Expenses, Assessment Rate, and Indemnification Reserve for Marketing Agreement No. 146 Regulating the Quality of Domestically Produced Peanuts

DEPARTMENT OF AGRICULTURE

7 CFR Part 998

[Docket No. FV95-998-1IFR]

Expenses, Assessment Rate, and Indemnification Reserve for

Marketing Agreement No. 146 Regulating the Quality of Domestically

Produced Peanuts

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule authorizes expenditures for

administration and indemnification, establishes an assessment rate, and

authorizes continuation of an indemnification reserve under Marketing

Agreement 146 (agreement) for the 1995-96 crop year. This rule also

increases the administrative assessment rate for the 1994-95 crop year.

Authorization of this budget enables the Peanut Administrative

Committee (Committee) to incur operating expenses, collect funds to pay

those expenses, and settle indemnification claims during the 1995-96

crop year. Authorization of the increase in the administrative

assessment rate for the 1994-95 crop year enables the Committee to

collect sufficient funds to pay expenses projected for the remainder of

that year. Funds to administer this program are derived from

assessments on handlers who have signed the agreement.

DATES: Effective July 1, 1995, through June 30, 1996 (Sec. 998.408) and

July 1, 1994, through June 30, 1995 (Sec. 998.407). Comments received

by June 16, 1995, 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 in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room

2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments should

reference the docket number and the date and page number of this issue

of the Federal Register and will be available for public inspection in

the Office of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Martha Sue Clark, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.

Box 96456, room 2523-S, Washington, DC 20090-6456, telephone 202-720-

9918, or William G. Pimental, Southeast Marketing Field Office, Fruit

and Vegetable Division, AMS, USDA, P.O. Box 2276, Winter Haven, FL

33883-2276, telephone 813-299-4770.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement 146 (7 CFR part 998) regulating the quality of domestically

produced peanuts. This agreement is effective under the Agricultural

Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674),

hereinafter referred to as the Act.

The U.S. Department of Agriculture (Department) is issuing this

rule in conformance with Executive Order 12866.

This interim final rule has been reviewed under Executive Order

12887, Civil Justice Reform. Under the agreement now in effect, peanut

handlers signatory to the agreement are subject to assessments. Funds

to administer the peanut agreement program are derived from such

assessments. This rule authorizes expenditures and establishes an

assessment rate for the Committee for the crop year beginning July 1,

1995, and increases the administrative assessment rate for the crop

year which began July 1, 1994. 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.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of 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

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened.

There are approximately 47,000 producers of peanuts in the 16

States covered under the agreement, and approximately 76 handlers

regulated under the agreement. Small agricultural producers have been

defined by the Small Business Administration (13 CFR 121.601) as those

having annual receipts of less than $500,000, and small agricultural

service firms are defined as those whose annual receipts are less than

$5,000,000. A majority of the producers may be classified as small

entities, and some of the handlers covered under the agreement are

small entities.

Under the agreement, the assessment rate for a particular crop year

applies to all assessable tonnage handled from the beginning of such

year (i.e., July 1). An annual budget of expenses is prepared by the

Committee and submitted to the Department for approval. The members of

the Committee are handlers and producers of peanuts. They are familiar

with the Committee's needs and with the costs for goods, services, and

personnel for program operations and, thus, are in a position to

formulate appropriate budgets. The budgets are formulated and discussed

at industry-wide meetings. Thus, all directly affected persons have an

opportunity to provide input in recommending the budget, assessment

rate, and indemnification reserve. The handlers of peanuts who are

directly affected have signed the marketing agreement authorizing the

expenses that may be incurred and the imposition of assessments.

The assessment rate recommended by the Committee for the 1995-96

crop year was derived by dividing anticipated expenses by expected

receipts and acquisitions of farmers' stock peanuts. It applies to all

assessable peanuts received or acquired by handlers from July 1, 1995.

Because that rate is applied to actual receipts and acquisitions, it

must be established at a rate which will produce sufficient income to

pay the Committee's expenses.

The Committee met on March 23, 1995, and unanimously recommended

1995-96 crop year administrative expenses of $1,067,500 and an

administrative assessment rate of $0.70 per net ton of assessable

farmers' stock peanuts received or acquired by handlers. In comparison,

1994-95 crop [[Page 26349]] year budgeted administrative expenditures

were $1,056,000, and the administrative assessment rate was initially

recommended and fixed at $0.60 per ton.

Administrative budget items for 1995-96 which have increased

compared to those budgeted for 1994-95 (in parentheses) are: Executive

salaries, $145,051 ($140,146), clerical salaries, $138,856 ($132,500),

field representatives salaries, $304,344 ($290,420), payroll taxes,

$44,000 ($43,000), employee benefits, $148,000 ($145,000), insurance

and bonds, $9,500 ($8,500), postage and mailing, $13,200 ($12,000), and

audit fees, $10,400 ($9,200). Items which have decreased compared to

those budgeted for 1994-95 (in parentheses) are: Office rent and

parking, $44,360 ($50,000), furniture and equipment, $4,000 ($9,500),

and lab data processing, $1,000 ($1,500). All other items are budgeted

at last year's amounts. The administrative budget includes $4,789 for

contingencies ($14,234 last year).

The Committee also unanimously recommended 1995 crop

indemnification claims payments of up to $7,000,000 and an

indemnification assessment of $1.00 per net ton of farmers' stock

peanuts received or acquired by handlers to continue its

indemnification program. For the 1994 crop, indemnification claim

payments of up to $9,000,000 and an assessment rate of $2.00 per net

ton were established. The decreases for 1995 reflect the Committee's

desire to lower indemnification costs.

The costs to carry out indemnification procedures (sampling and

testing of 2-AB and 3-AB Subsamples, and crushing supervision, of

indemnified peanuts, pursuant to Sec. 998.200(c)), are paid from

available indemnification funds. Such costs are not expected to exceed

$500,000.

The total assessment rate is $1.70 per ton of assessable peanuts

($0.70 for administrative and $1.00 for indemnification). Assessments

are due on the 15th of the month following the month in which the

farmers' stock peanuts are received or acquired. Application of the

recommended rates to the estimated assessable tonnage of 1,525,000 will

yield $1,067,500 for program administration and $1,525,000 for

indemnification. The indemnification amount, when added to expected

cash carryover from 1994-95 indemnification operations of $8,700,000,

will provide $10,225,000, which should be adequate for the 1995 fund,

and to maintain an adequate reserve.

The 1994-95 budget was published in the Federal Register as an

interim final rule on May 12, 1994 (59 FR 24633), and finalized on

August 3, 1994 (59 FR 39421). The administrative expenses and

assessment rate for the 1994-95 crop year were based on an estimated

assessable tonnage of 1,760,000. Due to handlers purchasing fewer

peanuts than originally projected, the assessable tonnage is expected

to be only 1,676,000. In order to have sufficient revenue to cover

budgeted expenses of $1,056,000, the Committee unanimously recommended

that the 1994-95 crop year administrative assessment be increased from

$0.60 to $0.63 per net ton of assessable farmers' stock peanuts.

While this action will impose some additional costs on handlers,

the costs are in the form of uniform assessments on all handlers

signatory to the agreement. Some of the additional costs may be passed

on to producers. However, these costs will be significantly offset by

the benefits derived from the operation of the marketing agreement.

Therefore, the Administrator of the AMS has determined that this action

will not have a significant economic impact on a substantial number of

small entities.

After consideration of all relevant matter presented, including the

information and recommendations submitted by the Committee and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

Pursuant to 5 U.S.C. 553, it 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 action until 30 days after publication in the Federal Register

because: (1) The Committee needs to have sufficient funds to pay its

expenses which are incurred on a continuous basis; (2) the 1994-95 crop

year began on July 1, 1994, and the 1995-96 crop year begins on July 1,

1995, and the marketing agreement requires that the rate of assessment

for the fiscal period apply to all assessable peanuts handled during

the fiscal period; (3) handlers are aware of these actions which were

unanimously recommended by the Committee at a public meeting and are

similar to other budget actions issued in past years; and (4) this

interim final rule provides a 30-day comment period, and all comments

timely received will be considered prior to finalization of this

action.

List of Subjects in 7 CFR Part 998

Marketing agreements, Peanuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 998 is

amended as follows:

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

1. The authority citation for 7 CFR part 998 continues to read as

follows:

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

Note: These sections will not appear in the Code of Federal

Regulations.

2. New Sec. 998.408 is added to read as follows:

Sec. 998.408 Expenses, assessment rate, and indemnification reserve.

(a) Administrative expenses. The budget of expenses for the Peanut

Administrative Committee for the crop year beginning July 1, 1995,

shall be in the amount of $1,067,500, such amount being reasonable and

likely to be incurred for the maintenance and functioning of the

Committee and for such purposes as the Secretary may, pursuant to the

provisions of the marketing agreement, determine to be appropriate.

(b) Indemnification expenses. Expenses of the Committee not to

exceed $7,000,000 for indemnification claims payments and claims

expenses, pursuant to the terms and conditions of indemnification

applicable to the 1995 crop effective July 1, 1995, are authorized. In

addition, indemnification expenses, in an undetermined amount estimated

not to exceed $500,000, which are incurred by the Committee for

sampling and testing fees for 2-AB and 3-AB Subsamples, and fees for

the supervision of the crushing of indemnified peanuts are also

authorized.

(c) Rate of assessment. Each handler shall pay to the Committee, in

accordance with Sec. 998.48 of the marketing agreement, an assessment

at the rate of $1.70 per net ton of farmers' stock peanuts received or

acquired other than from those described in Secs. 998.31(c) and (d). A

total of $0.70 shall be for administrative expenses and a total of

$1.00 shall be for indemnification. Assessments are due on the 15th of

the month following the month in which the farmers' stock peanuts are

received or acquired.

(d) Indemnification reserve. Monetary additions to the

indemnification reserve, established in the 1965 crop

[[Page 26350]] year pursuant to Sec. 998.48 of the agreement, shall

continue. That portion of the total assessment funds accrued from the

$1.00 rate not expended on indemnification claims payments on 1995 crop

peanuts and related expenses shall be kept in such reserve and shall be

available to pay indemnification expenses on subsequent crops.

Sec. 998.407 [Amended]

3. On Sec. 998.407, paragraph (c) is amended by removing ``$2.60''

and adding in its place ``$2.63'' and by removing ``$0.60'' and adding

in its place ``$0.63.''

Dated: May 11, 1995.

Terry C. Long,

Acting Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-12146 Filed 5-16-95; 8:45 am]

BILLING CODE 3410-02-P