Assessment Obligations for Non-signatory Handlers; Peanut Handlers Not Subject to Peanut Marketing Agreement No. 146

DEPARTMENT OF AGRICULTURE

7 CFR Part 997

[Docket No. FV94-997-1FIR]

Assessment Obligations for Non-signatory Handlers; Peanut

Handlers Not Subject to Peanut Marketing Agreement No. 146

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

final rule, with modifications, the provisions of an interim final rule

implementing administrative assessments on handlers who are not

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

146 (Agreement). The interim final rule provided notice that the

Department would begin assessing non-signatory handlers during the

1994-95 crop year. However, because of an unforeseen delay in

installing an assessment collection database, the Department will not

begin assessing non-signatory handlers until the 1995-96 crop year. The

postponement will allow the installation to be completed and all

affected handlers to be notified prior to the beginning of the 1995-96

crop year will be established by the Department in the spring of 1995.

EFFECTIVE DATE: March 6, 1995.

FOR FURTHER INFORMATION CONTACT: Richard Lower or Mark Slupek,

Marketing Order Administration Branch, Fruit and Vegetable Division,

AMS, USDA, Room 2523-S, P.O. Box 96456, Washington, DC 20090-6456;

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

SUPPLEMENTARY INFORMATION: This 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, and

August 10, 1993, Public Law 103-66, section 8b(b)(1), 107 Stat. 312.

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 will establish a 1995-96 crop year

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

1995-June 30, 1996. Segregation 1 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 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. The Small Business Administration 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.

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. The Agreement was established in 1965

and plays a very important role in 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 area peanut crop is marketed by handlers who are signatory to

the Agreement. Requirements established pursuant to the Agreement

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 and certain cleaned inshell peanuts

destined for edible channels must be officially sampled and chemically

tested for aflatoxin by the Department or in laboratories approved by

the Committee.

Public Law 101-220, enacted December 12, 1989, 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.

Under the non-signer provisions, no peanuts may be sold or

otherwise disposed of for human consumption if the peanuts fail to meet

the quality requirements of the Agreement. Regulations to implement

Pub. L. 101-220 were made effective on December 4, 1990 [55 FR 49980],

and amended several times thereafter, and are published in 7 CFR part

997. All such amendments were made to ensure that the non-signer

handling requirements remain consistent with modifications to the

handling requirements applied to signatory handlers under the

Agreement. The most recent amendment was published on August 30, 1994

[59 FR 44610].

Public Law 103-66 [107 Stat. 312], enacted August 10, 1993,

provides for mandatory assessment of farmer's stock peanuts acquired by

non-signatory peanut handlers. Under this 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.

This rule will add new permanent Sec. 997.51 Assessments to part

997--Provisions Regulating the Quality of Domestically Produced Peanuts

Handled by Persons Not Subject to the Peanut Marketing Agreement.

Notice of the actual assessment rate established for each crop year

will be issued as a new section as an Implementing Regulation beginning

with Sec. 997.100 Assessment rate, and be sequentially numbered each

succeeding year. Because of the Department's decision to postpone the

imposition of assessments on non-signatory handlers until the 1995-96

crop year, an assessment rate

[[Page 6395]]

will not be established until the spring of 1995.

The Committee meets in February or March each year and recommends

to the Secretary a per ton, administrative assessment of Segregation 1,

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.

Therefore, pursuant to Public Law 103-66 and subsequent to the

receipt of such a recommendation in 1995, the Department will initiate

rulemaking procedures to assess non-signatory handlers. 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) tonnage reported

on FV-117 ``Weekly Report of Uninspected Farmers Stock Seed Peanuts

Received for Custom Seed Shelling.'' If an administrative assessment

rate of $.60 per ton were established, a handler who received or

acquired 50,000 tons of Segregation 1 farmers stock peanuts and 50,000

tons of uninspected farmers stock peanuts for seed would pay an

assessment of $60.

The assessment will be applied to peanuts intended for human

consumption and peanuts intended for non-human consumption outlets such

as seed, oilstock and animal feed. The assessment will be applied to

peanuts received or acquired for a handler's account, including the

handler's own production. Assessment will not be applied on Segregation

1 peanut lots received or acquired by a handler from other handlers or

from the Commodity Credit Corporation (CCC) program received for non-

edible use, or lots received on behalf of an area association pursuant

to warehousing services [Sec. 997.20(a)].

The assessment will be applied, pro rata, on non-signatory handlers

who perform handling functions defined in Sec. 997.14. Handling is

defined 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, and assembler, a warehouse person or other intermediary between

the producer and the non-signatory handler.

Speculators, brokers, or other entities who take possession of

Segregation 1 farmers stock peanuts, submit such peanuts for incoming

inspection, and subsequently enter such peanuts into the channels of

commerce will pay assessments on such peanuts. Entities who receive or

acquire farmers stock peanuts for the purpose of custom seed shelling

will be assessed on the basis of Form FV-117 ``Weekly Report of

Uninspected Farmers Stock Seed Peanuts Received for Custom Seed

Shelling.'' Form FV-117 is currently required from such entities.

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 and, at that time, pay the pro-rata

administrative assessment on such peanuts.

Only one administrative assessment will be applied to any lot of

farmers stock peanuts. Non-signatory and signatory handlers will not

pay an administrative assessment on a lot which they purchase from

speculators, brokers or other such entities who have already paid an

administrative assessment on the lot.

A crop year's original assessment could be increased by the

Secretary based on a similar increase applied by the Secretary on

signatory handlers. Such an increase will be applied on all peanuts

first handled by non-signatory handlers during the crop year in which

the increased assessment occurred.

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

year in which the lot is presented for incoming inspection.

Also pursuant to Pub. L. 103-66, this rule will establish 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. The 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 will be

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

conducted by the Department to reconcile incoming, farmers stock volume

received or acquired and assessments paid.

Violation of the non-signer regulations may result in a penalty in

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

support price for quota peanuts. The support price for quota peanuts is

determined under 7 U.S.C. 1445c-3 for the crop year during which the

violation occurs.

The interim final rule on these issues was published in the Federal

Register on August 3, 1994 [59 FR 39419]. That rule invited interested

persons to submit written comments through September 2, 1994. One

comment supporting the collection of assessments from non-signer peanut

handlers was received.

The establishment of an administrative assessment rate may 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.

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 final rule will not have a

significant economic impact on a substantial number of small entities.

List of Subjects in 7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

Accordingly, the interim final rule amending 7 CFR part 997 which

was published at 59 FR 39419 on August 3, 1994, is adopted as a final

rule with the following change:

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.

Sec. 997.100 [Removed]

2. In part 997, Sec. 997.100 and the center heading preceding it

are removed.

Dated: January 27, 1995.

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-2581 Filed 2-1-95; 8:45 am]

BILLING CODE 3410-02-P