department. Committee meetings are open to the public and interested persons may express their views at these meetings. The Department will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2001-02 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by the Department.

Final Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule 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. Thus, both statutes have small entity orientation and compatibility.

There are approximately 250 producers of Colorado Area II potatoes and approximately 93 handlers subject to regulation under the order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

When the proposed rule was published, the SBA standard for determining small agricultural producers was $500,000. That standard has been changed to $750,000.

Information for the most recent season in which statistics are available, as reported by the National Agricultural Statistics Service, was considered in determining the number of large and small producers by acreage, production, and producer prices. According to the information provided, the average yield per acre was 335 hundredweight, the average farm size was 306 acres, and the season average producer price was $4.20 per hundredweight. This equates to average gross annual producer receipts of approximately $430,542. Furthermore, based upon information provided by the Committee, 96 percent of the handlers of Area II potatoes have shipped under $5,000,000 worth of potatoes during the most recent season for which numbers are available. Based on the foregoing, it can be concluded that a majority of producers and handlers of Area II potatoes may be classified as small entities, excluding receipts from other sources.

This rule increases the assessment rate established for the Committee and collected from handlers for the 2001-02 and subsequent fiscal periods from $0.0015 to $0.0035 per hundredweight of potatoes handled. The Committee unanimously recommended 2001-02 expenditures of $73,618 and an assessment rate of $0.0035 per hundredweight. The assessment rate of $0.0035 is $0.002 higher than the rate in effect prior to this rule and increases the financial burden on handlers by approximately $33,000. The quantity of assessable fresh potatoes for the 2001-02 season is estimated at 16,500,000 hundredweight. Thus, the $0.0035 rate should provide $57,750 in assessment income which, when combined with interest income and income from the Committee's monetary reserve, should be adequate to cover budgeted expenses. The rate in effect prior to this rule would not have provided enough funds to cover anticipated expenses.

The major expenditures recommended by the Committee for the 2001-02 year include $40,793 for salaries, $9,950 for office expenses, which include telephone service, supplies and postage, $7,650 for building maintenance, and $15,225 for miscellaneous expenses. Budgeted expenses for these items in 2000-01 were $39,793, $10,700, $6,250, and $14,389 respectively.

The Committee recommended the increased assessment rate to help offset higher administration costs and to decrease the rate in which the monetary reserve has been relied upon in recent fiscal periods. Based on the Committee's 2001-02 crop estimate, the reserve of $32,000 could be reduced by as much as $15,868 with the recommended assessment rate.

The Committee reviewed and unanimously recommended 2001-02 expenditures of $73,618. This compares to last year's approved budget of $71,132. Prior to arriving at a budget, alternative expenditures and assessment levels were discussed by the Committee, including higher and lower rates of assessment. When considering the relatively poor economic returns the industry has faced during the past six seasons and the resultant instability within the potato industry, as well as the 2001-02 budget and the size of the monetary reserve ($32,000), the Committee concluded that an increase in the rate of assessment to $0.0035 per hundredweight of potatoes allows it to properly administer the program.

A review of historical information, as well as preliminary information pertaining to the upcoming fiscal period, indicates that the producer price for the 2001-02 season could range between $2.06 and $7.35 per hundredweight of potatoes. Therefore, the estimated assessment revenue for the 2001-02 fiscal period as a percentage of total producer revenue could range between 0.170 and 0.048 percent.

This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs are offset by the benefits derived by the operation of the order. In addition, the Committee's meeting was widely publicized throughout the Colorado Area II potato industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 17, 2001, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This rule imposes no additional reporting or recordkeeping requirements on either small or large 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.

The Department has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal Register on August 2, 2001 (66 FR 40153). A copy of the proposed rule was mailed to the Committee office, which in turn notified Committee members and industry members. The proposal was also made available through the Internet by the Office of the Federal Register, and the Department. A 30-day comment period ending September 4, 2001, was provided for interested persons to respond to the proposal. No comments were 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/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it also found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) The 2001-02 fiscal period began on September 1, 2001, and the order requires that the rate of assessment for each fiscal period apply to all assessable potatoes handled during such fiscal period; (2) the Committee needs to have sufficient funds to pay its expenseswhich are incurred on a continuous basis; and (3) handlers are aware of this action which was unanimously recommended by the Committee at a public meeting. Also, a 30-day comment period was provided for in the proposed rule, and no comments were received.

List of subjects in 7 cfr part 948

Marketing Agreements, Potatoes, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, 7 CFR part 948 is amended as follows:

Part 948—irish potatoes grown in colorado

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

Authority:

7 U.S.C. 601-674.

2. Section 948.216 is revised to read as follows: § 948.216

On and after September 1, 2001, an assessment rate of $0.0035 per hundredweight is established for Colorado Area II potatoes.

Dated: October 5, 2001. Kenneth C. Clayton,

Associate Administrator, Agricultural Marketing Service.

References

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