Domestically Produced and Imported Peanuts; Change in the Maximum Percentage of Foreign Material Allowed Under Quality Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997, 998, and 999

[Docket Nos. FV99-997-2 FIR, FV99-998-1 FIR, and FV99-999-1 FIR]

Domestically Produced and Imported Peanuts; Change in the Maximum

Percentage of Foreign Material Allowed Under Quality Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a

final rule, without change, the provisions of an interim final rule

changing the outgoing quality control requirements currently prescribed

under Marketing Agreement No. 146 (Agreement). The Agreement regulates

the handling of peanuts grown in 16 States and is administered locally

by the Peanut Administrative Committee (Committee). This rule continues

to relax the allowance for foreign material to .20 percent from .10

percent in the three ``with splits'' edible grade categories to make

them consistent with the other seven edible grade categories, as

unanimously recommended by the Committee. The same change continues to

apply to peanuts handled by handlers who have not signed the Agreement,

and to imported peanuts.

EFFECTIVE DATE: February 9, 2000.

FOR FURTHER INFORMATION CONTACT: George Kelhart, Technical Advisor, of

the Marketing Order Administration Branch, FVP, AMS, USDA, Room 2525-S,

P.O. Box 96456, Washington, DC 20090-6456; telephone (202) 720-2491,

Fax: (202) 720-5698; or Jim Wendland, Marketing Specialist, DCMFO,

MOAB, FVP, AMS, USDA, 4700 River Road, Unit 155, Suite 5D03, Riverdale,

MD 20737; phone (301) 734-5246, Fax (301) 734-5275 or E-mail:

[email protected]. or [email protected].

Small businesses may request information on complying with this

regulation by contacting Jay Guerber, at the first address above, or E-

mail: Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 146 (Agreement) (7 CFR part 998), regulating the handling

of peanuts grown in 16 States. The Agreement is effective under the

Agricultural Marketing Agreement Act of 1937, as amended (Act) (7

U.S.C. 601-674). Also, subparagraph (f)(2) of section 108B of the

Agricultural Act of 1949 (7 U.S.C.

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1445c3) and section 155 of the Federal Agriculture Improvement and

Reform Act of 1996 (7 U.S.C. 7271) provide that the Secretary of

Agriculture shall require that all peanuts in the domestic and export

markets fully comply with all quality requirements under the Agreement.

This has been implemented through regulations governing peanuts handled

by persons not subject to the Agreement (non-signers program) (7 CFR

part 997) and regulations governing imports of peanuts (peanut import

regulation) (7 CFR part 999). Thus, the Agreement and the non-signers

regulations regulate the quality of domestically produced peanuts and

the peanut import regulations regulate the quality of imported peanuts.

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. This rule is not intended to have retroactive effect.

This rule will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule. There are no administrative procedures which must be exhausted

prior to any judicial challenge to the provisions of this rule.

The outgoing quality requirements under the Agreement were changed

in August 1998, as unanimously recommended by the Peanut Administrative

Committee (Committee). The Committee is responsible for local

administration of Marketing Agreement No. 146's quality assurance

program in the 16-State peanut production area. The four basic

varieties of peanuts produced domestically are: Runners, which account

for about 75 percent of total U.S. production; Virginias, which have

the largest kernels; Spanish, which have smaller kernels but higher oil

content; and Valencias, which are very sweet and are grown mostly in

New Mexico. Each of the grades may be certified ``with splits'' (where

the two halves have come apart) provided all applicable quality

requirements are met. A Sound Split and Broken Kernels tolerance of 15

percent is allowed, of which not more than 3 percent will pass thru a

prescribed screen.

At its April 30, 1997, meeting the Committee unanimously

recommended that for the 1997 and subsequent crop years the outgoing

quality regulation and the terms and conditions of indemnification be

amended to provide that all lots of edible quality peanuts be eligible

for indemnification. This recommendation was adopted. Prior to 1997

only edible quality peanuts meeting specifications applicable to

indemnifiable grades were eligible for indemnification. Basically, this

indemnification program insured that if a handler's milled peanuts met

the Agreement's requirements when shipped but were later found to be

out of compliance, the Committee would provide reimbursement to the

handler for those peanuts if a valid claim was submitted.

This modification to Sec. 998.200 (a) of the Agreement removed

Table (2) INDEMNIFIABLE GRADES from the Agreement (63 FR 2846; January

16, 1998). The modification inadvertently eliminated the specifications

applicable to all nine of the INDEMNIFIABLE GRADE CATEGORIES. The

Committee's intent was to cause all edible grade categories of peanuts

to be eligible for indemnification benefits, not to eliminate any grade

specifications. The Committee therefore unanimously recommended

incorporating the last three categories of Table 2--Runner with splits,

Virginia with splits, and Spanish and Valencia with splits--into Table

1 which had been retained in Sec. 998.200. That recommendation was

finalized and published in the August 23, 1998, issue of the Federal

Register (63 FR 41323).

However, at that time, the Committee inadvertently did not include

a request for modification of the tolerance for foreign material in the

three categories which were moved. The foreign material allowance in

the three moved categories was .10 percent in the old Table 2.

Therefore, these three moved categories were not consistent with the

foreign material allowance of the other seven edible peanut categories

already listed in the MAXIMUM LIMITATIONS table in Sec. 998.200 of the

Agreement. Retaining different allowances would only cause confusion in

the industry. Therefore, in order to eliminate any confusion and

correct the situation, the Committee unanimously recommended at its

March 18, 1999, public meeting to request an increase in the allowance

for the three ``with splits'' categories to .20 percent. This would

make all 10 edible peanut categories consistent. This rule continues

implementation of that recommendation.

The Agricultural Act of 1949 and the Federal Agriculture

Improvement and Reform Act of 1996 provide that the Secretary of

Agriculture shall require that all peanuts in the domestic and export

markets fully comply with all quality requirements under the Agreement.

Thus, this action continues to apply to Agreement signer and non-signer

handlers, and peanut importers for the remainder of the crop year

ending June 30, 2000, and subsequent crop years.

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 agreements

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, these statutes have

small entity orientation and compatibility. There are approximately 36

peanut handlers and 15 importers who are subject to regulation under

the Agreement, the non-signers program, or the peanut import

regulation, and approximately 23,000 commercial peanut producers in the

16-State production area. Small agricultural service firms, which

include handlers and importers, are defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts of less

than $5,000,000, and small agricultural producers are defined as those

having annual receipts of less than $500,000. Approximately 25 percent

of the signatory handlers, less than one-third of the importers,

virtually all of the non-signer handlers, and most of the producers may

be classified as small entities. In addition, based on the 1998

marketing year average price received by farmers of 25.5 cents per

pound times approximately 3.96 billion pounds production results in the

value of domestic production totaled about $1.01 billion. Dividing this

by approximately 23,000 producers results in an average annual producer

revenue of approximately $44,000. Regarding peanut importers,

approximately 15 business entities imported peanuts during the 1998

import quota period beginning January 1, 1998, for Mexico, and April 1,

1998, for Argentina and ``other countries'' and both ending 12 months

later. They appear to cover a broad range of business entities,

including fresh and processed food handlers, and both large and small

commodity brokers who buy agricultural products on behalf of others.

The majority of peanut importers are believed to be large business

entities with annual receipts of over $5,000,000. AMS is not aware of

any peanut producers (farmers) who imported peanuts during that quota

period. In

[[Page 1304]]

view of the foregoing, it can be concluded that the majority of peanut

handlers, and producers may be classified as small entities, but not

the importers.

This rule continues changes to the outgoing quality regulation of

increasing the allowance for foreign material in the three edible

categories of peanuts ``with splits'' to .20 percent from .10 percent,

to make the allowance for all 10 edible grade categories consistent.

The three edible categories are Runner with splits, Virginia with

splits, and Spanish and Valencia with splits.

The Agricultural Act of 1949 and the Federal Agriculture

Improvement and Reform Act of 1996 provide that the Secretary of

Agriculture shall require that all peanuts in the domestic and export

markets fully comply with all quality requirements under the Agreement.

Thus, this action applies to Agreement signer and non-signer handlers,

and peanut importers for the remainder of the crop year ending June 30,

2000, and subsequent crop years.

The Committee discussed alternatives to this rule, including making

no change, but unanimously concluded that such alternatives would not

be in the best interests of the industry.

This action continues to relax the outgoing quality regulations

imposed on all domestic peanut handlers and importers. It is applied

uniformly on all peanut handlers and importers, and should tend to

reduce their costs slightly since less lots will likely have to be

remilled to meet outgoing quality requirements. Also, this relaxation

may slightly reduce any reporting and recordkeeping burden on regulated

persons. As with all Federal marketing agreement and order programs,

reports and forms are periodically reviewed to reduce information

requirements and duplication by industry and public sectors. In

addition, as noted in the initial regulatory flexibility analysis, the

Department has not identified any Federal rules that duplicate, overlap

or conflict with this rule.

Further, the Committee's meetings were widely publicized throughout

the peanut industry and all interested persons were invited to attend

the meetings and participate in deliberations on all issues. Like all

Committee meetings, the February 2, 1999, and March 18, 1999, meetings

were public meetings and all entities, both large and small, were able

to express views on this issue. The Committee itself consists of 18

members of whom 9 represent handlers and 9 represent producers.

An interim final rule concerning this action was published in the

Federal Register on October 18, 1999. Copies of the rule were mailed by

the Peanut Administrative Committee staff to all Committee members and

Agreement signer handlers. Also, the Department mailed approximately

500 copies to importers, non-signer handlers, and other interested

persons. In addition, the rule was made available through the Internet

by the Office of the Federal Register. That rule provided for a 60-day

comment period which ended December 17, 1999. No comments referencing

that rule were received by the Docket Clerk.

A small business guide on complying with fruit, vegetable, and

specialty crop marketing agreements and orders may be viewed at the

following web site: http://www.ams.usda.gov/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 found that finalizing the interim final

rule, without change, as published in the Federal Register (64 FR

56133, October 18, 1999) will tend to effectuate the declared policy of

the Act.

List of Subjects

7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

7 CFR Part 998

Marketing agreements, Peanuts, Reporting and recordkeeping

requirements.

7 CFR Part 999

Dates, Food grades and standards, Hazelnuts, Imports, Nuts,

Peanuts, Prunes, Raisins, Reporting and recordkeeping requirements,

Walnuts.

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO MARKETING

AGREEMENT NO. 146

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

Accordingly, the interim final rule amending 7 CFR parts 997, 998,

and 999 which was published at 64 FR 56133 on October 18, 1999, is

adopted as a final rule without change.

Dated: January 4, 2000.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 00-506 Filed 1-7-00; 8:45 am]

BILLING CODE 3410-02-P