Amended Assessment Rate for Domestically Produced Peanuts Handled by Persons Not Subject to Marketing Agreement No. 146, and for Marketing Agreement No. 146 Regulating the Quality of Domestically Produced Peanuts

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997 and 998

[Docket No. FV97-998-3 IFR]

Amended Assessment Rate for Domestically Produced Peanuts Handled

by Persons Not Subject to Marketing Agreement No. 146, and 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.

-----------------------------------------------------------------------

SUMMARY: This rule decreases the administrative assessment rate

established for the Peanut Administrative Committee (Committee) under

Marketing Agreement No. 146 (agreement) for the 1997-98 and subsequent

crop years. The Committee is responsible for local administration of

the agreement which regulates the handling of peanuts grown in 16

States. Authorization to assess peanut handlers who have signed the

agreement enables the Committee to incur expenses that are reasonable

and necessary to administer the program. The agreement is effective

under the Agricultural Marketing Agreement Act of 1937, as amended

(Act). The Act also requires the Department of Agriculture (Department)

to impose the same administrative assessment rate on assessable peanuts

received or acquired by handlers who have not signed the agreement. The

1997-1998 crop year covers the period July 1 through June 30. The

assessment rate will continue in effect indefinitely unless modified,

suspended, or terminated.

DATES: Effective September 18, 1997. Comments received by October 17,

1997, 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

2525-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: Tammie M. Bryant, Program Assistant,

or Jim Wendland, Marketing Specialist, Marketing Order Administration

Branch, Fruit and Vegetable Division, DC Marketing Field Office, AMS,

USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-6456;

telephone: (202) 720-1755, Fax: (202) 720-5698. Small businesses may

request information on compliance with this regulation by contacting

Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-

6456; telephone: (202) 720-2491, Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued pursuant to the

requirements of the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereafter referred to as the ``Act''; and

under Marketing Agreement No. 146 (7 CFR part 998) regulating the

quality of domestically produced peanuts.

The Department is issuing this rule in conformance with Executive

Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Farmers' stock peanuts received or acquired by non-

signatory handlers and farmers' stock peanuts received or acquired by

handlers signatory to the agreement, other than from those described in

Sec. 998.31 (c) and (d), are subject to assessments. It is intended

that the assessment rates issued herein will be applicable to all

assessable peanuts beginning July 1, 1997, and continuing until

amended, suspended, or terminated. 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.

This rule decreases the assessment rate established for the

Committee for the 1997-98 and subsequent crop years from $0.70 to $0.35

per net ton.

The agreement provides authority for the Committee, with the

approval of the Department, to formulate an annual budget of expenses

and collect assessments from handlers to administer the program. Funds

to administer the agreement program are paid to the Committee and are

derived from signatory handler assessments. 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 and services in

their local areas and, thus, are in a position to formulate an

appropriate budget and assessment rate. The assessment rate is

formulated and discussed in public meetings. Thus, all directly

affected persons have an opportunity to participate and provide input.

The handlers of peanuts who are directly affected have voluntarily

signed the agreement authorizing the expenses that may be incurred and

the imposition of assessments.

For the 1997-98 and subsequent crop years, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from crop year to crop year indefinitely unless

modified, suspended, or terminated by the Secretary, upon

recommendation and information submitted by the Committee or other

information available to the Secretary.

The Committee met on April 30, 1997, and unanimously recommended

1997-98 administrative expenditures of $525,000, and an administrative

assessment rate of $0.35 per net ton of assessable farmers' stock

peanuts received or acquired by handlers. The Committee also voted not

to recommend an assessment rate for indemnification for handler losses

due to aflatoxin contamination. Adequate funds are included in the

Committee's indemnification reserve for such expenses during the 1997-

98 crop year. In comparison, last year's budgeted administrative

expenditures were $1,025,500. Major expenditures recommended by the

Committee for the 1997-98 crop year compared with those budgeted for

1996-97 (in parentheses)include: $55,000 for executive salaries

($112,450), $50,000 for clerical salaries ($131,500), $125,000 for

field representatives (3 compliance officers rather than 7 fieldmen)

salaries ($296,700), $18,000 for payroll taxes ($42,000), $65,000 for

employee benefits, ($148,000), $40,000 for committee members travel

($40,000), $5,000 for staff travel ($5,000), $60,000 for field

representatives travel ($110,000), $9,800 for insurance and bonds

($9,800), $19,000 for office rent and parking ($46,200), $10,000 for

office supplies and stationery ($14,000), $10,400 for postage and

mailing ($13,200), $11,000 for telephone and telegraph ($15,000),

$6,000 for repairs and maintenance agreements ($6,000), $10,400 for the

audit fee ($10,400), and $15,800 for the contingency reserve ($10,250).

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected receipts and acquisitions of

farmers' stock peanuts. Farmers' stock peanuts received or acquired by

handlers signatory to the agreement, other than

[[Page 48750]]

from those described in Sec. 998.31 (c) and (d), are subject to the

assessments. Farmers' stock peanuts received or acquired by non-

signatory handlers by law are subject to the same assessment rate.

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

which the farmers' stock peanuts are received or acquired. Peanut

receipts and acquisitions for the year under the agreement are

estimated at 1,500,000 tons, which should provide $525,000 in

assessment income. Approximately 95 percent of the domestically

produced peanut crop is marketed by handlers who are signatory to the

agreement. The remaining 5 percent of the U.S. peanut crop is marketed

by non-signer handlers.

The Act provides for mandatory assessment of farmer's stock peanuts

acquired by non-signatory peanut handlers. Section 608b of the Act

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 assessment rates established in this rule will continue in

effect indefinitely unless modified, suspended, or terminated by the

Secretary upon recommendation and information submitted by the

Committee or other available information.

Although these assessment rates are effective for an indefinite

period, the Committee will continue to meet prior to or during each

crop year to recommend a budget of expenses and consider

recommendations for modification of the assessment rate. The dates and

times of Committee meetings are available from the Committee or the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department will

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

Further rulemaking will be undertaken as necessary. The Committee's

1997-98 budget and those for subsequent crop years will be reviewed

and, as appropriate, approved by the Department.

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 initial 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. There are approximately

80 peanut handlers who are subject to regulation under the agreement or

the non-signer program and approximately 25,000 peanut producers in the

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

include handlers, have been defined by the Small Business

Administration (13 CFR 121.601) as those whose annual receipts are 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, virtually all of the non-signer handlers,

and most of the producers may be classified as small entities.

This rule decreases the assessment rate established for the

Committee and collected from handlers for the 1997-98 and subsequent

crop years from $0.70 to $0.35 per net ton. The recommended assessment

rate is $0.35 less than the rate currently in effect.

The Committee discussed alternatives to this rule, including

alternative expenditure levels. The Committee also discussed the

alternative of not decreasing the assessment rate. However, it decided

against this course of action. The peanut industry has been in a state

of economic decline since 1991, with the Committee attempting to cut

costs where possible. The Committee's budget for 1997-98 is $525,000;

this is $500,500 less than the amount budgeted for 1996-97. Based on an

estimated 1,500,000 net tons of assessable peanuts, income derived from

handler assessments during 1997-98 will be adequate to cover budgeted

expenses.

This action will reduce the assessment obligation imposed on

handlers. While this rule will impose some costs on handlers, the costs

are minimal and in the form of a uniform assessment on all handlers.

Some of these costs may be passed on to producers. However, these costs

will be offset by the benefits derived from the operation of the

agreement. This administrative assessment is required by law to also be

applied uniformly to all non-signatory handlers and should be of

benefit to all. In addition, the Committee's meeting was widely

publicized throughout the peanut industry and all interested persons

were invited to attend the meeting and participate in Committee

deliberations on all issues. Like all Committee meetings, the April 30,

1997, meeting was a public meeting and all entities, both large and

small, were able to express views on this issue. Finally, interested

persons are invited to submit information on the regulatory and

informational impacts of this action on small businesses.

This action will not impose any additional reporting or

recordkeeping requirements on either small or large peanut handlers. 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 sector agencies.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule. After consideration of

all relevant matter presented, including the information and

recommendation 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) This action reduces the current assessment rate; (2) the

Committee needs to have sufficient funds to pay its expenses which are

incurred on a continuous basis; (3) the Act requires the Department to

impose an administrative assessment on assessable peanuts received or

acquired for the account of signatory and non-signatory handlers; (4)

the 1997-98 crop year began on July 1, 1997, and the agreement and the

Act require that the rate of assessment for each crop year apply to all

assessable peanuts received or acquired during such crop year; (5)

handlers are aware of this action which was unanimously recommended by

the Committee at a public meeting and is similar to other assessment

rate actions issued in past years; and (6) this interim final rule

provides a 30-day comment period, and all comments timely received will

be considered prior to finalization of this rule.

List of Subjects

7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

[[Page 48751]]

7 CFR Part 998

Marketing agreements, Peanuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR parts 997 and 998

are amended as follows:

1. The authority citation for 7 CFR parts 997 and 998 continues to

read as follows:

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

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO THE PEANUT

MARKETING AGREEMENT

Sec. 997.101 [Amended]

2. Section 997.101 is amended by removing ``July 1, 1996,'' and

adding in its place ``July 1, 1997,'' and by removing ``$0.70'' and

adding in its place ``$0.35.''

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

Sec. 998.409 [Amended]

3. Section 998.409 is amended by removing ``July 1, 1996,'' and

adding in its place ``July 1, 1997,'' and by removing ``$0.70'' and by

adding in its place ``$0.35.''

Dated: September 12, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-24689 Filed 9-16-97; 8:45 am]

BILLING CODE 3410-02-P