[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Rules and Regulations]
[Pages 8253-8257]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03043]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 79, No. 29 / Wednesday, February 12, 2014 / 
Rules and Regulations

[[Page 8253]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 946 and 980

[Doc. No. AMS-FV-13-0068; FV13-946-3 IR]


Irish Potatoes Grown in Washington and Imported Potatoes; 
Modification of the Handling Regulations, Reporting Requirements, and 
Import Regulations for Red Types of Potatoes

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This rule exempts red types of potatoes from minimum quality, 
maturity, pack, marking, and inspection requirements of the Washington 
potato marketing order for the remainder of the 2013-2014 fiscal period 
and subsequent fiscal periods. The marketing order regulates the 
handling of Irish potatoes grown in Washington and is administered 
locally by the State of Washington Potato Committee (Committee). During 
the exemption period, reports will be required from handlers of red 
types of potatoes to obtain information necessary to administer the 
marketing order. As required under section 8e of the Agricultural 
Marketing Agreement Act of 1937, this action also exempts imported red-
skinned, round type potatoes from minimum grade, size, quality, and 
maturity requirements. This rule is expected to reduce overall industry 
expenses and increase net returns to producers and handlers while 
giving the industry the opportunity to explore alternative marketing 
strategies.

DATES: Effective February 15, 2014; comments received by April 14, 2014 
will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order and Agreement Division, Fruit and Vegetable Program, 
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 comments will be made public on the internet at the 
address provided above.

FOR FURTHER INFORMATION CONTACT: Teresa Hutchinson, Marketing 
Specialist, or Gary Olson, Regional Director, Northwest Marketing Field 
Office, Marketing Order and Agreement Division, Fruit and Vegetable 
Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or 
Email: Teresa.Hutchinson@ams.usda.gov or GaryD.Olson@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Jeffrey Smutny, Marketing Order and Agreement 
Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence 
Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-
2491, Fax: (202) 720-8938, or Email: Jeffrey.Smutny@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 946, as amended (7 CFR part 946), regulating the handling of Irish 
potatoes grown in Washington, 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.''
    This interim rule is also issued under section 8e of the Act, which 
provides that whenever certain specified commodities, including 
potatoes, are regulated under a Federal marketing order, the 
importation of these commodities into the United States is prohibited 
unless they meet the same or comparable grade, size, quality, or 
maturity requirements as those in effect for domestically produced 
commodities.
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866 and Executive Order 13563.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted there from. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
entry of the ruling.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulation 
issued under section 8e of the Act.
    This rule exempts red types of potatoes from the order's handling 
regulations for the remainder of the 2013-2014 fiscal period and 
subsequent fiscal periods. This rule allows the Washington potato 
industry to market red types of potatoes without regard to the minimum 
quality, maturity, pack, marking, and inspection requirements currently 
prescribed under the order.
    This rule also modifies the order's reporting requirements to 
require reports from handlers of red types of potatoes for the 
remainder of the 2013-2014 fiscal period and subsequent fiscal periods. 
By modifying the reporting requirements, the Committee can continue to 
obtain information necessary to administer the marketing order, 
including the collection of assessments, in the absence of inspection 
certificates and reports issued by the Federal State Inspection Service 
(FSIS). Assessments on all fresh

[[Page 8254]]

red type potatoes handled under the order will remain in effect during 
the exemption period.
    The order authorizes the establishment of handling regulations for 
all varieties or varietal types of potatoes grown in the production 
area. These regulations can include minimum grade, size, quality, 
maturity, and inspection requirements. They can also provide for the 
size, capacity, weight, dimensions, pack, marking, or labeling of 
containers used in the handling of such potatoes. The order also allows 
such handling regulations to be modified, suspended, or terminated when 
recommended by the Committee and approved by the Secretary.
    When handling regulations are in effect, regulated potatoes must be 
inspected and certified by FSIS. As authorized under the order, the 
Committee uses information included on FSIS inspection certificates as 
a basis for collecting assessments and compiling industry statistics. 
Because this action exempts red types of potatoes from FSIS inspection 
and certification, the industry must collect necessary information from 
an alternate source. Therefore, this action also modifies current 
reporting requirements to require handlers to submit reports to provide 
information on the volume of red types of potatoes handled for the 
fresh market during the exemption period.
    The above-described authorities are found in Sec. Sec.  946.51, 
946.52, 946.60, and 946.70 of the order. Administrative rules and 
regulations issued under these authorities are found in Sec. Sec.  
946.143 and 946.336.
    The Committee meets regularly to consider the effectiveness of 
regulatory requirements in place for Washington potatoes. These 
requirements are issued on a continuing basis and are subject to 
modification, suspension, or termination upon recommendation of the 
Committee and approval by USDA. Committee meetings are open to the 
public, and interested persons may express their views at these 
meetings. USDA reviews recommendations made by the Committee, along 
with any additional information submitted by the Committee and other 
available information, and determines whether such recommendations 
would tend to effectuate the declared policy of the Act.
    On May 9, 2013, the Committee met to discuss the handling 
regulations and the mandatory inspection requirements in effect for 
Washington potatoes. The Committee considered whether a short-term 
exemption of red types of potatoes from regulation could be beneficial. 
The industry is concerned that the benefits of regulating the quality 
of Washington potatoes may be outweighed by the current cost of 
mandatory inspections.
    After much consideration, on July 16, 2013, the Committee 
unanimously recommended temporarily exempting red types of potatoes 
from the handling regulations and modifying the reporting requirements 
for such potatoes. The temporary exemption was recommended for the 
duration of the current fiscal period so that the industry could 
evaluate the exemption's effects on the marketing of potatoes.
    On December 10, 2013, the Committee again met to discuss the 
temporary exemption of red types of potatoes from the handling 
regulations. The Committee continued to believe that the exemption of 
red types of potatoes from handling regulations would reduce industry 
costs without negatively impacting the market. Upon further 
consideration, the Committee unanimously recommended exempting red 
types of potatoes from the handling regulations for the remainder of 
the current fiscal period and subsequent fiscal periods.
    As a result of this exemption, red types of potatoes will not be 
subject to the minimum grade, size, quality, cleanness, maturity, pack, 
marking, and inspection requirements of the order for the remainder of 
the 2013-2014 fiscal period and subsequent fiscal periods. Also during 
this time, modified reporting requirements will be in effect to require 
handlers to submit reports of their shipments of fresh red types of 
potatoes to the Committee.
    Historically, an objective of the order's handling regulations has 
been to ensure that only quality Washington potatoes enter the fresh 
market, thereby fostering consumer satisfaction and increasing sales 
and returns for producers. However, the Committee reported that the 
cost for inspections has recently increased. With potato prices at 
reportedly low levels in recent years, the Committee studied the 
possibility of reducing production costs by eliminating the mandatory 
inspection requirement.
    In discussing the relative benefits of quality control during the 
Committee meeting, some individuals expressed concern that eliminating 
quality requirements could result in lower quality potatoes being 
shipped to the fresh market, thereby negatively affecting consumer 
demand. Others expressed concern that without minimum requirements the 
overall quality of potatoes could decline and the Washington potato 
industry could lose sales to other potato producing areas with 
mandatory quality and inspection requirements. While the industry 
recognizes that quality is an important factor for maintaining sales, 
the Committee believes the cost of mandatory inspections may exceed the 
benefits derived from the quality regulation of red types of potatoes.
    The Committee believes that the exemption of red types of potatoes 
from handling regulations will also benefit the Washington potato 
industry. The Committee recommended that red types of potatoes be 
exempted from the regulations for the remainder of the current fiscal 
period and subsequent fiscal periods.
    This rule modifies Sec.  946.336 to exempt red types of potatoes 
from handling regulations for the remainder of the 2013-2014 fiscal 
period and subsequent fiscal periods. This rule does not restrict 
handlers from seeking inspection on a voluntary basis, if they so 
choose.
    This action will result in a suspension of the monthly FSIS 
inspection reports for red types of potatoes. The Committee has 
utilized these monthly reports, compiled by FSIS from inspection 
certificates, as a basis for collecting assessments. During the 
exemption period, handlers will be required to report fresh shipments 
of red types of potatoes directly to the Committee on an existing form 
that is being modified for this purpose. This information will allow 
the Committee to collect assessments and compile industry statistics.
    Therefore, this rule modifies Sec.  946.143 to require that each 
person handling red types of potatoes submit a monthly report to the 
Committee. The reporting requirement was originally established in 2010 
to facilitate the exemption of russet type potatoes from the handling 
regulations. It will be modified to include the collection of 
information for red types of potatoes.
    Authorization to assess handlers enables the Committee to incur 
expenses that are reasonable and necessary to administer the program. 
The modified reporting requirement will facilitate the Committee's 
ability to continue collecting the funds needed to cover necessary 
program costs.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including potatoes, are regulated under a Federal 
marketing order, imports of that commodity must meet the same or 
comparable grade, size, quality, and maturity requirements as the 
domestically produced product. Minimum grade, size, quality, and 
maturity requirements for potatoes imported into the United States are 
currently in effect under the import

[[Page 8255]]

regulations. The import regulations distinguish between each of the 
three major types of potatoes handled domestically; (1) red-skinned, 
round type potatoes, (2) all other round type potatoes, and (3) long 
type potatoes.
    Section 980.1(a)(2)(i) of the vegetable import regulations 
specifies that, during each month of the marketing year, imports of 
red-skinned, round type potatoes are in most direct competition with 
potatoes of the same type produced in the area covered by the order. 
Further, Sec.  980.1(b)(1) provides that, through the entire year, the 
grade, size, quality, and maturity requirements of the order 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. As such, the exemption from minimum 
grade, size, quality, and maturity requirements for domestic potatoes 
covered by the order also exempts red-skinned, round type potato 
varieties that are imported into the U.S. from grade, size, quality, 
and maturity requirements.
    Prior to this action, red-skinned, round type potatoes imported 
into the U.S. must be U.S. No. 2 or better grade and meet a minimum 
diameter of 1\7/8\ inches. In addition, red-skinned, round type 
potatoes may be \3/4\ inch minimum diameter, if such imported potatoes 
otherwise met the requirements of the U.S. No. 1 grade. Lastly, 
imported red-skinned, round type potatoes could not be more than 
``moderately skinned'' as defined by the U.S. Standards for Grades of 
Potatoes.
    As a result of the exemption of red types of potatoes from the 
order's handling regulations, and pursuant to the Act, this rule also 
modifies Sec.  980.1(b)(1) to exempt imported red-skinned, round types 
of potatoes from the import regulations. However, this rule does not 
restrict importers from having their potatoes inspected or from meeting 
minimum grade, size, quality, or maturity requirements on a voluntary 
basis.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this action on small entities. 
Accordingly, AMS has prepared this initial regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses 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.
    There are 43 handlers of Washington potatoes subject to regulation 
under the order and approximately 267 producers in the regulated 
production area. Small agricultural service firms are defined by the 
Small Business Administration as those having annual receipts of less 
than $7,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000. (13 CFR 121.201)
    For the 2011-2012 marketing year, the Committee reports that 
11,018,670 hundredweight of Washington potatoes were shipped into the 
fresh market. Based on average f.o.b. prices estimated by the USDA's 
Economic Research Service and Committee data on individual handler 
shipments, the Committee estimates that 42, or approximately 98 percent 
of the handlers, had annual receipts of less than $7,000,000.
    In addition, based on information provided by the National 
Agricultural Statistics Service, the average producer price for 
Washington potatoes for 2011-2012 was $7.90 per hundredweight. Taking 
the 2011-2012 shipments of fresh potatoes in the marketing order area 
(11,018,670 hundredweight), multiplying it by the average producer 
price for Washington potatoes, $7.90, and then dividing it by the 
number of Washington potato producers (267) equates to an average gross 
annual revenue per producer of approximately $326,021. In view of the 
foregoing, the majority of Washington potato handlers and producers may 
be classified as small entities.
    Information from the Foreign Agricultural Service, USDA, indicates 
that the dollar value of imported fresh potatoes averaged $128.962 
million from 2008 to 2012, ranging from a low of approximately $106.502 
million in 2012 to a high of approximately $155.358 million in 2008. 
Taking the average dollar value of imported fresh potatoes, $128.962 
million, and dividing it by the number of potato importers, 571, 
results in average annual receipts per importer of approximately 
$226,000. Since this below the SBA definition of small business (less 
than $7 million in annual sales), most importers may be classified as 
small entities.
    This rule exempts red types of potatoes from the handling 
regulations and modifies the reporting for the remainder of the 2013-
2014 fiscal period and subsequent fiscal periods. The industry believes 
that the increased cost of mandatory inspections outweigh the benefits 
derived from quality regulation. This change is expected to reduce 
overall industry expenses and provide the industry with the opportunity 
to explore alternative marketing strategies.
    As stated previously, the authority for regulation is provided in 
Sec.  946.52 of the order, while authority for reports and records is 
provided in Sec.  946.70. In addition, the handling regulations are 
specified under Sec.  946.336 of the order's administrative rules and 
regulations, and reporting requirements are specified under Sec.  
946.143.
    The Committee does not anticipate that this rule will negatively 
impact small businesses. This rule will exempt red types of potatoes 
from minimum quality, maturity, pack, marking, and inspection 
requirements for the current fiscal period and subsequent fiscal 
periods. Though inspections are not mandatory for such potatoes during 
the exemption period, handlers may choose to have their potatoes 
inspected. Handlers are thus able to control costs based on the demands 
of their customers.
    The Committee discussed alternatives to this recommendation, 
including making no changes to the regulations. The Committee also 
considered different types of inspection programs, exempting all types 
of potatoes from handling regulations, and exempting red types from 
regulation temporarily instead of indefinitely. However, the Committee 
believes that the Washington potato industry will benefit more from the 
indefinite exemption of red types of potatoes from handling 
regulations.
    The Committee identified no other alternatives to requiring 
handlers to report fresh market shipments of red types of potatoes. 
This information is necessary to administer the program, including the 
collection of assessments.
    In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178, Generic Vegetable and Specialty Crops.
    This rule requires the submission of a monthly handler report for 
fresh red types of potatoes handled during the exemption period. This 
rule modifies the Russet Fresh Potato Report established for russet 
type potatoes to include red types of potatoes during the period those 
types of potatoes are exempted from regulation. The modified Self-
Reporting Potato Form will provide the Committee with information 
necessary to track shipments and collect

[[Page 8256]]

assessments. AMS has submitted the modified form and a Justification of 
Change to OMB for approval.
    While this rule requires a reporting requirement for red types of 
potatoes, their exemption from handling regulations also eliminates the 
more frequent reporting requirements imposed under the order's special 
purpose shipment exemptions (Sec.  946.336(d) and (e)). Under these 
paragraphs, handlers are required to provide detailed reports whenever 
they divert regulated potatoes for livestock feed, charity, seed, 
prepeeling, processing, grading and storing in specified counties in 
Oregon, and experimentation.
    Therefore, any additional reporting or recordkeeping requirements 
on either small or large handlers of red types of potatoes are expected 
to be offset by the elimination of the other reporting requirements 
currently in effect. In addition, the exemption from handling 
regulations and inspection requirements for red types of potatoes is 
expected to reduce industry expenses.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this rule.
    The Committee's meetings were widely publicized throughout the 
Washington potato industry and all interested persons were invited to 
participate in Committee deliberations. Like all Committee meetings, 
the May 9, July 16, and December 10, 2013, meetings were public 
meetings. All entities, both large and small, were able to express 
views on this issue. Further, interested persons are invited to submit 
comments on this interim 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: 
www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about 
the compliance guide should be sent to Jeffrey Smutny at the previously 
mentioned address in the FOR FURTHER INFORMATION CONTACT section.
    This interim rule invites comments on the exemption from handling 
regulations and the modification of the reporting requirements for red 
types of potatoes. Any comments received will be considered prior to 
finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim rule, as hereinafter set forth, will tend to effectuate 
the declared policy of the Act.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this interim rule.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) Any changes resulting from this rule should be effective 
as soon as practicable because the shipping season for Washington red 
types of potatoes began in July of 2013; (2) the Committee discussed 
and unanimously recommended these changes at public meetings and all 
interested parties had an opportunity to provide input; (3) potato 
handlers are aware of this action and want to take advantage of 
relaxation of the handling regulations as soon as possible; and (4) 
this rule provides a 60-day comment period, and any comments received 
will be considered prior to finalization of this rule.

List of Subjects

7 CFR Part 946

    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 946 and 980 
are amended as follows:

0
1. The authority citation for 7 CFR parts 946 and 980 continues to read 
as follows:

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

PART 946--IRISH POTATOES GROWN IN WASHINGTON

0
2. Section 946.143 is revised to read as follows:


Sec.  946.143  Assessment reports.

    During the period that russet, red, yellow fleshed, and white types 
of potatoes are exempt from handling requirements under Sec.  946.336, 
each person handling russet, red, yellow fleshed, and white types of 
potatoes shall submit a monthly report to the Committee by the 10th day 
of the month following the month such potatoes are handled. Each 
assessment report shall contain the following information:
    (a) The name and address of the handler;
    (b) The date and quantity of russet, red, yellow fleshed, and white 
types of potatoes handled;
    (c) The assessment payment due; and
    (d) Other information as may be requested by the Committee.

0
3. The introductory text of Sec.  946.336 is revised to read as 
follows:


Sec.  946.336  Handling regulation.

    No person shall handle any lot of potatoes unless such potatoes 
meet the requirements of paragraphs (a), (b), (c), and (g) of this 
section or unless such potatoes are handled in accordance with 
paragraphs (d) and (e), or (f) of this section, except that shipments 
of the blue or purple flesh varieties of potatoes shall be exempt from 
both this handling regulation and the assessment requirements specified 
in Sec.  946.41: Provided, That russet type potatoes shall be exempt 
from the requirements of paragraphs (a), (b), (c), (e), and (g) of this 
section: Provided further, That, from October 24, 2013, through June 
30, 2014, yellow fleshed and white types of potatoes shall be exempt 
from the requirements of paragraphs (a), (b), (c), (e), and (g) of this 
section: Provided further, That, effective February 15, 2014, red types 
of potatoes shall be exempt from the requirements of paragraphs (a), 
(b), (c), (e), and (g) of this section.
* * * * *

PART 980--VEGETABLES; IMPORT REGULATIONS

0
4. In Sec.  980.1, paragraph (b) is revised to read as follows:


Sec.  980.1  Import regulations; Irish potatoes.

* * * * *
    (b) Grade, size, quality, and maturity requirements. On and after 
the effective date hereof importation of Irish potatoes, except 
certified seed potatoes and red skinned, round types of potatoes, shall 
be prohibited unless they comply with the following requirements.
    (1) 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

[[Page 8257]]

be the respective grade, size, quality, and maturity requirements for 
imports of all other round type potatoes.
    (2) Through the entire year the grade, size, quality, and maturity 
requirements of Marketing Order 945, as amended (part 945 of this 
chapter) applicable to potatoes of all long types shall be the 
respective grade, size, quality, and maturity requirements for imported 
potatoes of all long types.
    (3) The grade, size, quality, and maturity requirements as provided 
for in this paragraph shall apply to imports of similar types of 
potatoes, unless otherwise ordered, on and after the effective date of 
the applicable domestic regulation or amendment thereto, as provided in 
this paragraph or 3 days following publication of such regulation or 
amendment in the Federal Register, whichever is later.
* * * * *

    Dated: February 6, 2014.
Rex A. Barnes,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2014-03043 Filed 2-11-14; 8:45 am]
BILLING CODE 3410-02-P