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

DEPARTMENT OF AGRICULTURE

7 CFR Part 997

[Docket No. FV95-997-1FIR]

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

Part 997; 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, without modification, the provisions of an interim final

rule

[[Page 57908]]

which imposed administrative assessments 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 continues at $.70 per net

ton. The interim final rule also clarified which categories of farmers

stock peanuts are assessable and established 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).

EFFECTIVE DATE: July 1, 1995, through June 30, 1996.

FOR FURTHER INFORMATION CONTACT: Richard Lower, Marketing Order

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

2523-S, PO 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, 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 established 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 are 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-signatory handlers) 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-signatory 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 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 imposed such an

administrative assessment on signatory handlers.

Peanuts are 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 final rule provides 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.

The interim final rule clarified 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 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.

[[Page 57909]]

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 continue to 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 handling: 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

100,000 pounds 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 will continue to be 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 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 unless the peanuts are

Segregation 2 or 3 peanuts crushed for oil.

A crop year's original assessment on non-signatory handlers may be

increased by the Secretary if a similar increase is 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 continues to require

that non-signatory handlers pay their administrative assessment to the

Secretary. The Secretary has begun billing non-signatory handlers on a

monthly basis. Each non-signatory handler is 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.

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.

The interim final rule was published in the Federal Register on

August 21, 1995 (60 FR 43353). That rule invited interested persons to

submit written comments through September 20, 1995. No comments were

received and the Department is adopting as a final rule, without

change, the provisions of the interim final rule.

This administrative assessment rate imposes some additional costs

on non-signatory handlers. However, the costs are 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 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.

After consideration of all relevant matter presented, it is hereby

found that this rule will tend to effectuate the declared policy of the

Act.

It is further found that good cause exists for not postponing the

effective date of this action until 30 days after publication in the

Federal Register (5 U.S.C. 553) because the Act requires collection of

this assessment. Non-signatory handlers are aware of this requirement

which was published in the August 21, 1995, issue of the Federal

Register. The assessment applies to all assessable peanuts handled

during the 1995-96 crop year, which began on July 1, 1995.

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

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

was published at 60 FR 43353 on August 21, 1995, is adopted as a final

rule without change.

Dated: November 20, 1995.

Martha B. Ransom,

Acting Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-28694 Filed 11-22-95; 8:45 am]

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