Peanut Promotion, Research, and Information Order; Referendum Procedures

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1216

[FV-98-703-PR]

Peanut Promotion, Research, and Information Order; Referendum

Procedures

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: The purpose of this rule is to establish procedures which the

Department of Agriculture (USDA or the Department) will use in

conducting a referendum to determine whether the issuance of the

proposed Peanut Promotion, Research, and Information Order (Order) is

favored by a majority of the producers voting in the referendum. These

procedures would also be used for any subsequent referendum under the

Order, if it is approved in the initial referendum. The proposed Order

is being published in a separate document. This proposed program would

be implemented under the Commodity Promotion, Research, and Information

Act of 1996 (Act). In addition, in accordance with the Paperwork

Reduction Act of 1995 (PRA), this proposed rule specifies the public

reporting burden for the collection of information involved in

conducting the referendum.

DATES: Comments must be received by January 5, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule to: Docket Clerk, Research and Promotion

Branch, Fruit and Vegetable Programs (FV), Agricultural Marketing

Service (AMS), USDA, Stop 0244, Room 2535-S, 1400 Independence Avenue,

S.W., Washington, D.C. 20250-0244. Comments should be submitted in

triplicate and will be made available for public inspection at the

above address during regular business hours. Comments may also be

submitted electronically to: [email protected]. All comments

should reference the docket number and the date and page number of this

issue of the Federal Register. A copy of this rule may be found at:

www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork

Reduction Act of 1995 (PRA), also send comments regarding the accuracy

of the burden estimate, ways to minimize the burden, including through

the use of automated collection techniques or other forms of

information technology, or any other aspect of this collection of

information, to the above address. Comments concerning the information

collection under the PRA should also be sent to the Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT: Angela C. Snyder, Research and

Promotion Branch, FV, AMS, USDA, Stop 0244, Room 2535-S, 1400

Independence Avenue, S.W., Washington, D.C. 20250-0244; telephone (910)

860-4689 or facsimile (202) 205-2800.

SUPPLEMENTARY INFORMATION: A referendum would be conducted among

eligible peanut producers to determine whether the issuance of the

proposed Peanut Promotion, Research, and Information Order (Order) (7

CFR Part 1216) is favored by a majority of persons voting in the

referendum. The Order is authorized under the Commodity Promotion,

Research, and Information Act of 1996 (Act) (Pub. L. 104-427, 7 U.S.C.

7401-7425). A proposed Order is being published separately in the

Federal Register.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. It is not intended to have retroactive effect.

Section 524 of the Act provides that the Act shall not affect or

preempt any other Federal or State law authorizing promotion or

research relating to an agricultural commodity.

Under Section 519 of the Act, a person subject to the order may

file a petition with the Secretary of Agriculture (Secretary) stating

that the order, any provision of the order, or any obligation imposed

in connection with the order, is not established in accordance with the

law, and requesting a modification of the order or an exemption from

the order. Any petition filed challenging the order, any provision of

the order or any obligation imposed in connection with the order, shall

be filed within two years after the effective date of the order,

provision or obligation subject to challenge in the petition. The

petitioner will have the opportunity for a hearing on the petition. The

Act provides that the district court of the United States for any

district in which the petitioner resides or conducts business shall the

jurisdiction to review a final ruling on the petition, if the

petitioner files a complaint for that purpose not later than 20 days

after the date of the entry of the Secretary's final ruling.

Executive Order 12866

This rule has been determined not significant for purposes of

Executive Order 12866 and therefore has not been reviewed by the Office

of Management and Budget.

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), the Agency is required to examine the impact of the proposed

rule on small entities. The purpose of the RFA is to fit regulatory

actions to the scale of businesses subject to such action so that small

businesses will not be disproportionately burdened.

The Act, which authorizes the Secretary to consider industry

proposals for generic programs of promotion, research, and information

for agricultural commodities, became effective on April 4, 1996. The

Act provides for alternatives within the terms of a variety of

provisions.

Paragraph (e) of Section 518 of the Act provides three options for

determining industry approval of a new research and promotion program:

(1) by a majority of those voting; (2) by a majority of the volume of

the agricultural commodity voted in the referendum; or (3) by a

majority of those persons voting who also represent a majority of the

volume of the agricultural commodity voted in the referendum. In

addition, section 518 of the Act provides for referenda to ascertain

approval of an order to be conducted either prior to its going into

effect or within three years after assessments first begin under the

order. The American Farm Bureau Federation (proponent) has recommended

that the Secretary conduct a referendum in which the Order must be

approved by a majority of those persons voting. The proponent also has

recommended that a referendum be conducted prior to the proposed Order

going into effect.

This proposed rule would establish the procedures under which

producers may vote on whether they want a

[[Page 59908]]

peanut promotion, research, and information program to be implemented.

This proposal would add a new subpart which establishes procedures to

conduct an initial and future referenda. The proposed subpart covers

definitions, voting instructions, use of subagents, ballots, the

referendum report, and confidentiality of information.

There are approximately 25,000 producers and 57 handlers of peanuts

who would be subject to the program. Most producers would be classified

as small businesses under the criteria established by the Small

Business Administration (SBA) [13 CFR Sec. 121.601], and most of the

handlers would not be classified as small businesses. The SBA defines

small agricultural handlers as those whose annual receipts are less

than $5 million, and small agricultural producers are defined as those

having annual receipts of not more than $500,000 annually.

According to USDA's National Agricultural Statistics Service

(NASS), the nine major peanut-producing states in the United States

account for 99 percent of the peanuts grown in this country. The

combined production from these states totaled 3.5 billion pounds in

1997. NASS reports that Georgia was the largest producer (38 percent of

the total), followed by Texas (23 percent), Alabama (11 percent), North

Carolina (9 percent), Florida (6 percent), Virginia (5 percent),

Oklahoma (5 percent), New Mexico (1 percent), and South Carolina (1

percent). The farm value of peanuts in 1997 reached $932 million.

According to 1992 Census of Agriculture (Census) data, small amounts of

peanuts were also grown in seven other states.

According to the proponent, and based on the Census for these nine

states, 36 percent of the peanut-producing counties in the United

States had 35 percent or more of their total crop income from peanuts.

Twenty-four percent of the counties had 50 percent or more of their

crop income from peanuts. From a state perspective, 70 percent of the

crop income in Alabama's peanut-producing counties is generated from

peanuts. For Virginia, the percentage is 48 percent. In addition,

16,194 farms harvested peanuts in 1992. Of these, 15,914 were located

in the nine primary peanut-producing states.

Three main types of peanuts are grown in the United States:

Florunners, Virginia, and Spanish. The southeast growing region grows

mostly the medium-kernel Runner peanuts. The southwest growing region

used to grow two-thirds Spanish and one-third Runner peanuts, but now

more Runners than Spanish are grown. Virtually all of the Spanish

peanut production is in Oklahoma and Texas. In the Virginia-Carolina

region, mainly large-kernel Virginia peanuts are grown. New Mexico

grows a fourth type of peanut, the Valencia.

Peanut manufacturers produce three principal peanut products:

peanut butter, packaged nuts (including salted, unsalted, flavored, and

honey-roasted nuts), and peanut candies. In most years, half of all

peanuts produced in the United States for edible purposes are used to

manufacture peanut butter. Packaged nuts account for almost one-third

of all processed peanuts. Some of these (commonly referred to as

``ballpark'' peanuts) are roasted in the shell, while a much larger

quantity is used as shelled peanuts packed as dry-roasted peanuts,

salted peanuts, and salted mixed nuts. Some peanuts are ground to

produce peanut granules and flour. Other peanuts are crushed to produce

oil.

According to USDA's Foreign Agricultural Service, exports of U.S.

peanuts (including peanut meal, oil, and peanut butter) totaled 880

million inshell equivalent pounds in 1997, with a value of $285 million

(U.S. point of departure for the foreign country). Of the total

quantity, 60 percent was shelled peanuts used as nuts, 11 percent was

blanched or otherwise prepared or preserved peanuts, 10 percent was

inshell peanuts, 7 percent was peanut butter, 4 percent was shelled oil

stock peanuts, 4 percent was crude peanut oil, and 3 percent was

refined peanut oil.

The major destinations for domestic shelled peanuts for use as nuts

are Canada, Mexico, the United Kingdom, and the Netherlands. Blanched

or otherwise prepared peanuts are sent mainly to Western Europe,

especially the Netherlands, France, and Spain. Inshell peanuts are

mainly exported to Canada and various countries in Western Europe.

Peanut butter is sent to many countries, with the largest amounts going

to Canada and Saudi Arabia. Peanut oil and oil stock peanuts are

exported world-wide, but major destinations can vary from year to year.

Approximately 250 million inshell equivalent pounds of peanuts and

processed peanuts (including oil and peanut butter) were imported in

1997 with a combined value (f.o.b. country of origin) of $73 million.

Most of the imports (45 percent) were shelled peanuts for use as nuts.

The major U.S. supplier is Argentina, but several other countries

export shelled peanuts to the United States, including Mexico,

Nicaragua, and South Africa.

Peanut butter imports are also significant and accounted for about

32 percent of the total quantity of nuts (inshell basis) imported in

1997. Most peanut butter imports come from Canada and Argentina. The

other major import category--crude and refined peanut oil--are shipped

mainly from Argentina and Nicaragua and account for approximately 18

percent of total imports (inshell equivalent basis). Inshell peanuts,

primarily from Mexico, accounted for nearly 3 percent of total imports

in 1997. About 3 percent of total imports consisted of blanched or

other processed peanuts, mainly from China. Imports of oil stock

shelled peanuts were negligible.

Most peanuts produced in other countries are crushed for oil and

protein meal. The United States is the main producer of peanuts used in

such edible products as peanut butter, roasted peanuts, and peanut

candies. Peanuts are one of the world's principal oilseeds, ranking

fourth behind soybeans, cottonseed, and rapeseed. India and China

usually account for half of the world's peanut production.

According to ``The Agriculture Statistics Report'' published by

USDA, during the 1995-96 season, the average annual production per

domestic producer was approximately 144,228 pounds of peanuts. Peanuts

produced during these growing seasons provided average annual gross

sales of $42,222 per peanut producer. The value of the 1995-96 crop was

approximately $1.013 billion. During the same period, per capita

consumption in the United States was 5.7 pounds of peanuts.

This proposed rule provides the procedures under which peanut

producers may vote on whether they want the Order to be implemented. In

accordance with the provisions of the Act, subsequent referenda may be

conducted, and it is anticipated that the proposed procedures would

apply. There are approximately 25,000 producers who will be eligible to

vote in the first referendum.

USDA will keep these individuals informed throughout the program

implementation and referendum process to ensure that they are aware of

and are able to participate in the program implementation process. USDA

will also publicize information regarding the referendum process, so

that trade associations and related industry media can be kept

informed.

Voting in the referendum is optional. However, if producers choose

to vote, the burden of voting would be offset by the benefits of having

the opportunity to vote on whether or not they want to be covered by

the program.

[[Page 59909]]

The information collection requirements contained in this proposed

rule are designed to minimize the burden on producers. This rule

provides for a ballot to be used by eligible producers in voting in the

referendum. The estimated annual cost of providing the information by

an estimated 25,000 producers would be $12,500 or $0.50 per producer.

The Secretary considered requiring eligible voters to vote in

person at various USDA offices across the country. The Secretary also

considered electronic voting, but the use of computers is not

universal, current technology is not reliable enough to ensure that

electronic ballots would be received in a readable format, and

technology is insufficient at this time to provide sufficient

safeguards of voters' confidentiality. Conducting the referendum from

one central location by mail ballot would be more cost-effective and

reliable. The Department will also accept ballots sent by facsimile

(fax) machine. A pilot of this method was conducted during a recent

referendum for another program. A fax machine was dedicated to the

receipt of ballots. All ballots received in this manner were stored in

the memory of the machine until the end of the voting period. Due to

the large number of voters expected in the referendum on the proposed

peanut program, USDA may use more than one such machine, providing

voters in different states with different fax numbers in order to avoid

exceeding the memory of the machine. Further, the Department would

provide easy access to information for potential voters through a toll-

free telephone line.

While other peanut programs have been implemented by the

government, USDA has not identified any relevant federal rules that

duplicate, overlap, or conflict with this rule.

We have preformed this Initial Regulatory Flexibility Analysis

regarding the impact of this proposed rule on small entities. However,

in order to obtain all of the data necessary for a comprehensive

analysis, we invite comments concerning the potential effects of this

proposed rule. In particular, we are interested in obtaining more

information on the number of small entities that may incur benefits or

costs from the implementation of this proposed rule and information on

the expected benefits or costs.

Paperwork Reduction Act

In accordance with the Office of Management and Budget (OMB)

regulations (5 CFR 1320) which implements the Paperwork Reduction Act

of 1995 (44 U.S.C. Chapter 35), the referendum ballot, which represents

the information collection and recordkeeping requirements that may be

imposed by this rule, has been submitted to OMB for approval.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number: 0581-0093.

Expiration Date of Approval: November 30, 2000.

Type of Request: Revision of a currently approved information

collection for research and promotion programs.

Abstract: The information collection requirements in this request

are essential to carry out the intent of the Act. The burden associated

with the ballot is as follows:

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 0.25 hours per response for each

producer.

Respondents: Producers.

Estimated Number of Respondents: 25,000.

Estimated Number of Responses per Respondent: 1 every 5 years

(0.2).

Estimated Total Annual Burden on Respondents: 1,250 hours.

The estimated annual cost of providing the information by an

estimated 25,000 producers would be $12,500 or $0.50 per producer.

The ballot will be added to the other information collections

approved for use under OMB Number 0581-0093.

Comments are invited on: (a) Whether the proposed collection of

information is necessary and whether it will have practical utility;

(b) the accuracy of USDA's estimate of the burden of the proposed

collection of information, including the validity of the methodology

and assumption used; (c) ways to enhance the quality, utility, and

clarity of the information to be collected; and (d) ways to minimize

the burden of the collection of information on those who are to

respond, including the use of appropriate automated, electronic,

mechanical, or other technological collection techniques or other forms

of information technology.

Comments concerning the information collection requirements

contained in this action should reference OMB No. 0581-0093, the docket

number, and the date and page number of this issue of the Federal

Register. Comments should be sent to the USDA Docket Clerk and the OMB

Desk Officer for Agriculture at the addresses and within the time

frames specified above. All comments received will be available for

public inspection during regular business hours at the same address.

All responses to this notice will be summarized and included in the

request for OMB approval.

OMB is required to make a decision concerning the collection of

information contained in this rule between 30 and 60 days after

publication. Therefore, a comment to OMB is best assured of having its

full effect if OMB receives it within 30 days of publication.

Background

The Act authorizes the Secretary, under generic authority, to

establish agricultural commodity research and promotion orders. The

American Farm Bureau Federation (proponent), working in cooperation

with 20 state and regional industry organizations from the peanut-

producing states, has requested the establishment of a Peanut

Promotion, Research, and Information Order (Order) pursuant to the Act.

The proposed Order would provide for the development and financing of

an effective and coordinated program of promotion, research, and

information for peanuts. The program would be funded by an assessment

levied on producers (to be collected by handlers) at a rate of 1

percent of the total value of all farmers stock peanuts. When peanuts

are placed under loan, a deduction from the producer's loan draft equal

to 1 percent of the price support value would be made and submitted to

the Board by an area marketing association. Once peanuts are sold for

disposition from a loan, the association would remit the balance of the

assessment to the Board. In the proposed Order, peanuts are defined as

the seeds of the legume arachis hypogaea, including both inshell and

shelled peanuts other than those marketed by the producer in green form

for consumption as boiled peanuts.

Assessments would be used to pay for promotion, research, and

consumer information; administration, maintenance, and functioning of

the Board; and expenses incurred by the Secretary in implementing and

administering the Order, including referendum costs.

Section 518 of the Act requires that a referendum be conducted

among eligible peanut producers to determine whether they favor the

Order. In addition, section 518 of the Act provides for referenda to

ascertain approval of an order to be conducted either prior to its

going into effect or within three years after assessments first begin

under the order. According to a proposed rule that is published

separately in this issue of the Federal Register, the Order would

become effective if it is approved by a majority of producers voting in

the referendum,

[[Page 59910]]

which will be held before the program is implemented.

This proposed rule establishes the procedures under which producers

may vote on whether they want the peanut promotion, research, and

information program to be implemented. There are approximately 25,000

eligible voters.

This proposed rule would add a new subpart which would establish

procedures to be used in this and future referenda. The subpart covers

definitions, voting, instructions, use of subagents, ballots, the

referendum report, and confidentiality of information.

All written comments received in response to this rule by the date

specified will be considered prior to finalizing this action. We

encourage the industry to pay particular attention to the definitions

to be sure that they are appropriate for the peanut industry. We also

encourage the industry to comment on whether it has considered the

impact of disaster transfers on the assessment process, whether peanuts

under those transfers would be considered quota or additional peanuts.

List of Subjects in 7 CFR Part 1216

Administrative practice and procedure, Advertising, Consumer

information, Marketing agreements, Peanut promotion, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, it is proposed that

Title 7, Chapter XI of the Code of Federal Regulations be amended as

follows:

1. Subpart B is added to proposed Part 1216 to read as follows:

PART 1216--PEANUT PROMOTION, RESEARCH, AND INFORMATION ORDER

* * * * *

Subpart B--Procedure for the Conduct of Referenda in Connection with

the Peanut Promotion, Research, and Information Order

Sec.

1216.100 General.

1216.101 Definitions.

1216.102 Voting.

1216.103 Instructions.

1216.104 Subagents.

1216.105 Ballots.

1216.106 Referendum report.

1216.107 Confidential information.

Authority: 7 U.S.C. 7401-7425.

Subpart B--Procedure for the Conduct of Referenda in Connection

With the Peanut Promotion, Research, and Information Order

Sec. 1216.100 General.

Referenda to determine whether eligible peanut producers favor the

issuance, amendment, suspension, or termination of the proposed Peanut

Promotion, Research, and Information Order shall be conducted in

accordance with this subpart.

Sec. 1216.101 Definitions.

Unless otherwise defined in this section, the definition of terms

used in these procedures shall have the same meaning as the definitions

in the Order.

(a) Administrator means the Administrator of the Agricultural

Marketing Service, with power to redelegate, or any officer or employee

of the Department to whom authority has been delegated or may hereafter

be delegated to act in the Administrator's stead.

(b) Order means the Peanut Promotion, Research, and Information

Order.

(c) Referendum agent or agent means the individual or individuals

designated by the Secretary to conduct the referendum.

(d) Representative period means the period designated by the

Secretary.

(e) Person means any individual, group of individuals, partnership,

corporation, association, cooperative, or any other legal entity. For

the purpose of this definition, the term ``partnership'' includes, but

is not limited to:

(1) A husband and a wife who have title to, or leasehold interest

in, a peanut farm as tenants in common, joint tenants, tenants by the

entirety, or, under community property laws, as community property; and

(2) So-called ``joint ventures'' wherein one or more parties to an

agreement, informal or otherwise, contributed land and others

contributed capital, labor, management, or other services, or any

variation of such contributions by two or more parties.

(f) Eligible producer means any person who is engaged in the

production and sale of peanuts in the United States and who:

(1) Owns, or shares the ownership and risk of loss of, the crop.

This does not include quota holders who do not share in the risk of

loss of the crop;

(2) Rents peanut production facilities and equipment resulting in

the ownership of all or a portion of the peanuts produced;

(3) Owns peanut production facilities and equipment but does not

manage them and, as compensation, obtains the ownership of a portion of

the peanuts produced; or

(4) Is a party in a landlord-tenant relationship or a divided

ownership arrangement involving totally independent entities

cooperating only to produce peanuts who share the risk of loss and

receive a share of the peanuts produced. No other acquisition of legal

title to peanuts shall be deemed to result in persons becoming eligible

producers.

Sec. 1216.102 Voting.

(a) Each person who is an eligible producer, as defined in this

subpart, at the time of the referendum and during the representative

period, shall be entitled to cast only one ballot in the referendum.

However, each producer in a landlord-tenant relationship or a divided

ownership arrangement involving totally independent entities

cooperating only to produce peanuts, in which more than one of the

parties is a producer, shall be entitled to cast one ballot in the

referendum covering only such producer's share of the ownership.

(b) Proxy voting is not authorized, but an officer or employee of

an eligible corporate producer, or an administrator, executor, or

trustee or an eligible producing entity may cast a ballot on behalf of

such producer. Any individual so voting in a referendum shall certify

that such individual is an officer or employee of the eligible

producer, or an administrator, executive, or trustee of an eligible

producing entity and that such individual has the authority to take

such action. Upon request of the referendum agent, the individual shall

submit adequate evidence of such authority.

(c) All ballots are to be cast by mail or by facsimile, as

instructed by the Secretary.

Sec. 1216.103 Instructions.

The referendum agent shall conduct the referendum, in the manner

herein provided, under the supervision of the Administrator. The

Administrator may prescribe additional instructions, not inconsistent

with the provisions hereof, to govern the procedure to be followed by

the referendum agent. Such agent shall:

(a) Determine the period during which ballots may be cast.

(b) Provide ballots and related material to be used in the

referendum. The ballot shall provide for recording essential

information, including that needed for ascertaining whether the person

voting, or on whose behalf the vote is cast, is an eligible voter.

(c) Give reasonable public notice of the referendum:

(1) By utilizing available media or public information sources,

without incurring advertising expense, to publicize the dates, places,

method of voting, eligibility requirements, and other pertinent

information. Such sources of publicity may include, but are not limited

to, print and radio; and

[[Page 59911]]

(2) By such other means as the agent may deem advisable.

(d) Mail to eligible producers whose names and addresses are known

to the referendum agent, the instructions on voting, a ballot, and a

summary of the terms and conditions of the proposed Order. No person

who claims to be eligible to vote shall be refused a ballot.

(e) At the end of the voting period, collect, open, number, and

review the ballots and tabulate the results in the presence of an agent

of a third party authorized to monitor the referendum process.

(f) Prepare a report on the referendum.

(g) Announce the results to the public.

Sec. 1216.104 Subagents.

The referendum agent may appoint any individual or individuals

necessary or desirable to assist the agent in performing such agent's

functions hereunder. Each individual so appointed may be authorized by

the agent to perform any or all of the functions which, in the absence

of such appointment, shall be performed by the agent.

Sec. 1216.105 Ballots.

The referendum agent and subagents shall accept all ballots cast.

However, if an agent or subagent deems that a ballot should be

challenged for any reason, the agent or subagent shall endorse above

their signature, on the ballot, a statement to the effect that such

ballot was challenged, by whom challenged, the reasons therefore, the

results of any investigations made with respect thereto, and the

disposition thereof. Ballots invalid under this subpart shall not be

counted.

Sec. 1216.106 Referendum report.

Except as otherwise directed, the referendum agent shall prepare

and submit to the Administrator a report on results of the referendum,

the manner in which it was conducted, the extent and kind of public

notice given, and other information pertinent to analysis of the

referendum and its results.

Sec. 1216.107 Confidential information.

The ballots and other information or reports that reveal, or tend

to reveal, the vote of any person covered under the Act and the voting

list shall be held confidential and shall not be disclosed.

Dated: November 2, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc.98-29728 Filed 11-5-98; 8:45 am]

BILLING CODE 3410-02-P