Assessment Obligation for 1995-96 Crop Year Peanuts Under 7 CFR Part 997; Peanuts Not Subject to Peanut Marketing Agreement No. 146

DEPARTMENT OF AGRICULTURE

7 CFR Part 997

[Docket No. FV95-997-1IFR]

Assessment Obligation for 1995-96 Crop Year Peanuts Under 7 CFR

Part 997; Peanuts Not Subject to Peanut Marketing Agreement No. 146

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This document implements an administrative assessment on

farmers stock peanuts received or acquired by handlers who are not

signatory (non-signatory handlers) to Peanut Marketing Agreement No.

146 (Agreement). The assessment rate for 1995-96 crop year peanuts

shall be $.70 per net ton. In addition, this rule clarifies which

categories of farmers stock peanuts are assessable. This rule also

establishes that non-signatory handlers shall submit their pro rata

assessment to the Secretary of Agriculture. The assessment rate is the

same as the administrative assessment established by the Department on

handlers who are signers of the Agreement (signatory handlers).

DATES: Effective July 1, 1995, through June 30, 1996. Comments which

are received by September 20, 1995 will be considered prior to any

finalization of this interim 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, D.C. 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: Richard Lower, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, room

2523-S, P.O. Box 96456, Washington, D.C. 20090-6456; telephone: (202)

720-2020, FAX (202) 720-5698.

SUPPLEMENTARY INFORMATION: This interim final rule is issued pursuant

to the requirements of the Agricultural Marketing Agreement Act of 1937

(Act), as amended (7 U.S.C. 601-674), and as further amended December

12, 1989; Public Law 101-220, section 4 (1), (2), 103 Stat. 1878,

December 12, 1989; and Public Law 103-66, section 8b(b)(1), 107 Stat.

312, August 10, 1993.

The Department is issuing this rule in conformance with Executive

Order 12866.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. The Department is establishing a 1995-96 crop year

assessment rate applicable to non-signatory handlers effective July 1,

1995-June 30, 1996. Farmers stock peanuts received or acquired by non-

signatory handlers during that crop year will be subject to the

assessment. 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 interim final 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 action 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 45 handlers of peanuts who have not signed

the Agreement and, thus, will be subject to the regulations specified

herein. There are also approximately 47,000 producers of peanuts, who

potentially might do business with these handlers. The Small Business

Administration now defines small agricultural service firms (13 CFR

121.601) as those having annual receipts of less than $5,000,000 and

small agricultural producers as those whose annual receipts are less

than $500,000. A majority of non-signatory handlers and peanut

producers may be classified as small entities.

The Agreement was established in 1965 and plays a very important

role in maintaining the industry's quality control efforts. The Peanut

Administrative Committee (Committee) was established by the Agreement

and works with the Department in administering the marketing agreement

program. Approximately 95 percent of the domestically produced peanut

crop is marketed by handlers who are signatory to the Agreement.

Since aflatoxin was found in peanuts in the mid-1960's, the

domestic peanut industry has sought to minimize aflatoxin contamination

in peanuts and peanut products. Agreement requirements provide that

farmers stock peanuts with visible Aspergillus flavus mold (the

principal source of aflatoxin) must be diverted to non-edible uses.

Each lot of shelled peanuts destined for edible channels must be

officially sampled and chemically tested for aflatoxin by Department

laboratories or laboratories approved by the Committee.

Public Law 101-220 amended section 608b of the Act to require that

all peanuts handled by persons who have not entered into the Agreement

(non-signers) be subject to quality and inspection requirements to the

same extent and manner as are required under the Agreement.

Approximately 5 percent of the U.S. peanut crop is marketed by non-

signer handlers.

Regulations to implement Pub. L. 101-220 were issued and made

effective on December 4, 1990 (55 FR 49980). The regulations, which

have been amended several times, are published in 7 CFR Part 997--

Provisions Regulating the Quality of Domestically Produced Peanuts

Handled by Persons Not Subject to the Peanut Marketing Agreement. Under

these provisions, no peanuts may be sold or otherwise disposed of for

human consumption if the peanuts fail to meet the edible quality

requirements of the Agreement. All amendments were made to ensure that

the non-signer handling requirements remain the same as, or are equal

to, the handling requirements applied to signatory handlers under the

Agreement.

Public Law 103-66 (107 Stat. 312) provides for mandatory assessment

of farmer's stock peanuts acquired by non-signatory peanut handlers.

Under this

[[Page 43354]]

law, paragraph (b) of section 1001, of the Agricultural Reconciliation

Act of 1993, specifies that: (1) Any assessment (except indemnification

assessments) imposed under the Agreement on signatory handlers also

shall apply to non-signatory handlers, and (2) such assessment shall be

paid to the Secretary.

The Committee meets in February or March each year and recommends

to the Secretary a per ton, administrative assessment of farmers stock

peanuts received or acquired by signatory handlers for the upcoming

crop year. The crop year covers the 12-month period from July 1 to June

30.

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

$.70 administrative assessment per ton of 1995-96 crop year farmers

stock peanuts received or acquired by signatory handlers. The

Department published an interim final rule in the May 17, 1995, issue

of the Federal Register (60 FR 26348) which implemented such an

administrative assessment on signatory handlers.

Peanuts will be assessed based on the rate applicable to the crop

year in which the lot is presented for incoming inspection. Therefore,

pursuant to Pub. L. 103-66, this interim final rule provides notice

that, for the 1995-96 crop year, the Department will assess non-

signatory handlers a $.70 administrative assessment per net ton of

farmers stock peanuts received or acquired by non-signatory handlers.

This rule clarifies which categories of farmers stock peanuts are

assessed. Segregation 1 peanuts are assessed under the Agreement and

under this regulation. Until recently, all Segregation 2 and 3 peanuts

were subject to assessment. However, the Committee recommended that

signatory handler assessments should not be applied to Segregation 2

and 3 peanuts that are crushed for oil. Crushing represents the minimum

market value that handlers can receive for poor quality peanuts. Thus,

it is reasonable that assessments should not be applied to such

peanuts. The Secretary approved the Committee's recommendation by

issuing an interim final rule in the July 17, 1995, issue of the

Federal Register (60 FR 36207. Thus, this rule also establishes that

Segregation 2 and 3 peanuts acquired by non-signatory handlers and

disposed of to crushing shall not be assessed pursuant to Sec. 997.51.

Under some surplus market conditions, Segregation 1 peanuts may also be

crushed for oil. However, such peanuts are not exempt from assessments.

The assessment will be applied to all such peanuts received or

acquired for a handler's account, including the handler's own

production. The assessment will be based on: (1) Tonnage reported on

incoming inspection certificates of each handler's Segregation 1

farmers stock peanuts received or acquired for the handler's account,

and (2) Segregation 2 and 3 tonnage received or acquired for non-edible

uses, except Segregation 2 and 3 peanuts sent to crushing.

Segregation 1 peanuts are defined as farmers stock peanuts with not

more than 2 percent damaged kernels nor more than 1.00 percent

concealed damage caused by rancidity, mold, or decay and which are free

from visible Aspergillus flavus. Segregation 2 peanuts are defined as

farmers stock peanuts with more than 2 percent damaged kernels or more

than 1.00 percent concealed damage caused by rancidity, mold, or decay

and which are free from visible Aspergillus flavus. Segregation 3

peanuts are defined as farmers stock peanuts with visible Aspergillus

flavus.

Handling is defined in Sec. 997.14 as engaging in the receiving or

acquiring, cleaning and shelling, cleaning inshell, or crushing of

peanuts and in the shipment (except as a common or contract carrier of

peanuts owned by another) or sale of cleaned inshell or shelled peanuts

or other activity causing peanuts to enter the current of commerce.

Handling does not include the sale or delivery of peanuts by a producer

to a handler or to an intermediary person engaged in delivering peanuts

to handlers and the sale or delivery of peanuts by such intermediary to

a handler.

Section 997.15 defines a non-signatory handler as ``any person who

handles peanuts, in a capacity other than that of a custom cleaner or

dryer, an assembler, a warehouseman or other intermediary between the

producer and the person handler: Provided, That this term does not

include handlers signatory to the Peanut Marketing Agreement.''

Thus, for the 1995-96 crop year, a handler who receives or acquires

a 100,000 pound shipment of Segregation 1 farmers stock peanuts will

pay an assessment of $35 (100,000 pounds is 50 tons, times 70 cents per

ton, equals $35).

The assessment is applied, pro rata, on each non-signatory handler

who is the first handler to receive or acquire an assessable lot of

farmers stock peanuts. Only one assessment is applied to each farmers

stock peanut lot. Assessments will not be applied on peanuts received

or acquired from other handlers, speculators, buying points, brokers,

or other entities who have paid assessments on the peanuts received or

acquired.

Assessments will not be applied on peanuts received on behalf of an

area association pursuant to a peanut receiving and warehouse contract.

Non-signatory producer/handlers who store peanuts of their own

production (``farm-stored'' peanuts) will, at some point prior to

further handling, obtain incoming inspection on such peanuts. At the

time of incoming inspection, such producer/handlers shall pay their pro

rata administrative assessment on such farm stored peanuts.

Speculators, brokers, or other entities who take possession of

farmers stock peanuts, submit such peanuts for incoming inspection, and

subsequently enter such peanuts into edible and non-edible channels of

commerce will pay assessments on such peanuts--except Segregation 2 and

3 peanuts crushed for oil.

A crop year's original assessment may be increased by the Secretary

to cover a deficit in administrative funds, but only if based on a

similar increase applied by the Secretary on signatory handlers. Such

an increase will be applied on all assessable peanuts handled by non-

signatory handlers during the crop year in which the increased

assessment occurred.

Also pursuant to Pub. L. 103-66, this rule establishes that non-

signatory handlers pay their administrative assessment to the

Secretary. The Secretary will bill non-signatory handlers on a periodic

basis determined by the Secretary. Each non-signatory handler will be

responsible for remitting payment by the date specified. Payment in the

form of a personal check, cashier's check, or money order shall be

remitted to the Department. Audits of each handler's account may be

conducted by the Department to reconcile farmers stock peanuts received

or acquired and assessments paid.

This interim final rule is the third notice of intent to assess

non-signatory peanut handlers. A similar assessment notice for the 1994

crop year was published in the August 3, 1994 issue of the Federal

Register (59 FR 39419). However, because the Department was unprepared

to begin collecting farmers stock data and unable to commence an

assessment billing and collection procedure, implementation of

assessments was delayed until the 1995-96 crop year (60 FR 6394,

February 2, 1995).

The Department corrects an error in the sample assessment

obligation calculation published in that final rule.

[[Page 43355]]

The erroneous example indicated that application of a $.60 per ton

assessment rate on 50,000 tons of Segregation 1 farmers stock peanuts

would result in an assessment obligation of $60. However, the correct

assessment obligation in that example should have been $30 (50 tons,

times $.60 per ton, equals $30).

Violation of this assessment regulation may result in a penalty in

the form of an assessment by the Secretary equal to 140 percent of the

support price of quota peanuts for the crop year during which the

violation occurs. The support price for quota peanuts is determined

under 7 U.S.C. 1445c-3.

This administrative assessment rate will impose some additional

costs on non-signatory handlers. However, the costs will be in the form

of uniform assessments on all handlers who are not signatory to the

Agreement as well as all signatory handlers.

In accordance with the Paperwork Reduction Act of 1988 (44 U.S.C.

Chapter 35), the information collection requirements that are contained

in this rule have been previously approved by the Office of Management

and Budget (OMB) and have been assigned OMB No. 0581-0163.

Based on available information, the Administrator of the AMS has

determined that the issuance of this interim final rule will not have a

significant economic impact on a substantial number of small entities.

This rule is required by law. This administrative assessment will be

applied uniformly to all non-signatory handlers and will be of benefit

to all.

Pursuant to 5 U.S.C. 553, it is also found and determined that,

upon good cause, 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) Public Law 103-66 requires the Department

to impose an administrative assessment on peanuts received or acquired

for the account of non-signatory handlers; (2) notice of intent to

assess the 1995 crop peanuts was published in the Federal Register as a

finalization of an interim final rule on February 2, 1995 (60 FR 6394);

(3) the peanut crop year begins July 1, and to achieve the intended

purpose of the law this action should be taken promptly; and (4) this

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

received will be considered prior to finalization of any rule.

List of Subjects in 7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 997 is

amended as follows:

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO THE PEANUT

MARKETING AGREEMENT

1. The authority citation for 7 CFR part 997 continues to read as

follows:

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

2. A new paragraph (b)(6) is added to Sec. 997.40 to read as

follows:

Sec. 997.40 Reconditioning and disposition of peanuts failing quality

requirements.

* * * * *

(b) * * *

(6) Peanuts handled pursuant to paragraphs (b)(4)(i) and

(b)(4)(iii) of this section are exempt from Sec. 997.51 Assessments.

3. A new undesignated centerheading and Sec. 997.100 are added to

read as follows:

Note: This section will not appear in the Code of Federal

Regulations.

Implementing Regulation

Sec. 997.100 Assessments.

For the 1995-96 crop year, the administrative assessment is $0.70

per net ton of assessable farmers stock peanuts received or acquired by

each non-signatory handler.

Dated: August 15, 1995.

Terry C. Long,

Acting Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-20644 Filed 8-18-95; 8:45 am]

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