Potato Research and Promotion Plan; Assessment Increase, 63541-63544 [E9-28924]
Download as PDF
<![CDATA[
Federal Register / Vol. 74, No. 232 / Friday, December 4, 2009 / Rules and Regulations
Regional Equity States will be available
until April 1 of each fiscal year, after
which date the remaining funds may be
re-allocated at the discretion of the
Chief.
Signed this 30th day of November, 2009, in
Washington, DC.
Dave White,
Chief, Natural Resources Conservation
Service.
[FR Doc. E9–29001 Filed 12–3–09; 8:45 am]
BILLING CODE 3410–16–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1207
[Doc. No. AMS–FV–09–0024; FV–09–706FR]
Potato Research and Promotion Plan;
Assessment Increase
AGENCY: Agricultural Marketing Service,
USDA.
ACTION: Final rule.
SUMMARY: This rule amends the Potato
Research and Promotion Plan (Plan) to
increase the assessment rate on handlers
and importers of potatoes from 2.5 cents
to 3 cents per hundredweight. This
increase is provided for under the Plan
which is authorized by the Potato
Research and Promotion Act (Act). The
National Potato Promotion Board, which
administers the Plan, recommended this
action to sustain and expand their
promotional, research, advertising and
communications programs.
DATES: Effective: December 7, 2009.
FOR FURTHER INFORMATION CONTACT:
Deborah Simmons, Marketing
Specialist, Research and Promotion
Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence
Avenue, SW., Room 0632, Stop 0244,
Washington, DC 20250–0244; telephone:
(202) 720–9915; or fax: (202) 205–2800;
or e-mail:
Deborah.simmons@ams.usda.gov.
This rule
is issued under the Potato Research and
Promotion Plan [7 CFR part 1207]. The
Plan is authorized under the Potato
Research and Promotion Act [7 U.S.C.
2611–2627]. This rule increases the
assessment rate on handlers and
importers of potatoes from 2.5 cents to
3 cents per hundredweight.
jlentini on DSKJ8SOYB1PROD with RULES
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget
(OMB) has waived the review process
required by Executive Order 12866 for
this action.
VerDate Nov<24>2008
17:09 Dec 03, 2009
Jkt 220001
Executive Order 12988
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. This rule is not intended to
have retroactive effect.
The Act allows handlers and
importers subject to the Plan to file a
written petition with the Secretary of
Agriculture (Secretary) if they believe
that the Plan, any provision of the Plan,
or any obligation imposed in connection
with the Plan, is not in accordance with
the law. In any petition, the person may
request a modification of the Plan or an
exemption from the Plan. The petitioner
will have the opportunity for a hearing
on the petition. Afterwards, an
Administrative Law Judge (ALJ) will
issue a decision. If the petitioner
disagrees with the ALJ’s ruling, the
petitioner has 30 days to appeal to the
Judicial Officer, who will issue a ruling
on behalf of the Secretary. If the
petitioner disagrees with the Secretary’s
ruling, the petitioner may file, within 20
days, an appeal in the U.S. District
Court for the district where the
petitioner resides or conducts business.
Regulatory Flexibility Act and
Paperwork Reduction Act
In accordance with the Regulatory
Flexibility Act (RFA) [5 U.S.C. 601 et
seq.], the Agricultural Marketing Service
(AMS) has considered the economic
impact of this rule on small entities. The
purpose of the RFA is to fit regulatory
actions to the scale of businesses subject
to such action in order that small
businesses will not be unduly or
disproportionately burdened.
The Small Business Administration
defines, in 13 CFR part 121, small
agricultural producers as those having
annual receipts of no more than
$750,000 and small agricultural service
firms (handlers and importers) as those
having annual receipts of no more than
$7 million. According to the Board,
there are approximately 1,600 potato
growing operations, 1,143 handlers and
252 importers who are subject to the
provisions of the Plan. According to the
National Agricultural Statistics Service
(NASS), data from the 2008 crop year
shows that approximately 395 cwt. of
potatoes were produced per acre. The
2008 grower price published by NASS
was $9.46 per cwt. Thus the value of
potato production per acre in 2008
averaged $3,736.70 (395 times $9.36
cwt). At that average price, a producer
would have to farm over 201 acres to
receive an annual income from potatoes
of $750,000 ($750,000 divided by
$3,736.70 per acre equals 201 acres).
Thus, it can be concluded that most
producers, handlers and importers
PO 00000
Frm 00011
Fmt 4700
Sfmt 4700
63541
would not be classified as small
businesses under the criteria established
by the SBA.
Producers of less than 5 acres of
potatoes are exempt from this program.
Potato and potato products used for
nonhuman food purposes, other than
seed, are exempt from assessment but
are subject to the disposition of
exempted potatoes provisions of section
1207.515 of the regulations.
Under the current Plan, potato
handlers and importers are required to
pay an assessment of 2.5 cents per
hundredweight. Handlers may collect
assessments from the producer or
deduct assessments from proceeds paid
to the producer on whose potatoes the
assessments are made. No more than
one assessment shall be made on any
potatoes or potato products. Funds
collected by the board shall be used for
research, development, advertising or
promotion of potatoes and potato
products and such other expenses for
the administration, maintenance and
functioning of the Board as may be
authorized by the Secretary. The
assessment at the current 2.5 cents per
hundredweight generates about $10
million in annual revenues. The 2.5
cents per hundredweight assessment
rate was established in August 2006
when the Plan was amended. The Plan
is administered by the Board under U.S.
Department of Agriculture supervision.
According to the Board, additional
revenue is required in order to sustain
and expand the promotional, research,
advertising and communications
programs. The Board approved the
assessment rate increase at its March 13,
2009, meeting. This increase is
consistent with section 1207.342(a) of
the Plan which states that funds to cover
the Board’s expenses shall be acquired
by the levying of assessments upon
handlers and importers as designated in
regulations recommended by the Board
and issued by the Secretary. Such
assessments shall be levied at the rate
fixed by the Secretary which shall not
exceed one-half of one per centum of
the immediate past ten calendar years
United States average price received for
potatoes by growers as reported by the
Department of Agriculture. Currently,
section 1207.510 of the Plan states that
an assessment of 2.5 cents per
hundredweight shall be levied on all
potatoes produced within the 50 states
of the United States and an assessment
rate of 2.5 cents per hundredweight
shall be levied on all tablestock potatoes
imported into the United States for
ultimate consumption by humans and
all seed potatoes. An assessment rate of
2.5 cents per hundredweight shall be
levied on the fresh weight equivalents of
E:\FR\FM\04DER1.SGM
04DER1
jlentini on DSKJ8SOYB1PROD with RULES
63542
Federal Register / Vol. 74, No. 232 / Friday, December 4, 2009 / Rules and Regulations
imported frozen or processed potatoes
for ultimate consumption by humans.
Further, not more than one such
assessment may be collected on any
potatoes or potato products.
In March 2007, the Board conducted
its most recent ‘‘Evaluation of GrowerFunded Value-Added Activities by the
United States Potato Board.’’ This study
was completed by Dr. Timothy Richards
and Dr. Paul Patterson of the Morrison
School of Management and
Agribusiness at Arizona State
University. The study presented an
econometric evaluation of the demand
impact of board marketing, public
relations and research activities and a
simulation model that estimates the
return on grower investment in board
programs. The primary objective of this
research was to estimate the long-run
return on grower’s investment in each
board activity, in both domestic and
export marketing.
The U.S. potato market was volatile
over the five year period (CY 2002–CY
2006). According to USDA data, the per
capita consumption of potatoes, of all
forms in the U.S., changed very little
over this period. Grower prices, on the
other hand, were strong in 2001, but fell
through the 2004 marketing season.
High prices may have been due to the
activities of a newly formed potato
industry cooperative comprising some
65% of the U.S. potato supply. In 2001
the Board adopted a new business
model for increasing potato
consumption, eschewing traditional
generic advertising programs for retail
partnerships, public relations,
marketing research, product
development and active export
promotion programming. The objective
of this study was to determine the
return on investment to grower funds
invested in board marketing activities.
The relevant markets for U.S. potatoes
are defined as the domestic retail market
(frozen, refrigerated, chips, bagged fresh,
bulk fresh and dehydrated potatoes), the
domestic food service market (skins,
chips, formed products, hash browns,
mashed, frozen, French fries, and whole
potatoes), and export marketing for fresh
(table stock and chipping stock), frozen,
dehydrated and seed potatoes.
Econometric models were used to
estimate the demand impact of board
activities. Five models were created for
this purpose: Domestic Retail, Domestic
Foodservice model, Domestic ‘‘Best
Practices’’ model to estimate the effect
of targeted category management
programs, and two export marketing
models: One for Fresh, Frozen and
Dehydrated potatoes and another for
Seed potatoes. All models are estimated
with data made available from board
VerDate Nov<24>2008
17:09 Dec 03, 2009
Jkt 220001
records and include retail scanner data,
food service supplier survey data and
USDA export data.
The study found that U.S. potato
growers have received a significantly
positive return on their investment in
USPB activities over the FY 2002–FY
2006 period covered by the analysis.
The study found that each is highly
effective in increasing potato demand,
although the final return varies widely
among them. On a per dollar of
investment basis; the most likely
estimate of the return to the Domestic
Retail program is $4.4743 in long run
grower profit, while the Foodservice
program provides a return of $3.035 per
dollar of investment. Considering the
Best Practices program on its own,
which is part of the Domestic Retail
effort; category management
investments provide incremental
revenue of $1.018 per dollar of program
cost. On the export side, Frozen
Consumer program generate a return of
$1.27, while Frozen Trade activities
return $1.11 and $1.19, respectively,
while Fresh Consumer and Trade
activities yield $10.36 and $6.93 per
dollar. In all cases, these Returns on
Investments estimates are at least as
high as growers could earn on
investments elsewhere and, in many
cases, several times greater.
The Board’s Executive Committee
collectively recognized the need to
sustain the momentum of current board
programs, which continue to ‘‘Maximize
Return on Grower Investment.’’
According to the Board, the board’s
domestic and global market strategies to
increase demand for U.S. Potatoes and
Potato Products have been highly
successful, but industry and economic
conditions have eroded the board’s
ability to fund the future needs of all its
programs. The Board’s Executive
Committee proposed the 1⁄2-cent
increase in the assessment rate in order
to maintain the value in all programs.
Over the last three fiscal years, however,
several trends have asserted downward
pressure on the board programs
continued ability to sustain the industry
recognized high level of return. Acreage
decreases, produced by right-sizing
supply with demand, and competition
for acres to produce other crops, has
reduced revenues’ to the board. Higher
costs, driven by worldwide inflation
have increased the expenses of
implementing board programs. The
weakened U.S. dollar, in relation to the
exchange rates of foreign currencies, has
reduced the Board’s purchasing power
in obtaining needed goods and services
to operate international marketing
programs in foreign markets.
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
Alternatives were also considered by
the Board, which included cutting back
funding of marketing programs,
international programs, and the new
‘‘Potatoes Goodness Unearthed’’
campaign. All of the alternatives were
rejected by the Board. The Board
believes that programs should not be
reduced at a time when it’s absolutely
critical that they continue providing
them, that it’s a reasonable cost for
keeping programs going and that the
Board needs to maintain adequate
reserves to handle food safety issues and
other projects. The Board feels the
direction it is going is in line with the
grower’s vision and that the assessment
fee is money well invested. The Board
believes that in order to continue to
fund these and new programs, an
increase in the assessment rate by 1⁄2
cent per hundredweight is needed.
Using the USDA previous 10-year
average potato prices formula in the
Plan, the assessment rate can be
increased to 3.08 cents per
hundredweight. However, it was
determined that the rate would be
increased 1⁄2 cent from 2.5 cents to 3
cents per hundredweight and that 1⁄2
cent would be easy to understand,
communicate and ultimately to put into
a collection system and at a full year of
collection will deliver enough revenue
to maintain the current programs with
modest expansion. The 1⁄2-cent increase
falls within the allowed limits in the
Plan.
Using the 10-year average market
price and average yield values of
potatoes in the U.S., the increase in
assessment rate to 3 cents per
hundredweight will result in an average
cost to growers of $11.93 per acre,
which represents less than one-half of
one percent (0.445 percent) of potato
revenue per acre. Calculated at the
current market price for potatoes of
$8.36 per cwt: At the 3 cents per cwt
assessment the total assessment for
growers would be 0.359 percent of gross
revenue per acre.
All potatoes are assessed the same
assessment rate into the program
regardless of origin—either U.S. grown
or imported as fresh potatoes or potato
products. The same assessments for
domestic production and imports will
be unchanged by the rate increase.
In order to sustain and expand the
promotional, research, and
communication programs, the Board
decided to propose an increase in the
assessment rate of 1⁄2 cent per
hundredweight for a total assessment
rate of 3 cents per hundredweight on all
domestic and imported potatoes and
potato products.
E:\FR\FM\04DER1.SGM
04DER1
Federal Register / Vol. 74, No. 232 / Friday, December 4, 2009 / Rules and Regulations
jlentini on DSKJ8SOYB1PROD with RULES
This rule does not impose additional
recordkeeping requirements on handlers
or importers of potatoes. Producers of
fewer than 5 acres of potatoes annually
are exempt.
There are no Federal rules that
duplicate, overlap, or conflict with this
rule.
In accordance with the Office of
Management and Budget (OMB)
regulation [5 CFR part 1320] which
implements the Paperwork Reduction
Act of 1995 [44 U.S.C. Chapter 35], the
information collection and
recordkeeping requirements that are
imposed by the Plan have been
approved previously under OMB
control number 0581–0093. This rule
does not result in a change to the
information collection and
recordkeeping requirements previously
approved.
Background
Under the Plan, which became
effective March 9, 1972, the Board
administers a nationally coordinated
program of research, development,
advertising, and promotion designed to
strengthen potatoes competitive
position and expand domestic and
foreign markets for potatoes and potato
products. This program is financed by
assessments on handlers and importers
of potatoes and potato products. The
Plan specifies that handlers are
responsible for collecting and
submitting assessments to the Board,
reporting their handling of potatoes, and
maintaining records necessary to verify
their reporting. Handlers may collect
assessments from producers or deduct
assessments from the proceeds paid to
the producer on whose potatoes the
assessments are made. Importers are
responsible for payment of assessments
to the Board on potatoes imported into
the United States through the U.S.
Customs Service and Border Protection.
Based on the most recent data
available in March 2009 from USDA, the
average price received for potatoes for
the period 1999 to 2008 was $6.74 per
hundredweight. One-half of 1 per
centum of this average price would
allow a maximum assessment rate of
$0.0337 cents per hundredweight. If the
board had elected to use $0.0337 cents
per hundredweight in its fiscal year
2008, when 449.7 million
hundredweight of potatoes were
assessed, the Board would have realized
assessment dollars of $15,155,963 (vs.
$11,243,296 actual collected in FY
2008), an increase in assessment
revenue of $3.9 million.
A proposed rule was published in the
Federal Register on July 27, 2009 [74 FR
36952]. Copies of the rule were made
VerDate Nov<24>2008
17:09 Dec 03, 2009
Jkt 220001
available through the Internet by the
Department and the Office of the
Federal Register. That rule provided a
sixty-day comment period which ended
September 25, 2009. Four comments
were received by the deadline.
This rule increases the assessment
rate by 1⁄2 cent per hundredweight for
handlers and importers. Currently, the
assessment rate is 2.5 cents per
hundredweight levied on potatoes
handled within the 50 States of the
United States and 2.5 cents per
hundredweight on imports of potatoes
and potato products. According to the
Board, in order to sustain and expand
the promotion, research, and
communications programs at present
levels, the Board contends that
additional revenue is required. The 1⁄2
cent per hundredweight assessment rate
increase is estimated to generate $1 to
$1.5 million in new revenue, depending
upon production levels.
Based on assessments collected for
crop year 2008, about 87 percent of this
production total was from domestic
assessments, with the remainder from
imports. The Board states that the
assessment rate increase would enable it
to expand media services, educational
programs, research programs, and
establish, maintain, and expand
domestic and foreign markets for
potatoes. Some of the additional
revenue, the Board states, would be
used to increase the reserve fund over
a two-year period to provide for
adequate cash flow. Based on the 2008
crop year production figures, the Board
would have received $13,491.955 in
total assessments at the 3 cents per
hundredweight assessment rate on
potatoes.
In addition, the Board, whose
members represent all potato producing
states as well as importers, voted to
propose the assessment rate increase at
its March 13, 2009 meeting which was
open to the public like all other
meetings. The vote to recommend the
assessment increase was 68 in favor and
7 against of the Board members present
at the meeting. Most of the dissenting
votes concerned the impact the increase
would have on small growers.
Summary of Comments
In response to the proposed rule, the
Department received four comments
regarding the proposed amendment to
the Plan to increase the assessment rate
on handlers and importers of potatoes
from 2.5 cents to 3 cents per
hundredweight. Three comments were
received from current Board members
who state that being on the Board gives
them a unique perspective on how the
Board is helping to increase the demand
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
63543
for potato and potato products in the
domestic and international markets.
One comment was received from a trade
association that represents the potato
industry. All four of the comments were
in favor of the proposed amendment,
citing the need for the increased
assessment rate to fund programs that
will continue to be successful and
increase demand for potatoes and potato
products in domestic and international
markets.
The Department has considered all of
the comments and is not making any
changes to the proposed rule based on
them.
Pursuant to 5 U.S.C. 553, it is also
found that good cause exists for not
postponing the effective date of this
action until one day after publication in
the Federal Register because (1) the
Board’s Finance Committee needs the
new assessment rate by the beginning of
the calendar year so that they may
develop a timely budget
recommendation; (2) the Board needs
the additional assessments for
sustaining ongoing projects and
developing new projects to create
demand for potatoes and potato
products in foreign and domestic
markets; and (3) all comments
supported the proposed assessment
increase.
List of Subjects in 7 CFR Part 1207
Administrative practice and
procedure, Advertising, Consumer
information, Marketing agreements,
Potatoes, Promotion, Reporting and
recordkeeping requirements.
■ For the reasons set forth in the
preamble, Part 1207, Chapter XI of Title
7 is amended as follows:
PART 1207—POTATO RESEARCH
AND PROMOTION PLAN
1. The authority citation for 7 CFR
part 1207 continues to read as follows:
■
Authority: 7 U.S.C. 2611–2627 and
7 U.S.C. 7401.
2. Section 1207.510 is amended by
revising paragraphs (a)(1), (b)(1) and the
Table in paragraph (b)(3) as follows:
■
§ 1207.510
Levy of assessments.
(a) * * * (1) An assessment rate of 3
cents per hundredweight shall be levied
on all potatoes produced within the 50
states of the United States.
*
*
*
*
*
(b) * * * (1) An assessment rate of 3
cents per hundredweight shall be levied
on all tablestock potatoes imported into
the United States for ultimate
consumption by humans and all seed
potatoes imported into the United
E:\FR\FM\04DER1.SGM
04DER1
63544
Federal Register / Vol. 74, No. 232 / Friday, December 4, 2009 / Rules and Regulations
States. An assessment rate of 3 cents per
hundredweight shall be levied on the
fresh weight equivalents of imported
frozen or processed potatoes for
ultimate consumption by humans. The
importer of imported tablestock
potatoes, potato products, or seed
potatoes shall pay the assessment to the
board through the U.S. Customs Service
and Border Protection at the time of
entry or withdrawal for consumption of
such potatoes and potato products into
the United States.
*
*
*
*
*
(3) * * *
Assessment
Tablestock potatoes, frozen or processed potatoes, and seed potatoes
Cents/cwt
0701.10.0020
0701.10.0040
0701.90.1000
0701.90.5010
0701.90.5020
0701.90.5030
0701.90.5040
0710.10.0000
2004.10.4000
2004.10.8020
2004.10.8040
2005.20.0070
0712.90.3000
1105.10.0000
1105.20.0000
2005.20.0040
2005.20.0020
1108.13.0010
*
*
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
*
*
*
Dated: November 30, 2009.
Rayne Pegg,
Administrator.
[FR Doc. E9–28924 Filed 12–3–09; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF ENERGY
10 CFR Part 609
RIN 1901–AB27
Loan Guarantees for Projects That
Employ Innovative Technologies
jlentini on DSKJ8SOYB1PROD with RULES
AGENCY: Office of the Chief Financial
Officer, Department of Energy.
ACTION: Final rule.
SUMMARY: On August 7, 2009, the
Department of Energy (DOE or the
Department) published a Notice of
Proposed Rulemaking and Opportunity
for Comment (NOPR) to make certain
changes to the existing regulations for
the loan guarantee program authorized
by Section 1703 of Title XVII of the
Energy Policy Act of 2005 (Title XVII or
the Act). Section 1703 of Title XVII
authorizes the Secretary of Energy
(Secretary) to make loan guarantees for
projects that ‘‘avoid, reduce, or
sequester air pollutants or
anthropogenic emissions of greenhouse
gases; and employ new or significantly
improved technologies as compared to
commercial technologies in service in
the United States at the time the
guarantee is issued.’’ Section 1703 of
VerDate Nov<24>2008
17:09 Dec 03, 2009
Jkt 220001
Title XVII also identifies ten categories
of technologies and projects that are
potentially eligible for loan guarantees.
The two principal goals of section 1703
of Title XVII are to encourage
commercial use in the United States of
new or significantly improved energyrelated technologies and to achieve
substantial environmental benefits. DOE
believes that commercial use of these
technologies will help sustain and
promote economic growth, produce a
more stable and secure energy supply
and economy for the United States, and
improve the environment.
Through experience gained
implementing the loan guarantee
program authorized by section 1703 of
Title XVII, and information received
from industry indicating the wide
variety of ownership and financing
structures which participants would
like to employ in implementing projects
seeking loan guarantees, DOE believes it
is appropriate to make certain changes
to the existing regulations to provide
flexibility in the determination of an
appropriate collateral package to secure
guaranteed loan obligations, facilitate
collateral sharing and related
intercreditor arrangements with other
project lenders, and to provide a more
workable interpretation of certain
statutory provisions regarding DOE’s
treatment of collateral, consistent with
the intent and purposes of Title XVII.
Having considered all of the comments
submitted to DOE in response to the
NOPR, the Department today is issuing
this final rule.
PO 00000
Frm 00014
Fmt 4700
Sfmt 4700
DATES:
Cents/kg
3.0
3.0
3.0
3.0
3.0
3.0
3.0
6.0
6.0
6.0
6.0
4.716
21.429
21.429
21.429
21.429
12.240
27.0
0.066
0.066
0.066
0.066
0.066
0.066
0.066
0.132
0.132
0.132
0.132
0.104
0.472
0.472
0.472
0.472
0.27
0.595
This rule is effective December 4,
2009.
FOR FURTHER INFORMATION CONTACT:
David G. Frantz, Director, Loan
Guarantee Program Office, 1000
Independence Avenue, SW.,
Washington, DC 20585–0121, e-mail:
lgprogram@hq.doe.gov; or Susan S.
Richardson, Chief Counsel for the Loan
Guarantee Program, Office of the
General Counsel, 1000 Independence
Avenue, SW., Washington, DC 20585–
0121, e-mail: lgprogram@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
II. Public Comments on the NOPR and DOE’s
Responses
A. Definition of Eligible Project
B. Definition of Intercreditor Agreement
C. Shorter Amortization for NonGuaranteed Obligations
D. Opposition to the Rule Change
III. Regulatory Review
A. Executive Order 12866
B. National Environmental Policy Act of
1969
C. Regulatory Flexibility Act
D. Paperwork Reduction Act
E. Unfunded Mandates Reform Act of 1995
F. Treasury and General Government
Appropriations Act, 1999
G. Executive Order 13132
H. Executive Order 12988
I. Treasury and General Government
Appropriations Act, 2001
J. Executive Order 13211
K. Congressional Notification
L. Approval by the Office of the Secretary
of Energy
I. Introduction and Background
Today’s final rule amends the
regulations implementing the loan
E:\FR\FM\04DER1.SGM
04DER1
]]>Agencies
[Federal Register Volume 74, Number 232 (Friday, December 4, 2009)]
[Rules and Regulations]
[Pages 63541-63544]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-28924]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1207
[Doc. No. AMS-FV-09-0024; FV-09-706FR]
Potato Research and Promotion Plan; Assessment Increase
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule amends the Potato Research and Promotion Plan (Plan)
to increase the assessment rate on handlers and importers of potatoes
from 2.5 cents to 3 cents per hundredweight. This increase is provided
for under the Plan which is authorized by the Potato Research and
Promotion Act (Act). The National Potato Promotion Board, which
administers the Plan, recommended this action to sustain and expand
their promotional, research, advertising and communications programs.
DATES: Effective: December 7, 2009.
FOR FURTHER INFORMATION CONTACT: Deborah Simmons, Marketing Specialist,
Research and Promotion Branch, Fruit and Vegetable Programs, AMS, USDA,
1400 Independence Avenue, SW., Room 0632, Stop 0244, Washington, DC
20250-0244; telephone: (202) 720-9915; or fax: (202) 205-2800; or e-
mail: Deborah.simmons@ams.usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under the Potato
Research and Promotion Plan [7 CFR part 1207]. The Plan is authorized
under the Potato Research and Promotion Act [7 U.S.C. 2611-2627]. This
rule increases the assessment rate on handlers and importers of
potatoes from 2.5 cents to 3 cents per hundredweight.
Executive Order 12866
The Office of Management and Budget (OMB) has waived the review
process required by Executive Order 12866 for this action.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
The Act allows handlers and importers subject to the Plan to file a
written petition with the Secretary of Agriculture (Secretary) if they
believe that the Plan, any provision of the Plan, or any obligation
imposed in connection with the Plan, is not in accordance with the law.
In any petition, the person may request a modification of the Plan or
an exemption from the Plan. The petitioner will have the opportunity
for a hearing on the petition. Afterwards, an Administrative Law Judge
(ALJ) will issue a decision. If the petitioner disagrees with the ALJ's
ruling, the petitioner has 30 days to appeal to the Judicial Officer,
who will issue a ruling on behalf of the Secretary. If the petitioner
disagrees with the Secretary's ruling, the petitioner may file, within
20 days, an appeal in the U.S. District Court for the district where
the petitioner resides or conducts business.
Regulatory Flexibility Act and Paperwork Reduction Act
In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C.
601 et seq.], the Agricultural Marketing Service (AMS) has considered
the economic impact of this rule on small entities. The purpose of the
RFA is to fit regulatory actions to the scale of businesses subject to
such action in order that small businesses will not be unduly or
disproportionately burdened.
The Small Business Administration defines, in 13 CFR part 121,
small agricultural producers as those having annual receipts of no more
than $750,000 and small agricultural service firms (handlers and
importers) as those having annual receipts of no more than $7 million.
According to the Board, there are approximately 1,600 potato growing
operations, 1,143 handlers and 252 importers who are subject to the
provisions of the Plan. According to the National Agricultural
Statistics Service (NASS), data from the 2008 crop year shows that
approximately 395 cwt. of potatoes were produced per acre. The 2008
grower price published by NASS was $9.46 per cwt. Thus the value of
potato production per acre in 2008 averaged $3,736.70 (395 times $9.36
cwt). At that average price, a producer would have to farm over 201
acres to receive an annual income from potatoes of $750,000 ($750,000
divided by $3,736.70 per acre equals 201 acres). Thus, it can be
concluded that most producers, handlers and importers would not be
classified as small businesses under the criteria established by the
SBA.
Producers of less than 5 acres of potatoes are exempt from this
program. Potato and potato products used for nonhuman food purposes,
other than seed, are exempt from assessment but are subject to the
disposition of exempted potatoes provisions of section 1207.515 of the
regulations.
Under the current Plan, potato handlers and importers are required
to pay an assessment of 2.5 cents per hundredweight. Handlers may
collect assessments from the producer or deduct assessments from
proceeds paid to the producer on whose potatoes the assessments are
made. No more than one assessment shall be made on any potatoes or
potato products. Funds collected by the board shall be used for
research, development, advertising or promotion of potatoes and potato
products and such other expenses for the administration, maintenance
and functioning of the Board as may be authorized by the Secretary. The
assessment at the current 2.5 cents per hundredweight generates about
$10 million in annual revenues. The 2.5 cents per hundredweight
assessment rate was established in August 2006 when the Plan was
amended. The Plan is administered by the Board under U.S. Department of
Agriculture supervision.
According to the Board, additional revenue is required in order to
sustain and expand the promotional, research, advertising and
communications programs. The Board approved the assessment rate
increase at its March 13, 2009, meeting. This increase is consistent
with section 1207.342(a) of the Plan which states that funds to cover
the Board's expenses shall be acquired by the levying of assessments
upon handlers and importers as designated in regulations recommended by
the Board and issued by the Secretary. Such assessments shall be levied
at the rate fixed by the Secretary which shall not exceed one-half of
one per centum of the immediate past ten calendar years United States
average price received for potatoes by growers as reported by the
Department of Agriculture. Currently, section 1207.510 of the Plan
states that an assessment of 2.5 cents per hundredweight shall be
levied on all potatoes produced within the 50 states of the United
States and an assessment rate of 2.5 cents per hundredweight shall be
levied on all tablestock potatoes imported into the United States for
ultimate consumption by humans and all seed potatoes. An assessment
rate of 2.5 cents per hundredweight shall be levied on the fresh weight
equivalents of
[[Page 63542]]
imported frozen or processed potatoes for ultimate consumption by
humans. Further, not more than one such assessment may be collected on
any potatoes or potato products.
In March 2007, the Board conducted its most recent ``Evaluation of
Grower-Funded Value-Added Activities by the United States Potato
Board.'' This study was completed by Dr. Timothy Richards and Dr. Paul
Patterson of the Morrison School of Management and Agribusiness at
Arizona State University. The study presented an econometric evaluation
of the demand impact of board marketing, public relations and research
activities and a simulation model that estimates the return on grower
investment in board programs. The primary objective of this research
was to estimate the long-run return on grower's investment in each
board activity, in both domestic and export marketing.
The U.S. potato market was volatile over the five year period (CY
2002-CY 2006). According to USDA data, the per capita consumption of
potatoes, of all forms in the U.S., changed very little over this
period. Grower prices, on the other hand, were strong in 2001, but fell
through the 2004 marketing season. High prices may have been due to the
activities of a newly formed potato industry cooperative comprising
some 65% of the U.S. potato supply. In 2001 the Board adopted a new
business model for increasing potato consumption, eschewing traditional
generic advertising programs for retail partnerships, public relations,
marketing research, product development and active export promotion
programming. The objective of this study was to determine the return on
investment to grower funds invested in board marketing activities. The
relevant markets for U.S. potatoes are defined as the domestic retail
market (frozen, refrigerated, chips, bagged fresh, bulk fresh and
dehydrated potatoes), the domestic food service market (skins, chips,
formed products, hash browns, mashed, frozen, French fries, and whole
potatoes), and export marketing for fresh (table stock and chipping
stock), frozen, dehydrated and seed potatoes.
Econometric models were used to estimate the demand impact of board
activities. Five models were created for this purpose: Domestic Retail,
Domestic Foodservice model, Domestic ``Best Practices'' model to
estimate the effect of targeted category management programs, and two
export marketing models: One for Fresh, Frozen and Dehydrated potatoes
and another for Seed potatoes. All models are estimated with data made
available from board records and include retail scanner data, food
service supplier survey data and USDA export data.
The study found that U.S. potato growers have received a
significantly positive return on their investment in USPB activities
over the FY 2002-FY 2006 period covered by the analysis. The study
found that each is highly effective in increasing potato demand,
although the final return varies widely among them. On a per dollar of
investment basis; the most likely estimate of the return to the
Domestic Retail program is $4.4743 in long run grower profit, while the
Foodservice program provides a return of $3.035 per dollar of
investment. Considering the Best Practices program on its own, which is
part of the Domestic Retail effort; category management investments
provide incremental revenue of $1.018 per dollar of program cost. On
the export side, Frozen Consumer program generate a return of $1.27,
while Frozen Trade activities return $1.11 and $1.19, respectively,
while Fresh Consumer and Trade activities yield $10.36 and $6.93 per
dollar. In all cases, these Returns on Investments estimates are at
least as high as growers could earn on investments elsewhere and, in
many cases, several times greater.
The Board's Executive Committee collectively recognized the need to
sustain the momentum of current board programs, which continue to
``Maximize Return on Grower Investment.'' According to the Board, the
board's domestic and global market strategies to increase demand for
U.S. Potatoes and Potato Products have been highly successful, but
industry and economic conditions have eroded the board's ability to
fund the future needs of all its programs. The Board's Executive
Committee proposed the \1/2\-cent increase in the assessment rate in
order to maintain the value in all programs. Over the last three fiscal
years, however, several trends have asserted downward pressure on the
board programs continued ability to sustain the industry recognized
high level of return. Acreage decreases, produced by right-sizing
supply with demand, and competition for acres to produce other crops,
has reduced revenues' to the board. Higher costs, driven by worldwide
inflation have increased the expenses of implementing board programs.
The weakened U.S. dollar, in relation to the exchange rates of foreign
currencies, has reduced the Board's purchasing power in obtaining
needed goods and services to operate international marketing programs
in foreign markets.
Alternatives were also considered by the Board, which included
cutting back funding of marketing programs, international programs, and
the new ``Potatoes Goodness Unearthed'' campaign. All of the
alternatives were rejected by the Board. The Board believes that
programs should not be reduced at a time when it's absolutely critical
that they continue providing them, that it's a reasonable cost for
keeping programs going and that the Board needs to maintain adequate
reserves to handle food safety issues and other projects. The Board
feels the direction it is going is in line with the grower's vision and
that the assessment fee is money well invested. The Board believes that
in order to continue to fund these and new programs, an increase in the
assessment rate by \1/2\ cent per hundredweight is needed.
Using the USDA previous 10-year average potato prices formula in
the Plan, the assessment rate can be increased to 3.08 cents per
hundredweight. However, it was determined that the rate would be
increased \1/2\ cent from 2.5 cents to 3 cents per hundredweight and
that \1/2\ cent would be easy to understand, communicate and ultimately
to put into a collection system and at a full year of collection will
deliver enough revenue to maintain the current programs with modest
expansion. The \1/2\-cent increase falls within the allowed limits in
the Plan.
Using the 10-year average market price and average yield values of
potatoes in the U.S., the increase in assessment rate to 3 cents per
hundredweight will result in an average cost to growers of $11.93 per
acre, which represents less than one-half of one percent (0.445
percent) of potato revenue per acre. Calculated at the current market
price for potatoes of $8.36 per cwt: At the 3 cents per cwt assessment
the total assessment for growers would be 0.359 percent of gross
revenue per acre.
All potatoes are assessed the same assessment rate into the program
regardless of origin--either U.S. grown or imported as fresh potatoes
or potato products. The same assessments for domestic production and
imports will be unchanged by the rate increase.
In order to sustain and expand the promotional, research, and
communication programs, the Board decided to propose an increase in the
assessment rate of \1/2\ cent per hundredweight for a total assessment
rate of 3 cents per hundredweight on all domestic and imported potatoes
and potato products.
[[Page 63543]]
This rule does not impose additional recordkeeping requirements on
handlers or importers of potatoes. Producers of fewer than 5 acres of
potatoes annually are exempt.
There are no Federal rules that duplicate, overlap, or conflict
with this rule.
In accordance with the Office of Management and Budget (OMB)
regulation [5 CFR part 1320] which implements the Paperwork Reduction
Act of 1995 [44 U.S.C. Chapter 35], the information collection and
recordkeeping requirements that are imposed by the Plan have been
approved previously under OMB control number 0581-0093. This rule does
not result in a change to the information collection and recordkeeping
requirements previously approved.
Background
Under the Plan, which became effective March 9, 1972, the Board
administers a nationally coordinated program of research, development,
advertising, and promotion designed to strengthen potatoes competitive
position and expand domestic and foreign markets for potatoes and
potato products. This program is financed by assessments on handlers
and importers of potatoes and potato products. The Plan specifies that
handlers are responsible for collecting and submitting assessments to
the Board, reporting their handling of potatoes, and maintaining
records necessary to verify their reporting. Handlers may collect
assessments from producers or deduct assessments from the proceeds paid
to the producer on whose potatoes the assessments are made. Importers
are responsible for payment of assessments to the Board on potatoes
imported into the United States through the U.S. Customs Service and
Border Protection.
Based on the most recent data available in March 2009 from USDA,
the average price received for potatoes for the period 1999 to 2008 was
$6.74 per hundredweight. One-half of 1 per centum of this average price
would allow a maximum assessment rate of $0.0337 cents per
hundredweight. If the board had elected to use $0.0337 cents per
hundredweight in its fiscal year 2008, when 449.7 million hundredweight
of potatoes were assessed, the Board would have realized assessment
dollars of $15,155,963 (vs. $11,243,296 actual collected in FY 2008),
an increase in assessment revenue of $3.9 million.
A proposed rule was published in the Federal Register on July 27,
2009 [74 FR 36952]. Copies of the rule were made available through the
Internet by the Department and the Office of the Federal Register. That
rule provided a sixty-day comment period which ended September 25,
2009. Four comments were received by the deadline.
This rule increases the assessment rate by \1/2\ cent per
hundredweight for handlers and importers. Currently, the assessment
rate is 2.5 cents per hundredweight levied on potatoes handled within
the 50 States of the United States and 2.5 cents per hundredweight on
imports of potatoes and potato products. According to the Board, in
order to sustain and expand the promotion, research, and communications
programs at present levels, the Board contends that additional revenue
is required. The \1/2\ cent per hundredweight assessment rate increase
is estimated to generate $1 to $1.5 million in new revenue, depending
upon production levels.
Based on assessments collected for crop year 2008, about 87 percent
of this production total was from domestic assessments, with the
remainder from imports. The Board states that the assessment rate
increase would enable it to expand media services, educational
programs, research programs, and establish, maintain, and expand
domestic and foreign markets for potatoes. Some of the additional
revenue, the Board states, would be used to increase the reserve fund
over a two-year period to provide for adequate cash flow. Based on the
2008 crop year production figures, the Board would have received
$13,491.955 in total assessments at the 3 cents per hundredweight
assessment rate on potatoes.
In addition, the Board, whose members represent all potato
producing states as well as importers, voted to propose the assessment
rate increase at its March 13, 2009 meeting which was open to the
public like all other meetings. The vote to recommend the assessment
increase was 68 in favor and 7 against of the Board members present at
the meeting. Most of the dissenting votes concerned the impact the
increase would have on small growers.
Summary of Comments
In response to the proposed rule, the Department received four
comments regarding the proposed amendment to the Plan to increase the
assessment rate on handlers and importers of potatoes from 2.5 cents to
3 cents per hundredweight. Three comments were received from current
Board members who state that being on the Board gives them a unique
perspective on how the Board is helping to increase the demand for
potato and potato products in the domestic and international markets.
One comment was received from a trade association that represents the
potato industry. All four of the comments were in favor of the proposed
amendment, citing the need for the increased assessment rate to fund
programs that will continue to be successful and increase demand for
potatoes and potato products in domestic and international markets.
The Department has considered all of the comments and is not making
any changes to the proposed rule based on them.
Pursuant to 5 U.S.C. 553, it is also found that good cause exists
for not postponing the effective date of this action until one day
after publication in the Federal Register because (1) the Board's
Finance Committee needs the new assessment rate by the beginning of the
calendar year so that they may develop a timely budget recommendation;
(2) the Board needs the additional assessments for sustaining ongoing
projects and developing new projects to create demand for potatoes and
potato products in foreign and domestic markets; and (3) all comments
supported the proposed assessment increase.
List of Subjects in 7 CFR Part 1207
Administrative practice and procedure, Advertising, Consumer
information, Marketing agreements, Potatoes, Promotion, Reporting and
recordkeeping requirements.
0
For the reasons set forth in the preamble, Part 1207, Chapter XI of
Title 7 is amended 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 and 7 U.S.C. 7401.
0
2. Section 1207.510 is amended by revising paragraphs (a)(1), (b)(1)
and the Table in paragraph (b)(3) as follows:
Sec. 1207.510 Levy of assessments.
(a) * * * (1) An assessment rate of 3 cents per hundredweight shall
be levied on all potatoes produced within the 50 states of the United
States.
* * * * *
(b) * * * (1) An assessment rate of 3 cents per hundredweight shall
be levied on all tablestock potatoes imported into the United States
for ultimate consumption by humans and all seed potatoes imported into
the United
[[Page 63544]]
States. An assessment rate of 3 cents per hundredweight shall be levied
on the fresh weight equivalents of imported frozen or processed
potatoes for ultimate consumption by humans. The importer of imported
tablestock potatoes, potato products, or seed potatoes shall pay the
assessment to the board through the U.S. Customs Service and Border
Protection at the time of entry or withdrawal for consumption of such
potatoes and potato products into the United States.
* * * * *
(3) * * *
------------------------------------------------------------------------
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
0701.90.5010............................ 3.0 0.066
0701.90.5020............................ 3.0 0.066
0701.90.5030............................ 3.0 0.066
0701.90.5040............................ 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
------------------------------------------------------------------------
* * * * *
Dated: November 30, 2009.
Rayne Pegg,
Administrator.
[FR Doc. E9-28924 Filed 12-3-09; 8:45 am]
BILLING CODE 3410-02-P
