Domestically Produced Peanuts; Decreased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997 and 998

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

Domestically Produced Peanuts; Decreased Assessment Rate

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 change, the provisions of an interim final rule

which decreased 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. 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 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 remain in

effect indefinitely unless modified, suspended, or terminated.

EFFECTIVE DATE: November 30, 1998.

FOR FURTHER INFORMATION CONTACT: Jim Wendland or George J. Kelhart,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

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

telephone: (202) 720-2491, Fax: (202) 205-6632. Small businesses may

request information on complying with this regulation, or obtain a

guide on complying with marketing agreements and orders for fruits,

vegetables, and speciality crops, by contacting Jay Guerber, also at

the above address, telephone, and fax number, or E-mail:

Jay__N__G[email protected]. You may also view the marketing agreements

and orders small business compliance guide at the following web site:

http://www.ams.usda.gov/fv/moab.html.

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 finalized 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 continues the decreased 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 a public meeting. 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 lower than the rate previously in effect.

Major expenditures approved for 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 had discussed alternatives to this rule, including

alternative expenditure levels but decided that each of the budgeted

expenses was reasonable and appropriate. It had also discussed the

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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 had 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 approved for 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.

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 the 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 finalized 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 has been approved 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 final 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. Marketing agreements and

orders issued pursuant to the Act, and rules issued thereunder, are

unique in that they are brought about through group action of

essentially small entities acting on their own behalf. Thus, both

statutes have small entity orientation and compatibility.

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 continues the decreased assessment rate established for

the Committee (as it unanimously recommended) 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 had discussed alternatives to this rule, including

alternative expenditure levels but unanimously voted that each of the

budgeted expenses was reasonable and appropriate. It had also discussed

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

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 approved budget for 1998-

99 is $495,000, or $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 approved for 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 had reviewed historical information and information

pertaining to the 1998-99 crop year. The Department expects the area

for harvest to total 1.48 million acres of 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 finalizes the decreased 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, the decreased

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

burden on producers. Also, the reduced burdens are offset by the

benefits derived from the operations of the Agreement and the non-

signer programs. 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 were invited

to submit information on the regulatory and informational impacts of

this action on small businesses and none were received.

This action will not impose any additional reporting or

recordkeeping requirements on either small or large

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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. In addition, as noted in the initial regulatory flexibility

analysis, the Department has not identified any relevant Federal rules

that duplicate, overlap, or conflict with this rule.

An interim final rule concerning this action was published in the

Federal Register on August 3, 1998 (63 FR 41182). Copies of that rule

were mailed by the Committee's staff to all Committee members and

peanut handlers. In addition, the rule was made available through the

Internet by the Office of the Federal Register. A 60-day comment period

was provided for interested persons to respond to the interim final

rule. The comment period ended October 2, 1998, and no comments were

received.

After consideration of all relevant material presented, including

the information and unanimous 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.

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.

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED BY PERSONS NOT SUBJECT TO THE PEANUT MARKETING AGREEMENT

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

Accordingly, the interim final rule amending 7 CFR parts 997 and

998 which was published at 63 FR 41182 on August 3, 1998, is adopted as

a final rule without change.

Dated: October 23, 1998.

Larry B. Lace,

Acting Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-28972 Filed 10-28-98; 8:45 am]

BILLING CODE 3410-02-P