Domestically Produced Peanuts; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997 and 998

[Docket Nos. FV98-997-1 IFR and FV98-998-1 IFR]

Domestically Produced Peanuts; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases the administrative assessment rate

established for the Peanut Administrative Committee (Committee) under

Marketing Agreement No. 146 (Agreement) for the 1998-99 and subsequent

crop years from $0.35 to $0.33 per net ton of assessable peanuts. 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 1998-

1999 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 August 4, 1998. Comments received by October 2, 1998,

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 to the Docket Clerk,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

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

(202) 205-6632. Comments should reference the docket numbers 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: Jim Wendland, Marketing Specialist, DC

Marketing Field Office, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,

Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 205-

6632. Small businesses may request information on compliance with this

regulation by contacting Jay Guerber, also at the above address,

telephone, and fax number.

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'', under

Marketing Agreement No. 146 (7 CFR part 998), and under the Peanut Non-

Signer Program (7 CFR part 997). The marketing agreement and non-signer

program, and the regulations issued thereunder regulate 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 the same assessment rate. It is

intended that the assessment rates issued herein will be applicable to

all assessable peanuts beginning July 1, 1998, and continue in effect

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 and non-signer handlers for the 1998-99 and subsequent crop

years from $0.35 to $0.33 per net ton of assessable peanuts.

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 Committee members

include nine handlers and nine 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 1996-97 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 May 27, 1998, and unanimously recommended for

1998-99 a reduction in the administrative assessment rate from $0.35 to

$0.33 per net ton of assessable peanuts, and administrative

expenditures of $495,000. In comparison, last year's budgeted

administrative expenditures were $525,000. The assessment rate of $0.33

is $0.02 less than the rate currently in effect.

Major expenditures recommended by the Committee for the 1998-99

crop year compared with those budgeted for 1997-98 (in parentheses)

include: $58,000 for executive salaries ($55,000), $43,500 for clerical

salaries ($50,000), $129,000 for compliance officers salaries

($125,000), $19,000 for payroll taxes ($18,000), $70,000 for employee

benefits, ($65,000), $40,000 for committee members travel ($40,000),

$55,000 for compliance officers travel ($60,000), $13,000 for office

rent ($19,000), and $10,400 for the audit fee ($10,400).

The Committee discussed alternatives to this rule, including

alternative expenditure levels but decided that each of the budgeted

expenses was reasonable and appropriate. It also discussed the

alternative of not decreasing the assessment rate but decided it needed

to decrease the rate to reduce handlers' costs as much as possible. The

Committee also discussed an even lower rate, but decided that an

assessment rate of less than $0.33 would not generate the income

necessary to administer the program.

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 those peanuts described

in Sec. 998.31(c) and (d), are subject to the assessments. Assessments

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

farmers stock peanuts are received or acquired by signatory handlers.

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Peanut receipts and acquisitions for the year under the Agreement are

estimated at 1,500,000 tons, which should provide $495,000 in

assessment income. Approximately 95 percent of the domestically

produced peanut crop is handled by handlers who signed the Agreement.

The remaining 5 percent is handled by non-signer handlers.

The Act provides for mandatory assessment of farmers 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 with signatory handlers also shall apply to

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

Secretary. Thus, the assessment rate of $0.33 per net ton of assessable

peanuts also applies to non-signatory handlers of domestic peanuts.

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 for signatory

handlers. 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 1998-99 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 commercial peanut

producers in the 16-State production area. Small agricultural service

firms, which include handlers, are defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts of 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 to be collected from handlers for the 1998-99 and

subsequent crop years from $0.35 to $0.33 per net ton. The rate is

$0.02 less than the 1997-98 rate.

The Committee discussed alternatives to this rule, including

alternative expenditure levels but decided that each of the budgeted

expenses was reasonable and appropriate. It 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 1998-99 is $495,000,

$30,000 less than the amount budgeted for 1997-98. Based on an

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

handler assessments during 1998-99 will be adequate to cover budgeted

expenses.

Major expenditures recommended by the Committee for the 1998-99

crop year compared with those budgeted for 1997-98 (in parentheses)

include: $58,000 for executive salaries ($55,000), $43,500 for clerical

salaries($50,000), $129,000 for compliance officers salaries

($125,000), $19,000 for payroll taxes ($18,000), $70,000 for employee

benefits, ($65,000), $40,000 for committee members travel ($40,000),

$55,000 for compliance officers travel ($60,000), $13,000 for office

rent ($19,000), and $10,400 for the audit fee ($10,400).

The Committee reviewed historical information and preliminary

information pertaining to the 1998-99 crop year. The Department

reported 1.463 million acres planted in peanuts for the 1998 crop. The

Committee projected shipments for the 1998-99 crop year to be 1.5

million net tons. Based on 1997-98 crop figures, the approximately

$560,000 in total assessments collected by the Committee as a

percentage of the $932,000,000 total peanut crop value was only 0.0006

percent. With a decreased assessment rate, the relationship of total

assessment cost as a percentage of total crop value is expected to be

even smaller for the 1998-99 crop.

This action decreases the administrative assessment obligation

imposed on all domestic peanut handlers, whether signers or non-

signers. Assessments are applied uniformly on all handlers, and some of

the costs may be passed on to producers. However, decreasing the

assessment rate reduces the burden on handlers, and may reduce the

burden on producers. 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 deliberations on

all issues. Like all Committee meetings, the May 27, 1998, 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 1997-98 assessment rate for signer

and non-signer handlers; (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

[[Page 41184]]

account of signatory and non-signatory handlers; (4) the 1998-99 crop

year began on July 1, 1998, 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) signatory

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 60-day comment period, and all written 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.

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:

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 parts 997 and 998 continues to

read as follows:

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

2. Section 997.101 is revised to read as follows:

Sec. 997.101 Assessment rate.

On and after July 1, 1998, an administrative assessment rate of

$0.33 per net ton of assessable farmers stock peanuts received or

acquired by each non-signatory first handler is established for

peanuts.

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

3. Section 998.409 is revised to read as follows:

Sec. 998.409 Assessment rate.

On and after July 1, 1998, an administrative assessment rate of

$0.33 per net ton of farmers stock peanuts received or acquired other

than those described in Sec. 998.31(c) and (d) is established for

handlers signatory to the Agreement. Assessments are due on the 15th of

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

received or acquired.

Dated: July 28, 1998

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-20641 Filed 7-31-98; 8:45 am]

BILLING CODE 3410-02-P