Proposed Peanut Promotion, Research, and Information Order

SUMMARY: This proposed rule would establish an industry-funded

promotion, research, and information program for peanuts. A proposed

program--the Peanut Promotion, Research, and Information Order

(Order)--was submitted to U.S. Department of Agriculture (USDA or

Department) by the American Farm Bureau Federation. Under the Order,

peanut producers would pay an assessment of 1 percent of the price of

farmers stock peanuts sold to first handlers. First handlers and

marketing associations would remit the assessments to the proposed

National Peanut Board (Board). The proposed program would be

implemented under the Commodity Promotion, Research, and Information

Act of 1996 (Act). In addition, the USDA is announcing that a

referendum will be conducted among eligible peanut producers to

determine whether they favor the implementation of the program.

DATES: In Order to be eligible to vote, peanut producers must have

produced peanuts during the period from August 1, 1997, through July

30, 1998 (representative period). The voting period for the referendum

will be May 24 through June 11, 1999.

FOR FURTHER INFORMATION CONTACT: Daniel R. Williams II, Research and

Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244,

1400 Independence Avenue, S.W., Room 2535-S, Washington, D.C. 20250-

0244; telephone (202) 720-9916 or fax (202) 205-2800.

SUPPLEMENTARY INFORMATION: This Order is issued pursuant to the

Commodity Promotion, Research, and Information Act of 1996, 7 U.S.C.

7401-7425; Public Law 104-127, enacted April 4, 1996, hereinafter

referred to as the Act.

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 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 2 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. Thereafter, the

Secretary of Agriculture (Secretary) will issue a ruling on a petition.

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

district in which the petitioner resides or conducts business shall

have 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 proposed 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 (OMB).

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C.

601 et seq.], the Agency has examined 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 actions so that small

businesses will not be disproportionately burdened.

The Act authorizes generic programs of promotion, research, and

information for agricultural commodities. Congress found that it is in

the national public interest and vital to the welfare of the

agricultural economy of the United States to maintain and expand

existing markets and develop new markets and uses for agricultural

commodities through industry-funded, government-supervised, generic

commodity promotion programs.

This program is intended to develop and finance an effective and

coordinated program of promotion, research, and consumer information to

maintain and expand the markets for peanuts. A proposal was submitted

by the American Farm Bureau Federation (proponent), working in

cooperation with 20 state and regional peanut grower organizations

representing the nine primary peanut-producing states and other states.

The proponent has proposed that peanut producers approve the program in

a referendum in advance of its implementation, and producer members

would serve on the 10 member Board that would administer the program

under USDA's supervision. In addition, any person subject to the

program may file with the Secretary a petition stating that the Order

or any provision is not in accordance with law and requesting a

modification of the Order or an exemption from the Order.

While the proposed Order would impose certain recordkeeping

requirements on first handlers, information required under the proposed

Order could be compiled from records currently maintained. First

handlers and area marketing associations--for peanuts placed under loan

with the Commodity Credit Corporation (CCC) in the price support

program administered for CCC by USDA's Farm Service Agency (FSA)--would

collect and remit all assessments to the Board. Their responsibilities

would include accurate recordkeeping and accounting of all peanuts

purchased or contracted for, including the number of pounds handled,

price paid to the producer, and when peanuts are purchased. The forms

require the minimum information necessary to effectively carry out the

requirements of the program, and their use is necessary to fulfill the

intent of the Act. Such records shall be retained for at least two

years. These requirements are either already being conducted as a

normal business practice or are required by other USDA peanut

regulations. The added burden to first handlers and area marketing

associations for a peanut promotion, research, and information program

is therefore expected to be minimal.

There is also a minimal burden on producers. The burden relates to

those producers who would seek nomination to serve on the Board and

those who vote in referenda. In addition, the proposed Order would

require producers to keep records and to provide information to the

Board or the Secretary when requested. However, it is not anticipated

that producers would be required to submit forms to the Board. Most

likely, the information would be obtained through an audit of a

producer's records to confirm information provided by a first handler

or if a first handler did not file the required reports as part of the

Board's compliance operation.

[[Page 20108]]

The estimated annual cost of providing the information to the Board

by an estimated 98 respondents (21 producers, 57 first handlers, and 20

producer organizations) would be $4,059.85 or $5.00 per producer,

$66.05 per first handler, and $9.50 per producer organization.

The Department would oversee program operations and, if the program

is implemented, would conduct a referendum (1) every five years to

determine whether peanut producers support continuation of the program,

(2) at the request of the Board established under the Order, or (3) at

the request of 10 percent or more of the number of persons eligible to

vote in referenda. Additionally, the Secretary may conduct a referendum

at any time to determine whether the continuation, suspension, or

termination of the Order or a provision of the Order is favored by

those eligible to vote in referenda.

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

peanuts that would be subject to the program. Most of the producers

would be classified as small businesses under the criteria established

by the Small Business Administration (SBA) (13 CFR 121.601). Most first

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. The farm value of peanuts in 1997 reached $932 million. 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). According to 1992 Census of Agriculture (Census) data, small

amounts of peanuts were also grown in seven other states.

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

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

States acquired 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, U.S. exports of

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

million in-shell 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 in-

shell 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. In-shell 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 in-shell 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 (in-shell 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 (in-shell equivalent basis). In-shell 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 ``Agricultural Statistics Report'' published by

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

producer was 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.

The Order would authorize a fixed assessment paid by producers (to

be collected by first handlers) at a rate of 1 percent of the price

paid for all farmers stock peanuts, regardless of whether the peanuts

are sold commercially or placed under loan with CCC in the price

support program administered for CCC by FSA.

Section 516(a)(1) of the Act provides authority to the Secretary to

exempt from the Order any de minimis quantity of an agricultural

commodity otherwise covered by the Order. The proponent

[[Page 20109]]

has elected not to provide for exemptions for a de minimis amount

regarding peanuts. Therefore, the term de minimis is not defined in the

proposed Order, and a de minimis exemption is not included.

At the proposed rate of assessment of 1 percent of farm value, the

Board would collect approximately $10 million annually, assuming 1

billion pounds of peanuts are produced. It is expected that the 1

percent rate of assessment would represent approximately 1 percent of

producers' average return. In 1995-96, the average price for peanuts

was $0.293 per pound.

USDA will keep all individuals informed throughout the referendum

process to ensure that they are aware of and are able to participate in

the referendum. USDA will publicize information regarding the

referendum process so that trade associations and related industry

media can be kept informed. If the program is implemented, the newly

established Board would recommend to USDA regulations for the program.

In addition, the peanut industry would nominate producers to serve

as members on the Board. The Board would recommend the assessment rate,

programs and projects, a budget, and any other rules and regulations

that might be necessary for the administration of the program. USDA

would ensure that the nominees represent the peanut industry in

accordance with the Act. Primary peanut-producing states are defined in

the Order as Alabama, Florida, Georgia, New Mexico, North Carolina,

Oklahoma, South Carolina, Texas, and Virginia, provided that these

states maintain 3-year average production of at least 10,000 tons of

peanuts each. Minor peanut-producing states are defined in the Order as

all peanut-producing states other than the primary peanut-producing

states. Currently, the following states would be considered minor

states: Arizona, California, Louisiana, Mississippi, and Tennessee.

Each primary producing state would have one member on the Board,

and the minor peanut-producing states would be represented collectively

by one member on the Board. Each member would have an alternate.

Therefore, the Board would have 10 members and 10 alternates.

Proposed recordkeeping and reporting requirements for the peanut

promotion, research, and information program would be designed to

minimize the burden on first handlers. It is USDA's goal to collect as

much information as possible from forms already submitted to another

USDA agency. In addition, any information collection that could not

occur through forms already in use would pose a minimal additional

burden. The peanut promotion program would be designed to strengthen

the position of peanuts in the marketplace, maintain and expand

existing domestic and foreign markets, and develop new uses and markets

for peanuts.

The estimated annual cost of providing the information to the

proposed Board by an estimated 98 respondents (21 producers, 57 first

handlers, and 20 producer organizations) would be $4,059.85, or $5.00

per producer, $66.05 per first handler, and $9.50 per producer

organization.

With regard to alternatives to this proposed rule, the Act itself

does provide for authority to tailor a program according to the

individual needs of an industry. Provision is made for permissive terms

in an Order in Section 516 of the Act, and other sections provide for

alternatives. For example, Section 514 of the Act provides for Orders

applicable to (1) producers, (2) first handlers and other persons in

the marketing chain as appropriate, and (3) importers (if imports are

subject to assessment). Section 516 authorizes an Order to provide for

exemption of de minimis quantities of an agricultural commodity;

different payment and reporting schedules; coverage of research,

promotion, and information activities to expand, improve, or make more

efficient the marketing or use of an agricultural commodity in both

domestic and foreign markets; provision for reserve funds; provision

for credits for generic and branded activities; and assessment of

imports. 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 3 years after assessments first begin under

the Order. An Order also may provide for its approval in a referendum

to be based upon (1) a majority of those persons voting; (2) persons

voting for approval who represent a majority of the volume of the

agricultural commodity; or (3) a majority of those persons voting for

approval who also represent a majority of the volume of the

agricultural commodity. Section 515 of the Act provides for

establishment of a board from among producers, first handlers, and

others in the marketing chain as appropriate and importers, if

importers are subject to assessment.

The proposal included provisions for both domestic and foreign

market expansion and improvement; reserve funds; and an initial

referendum to be conducted prior to the Order going into effect, with

approval based upon a majority of those persons voting in a referendum.

In order to conduct the Regulatory Flexibility Analysis regarding

the impact of this proposed Order on small entities, the proposed rule

that was published in the Federal Register on November 6, 1998 (63 FR

59907) invited comments concerning the potential effects of the

proposed Order. Concerning the information collection burden, one

comment was received regarding the effect of the paperwork burden on

first handlers. The concern of the commenter was that there would be

significant administrative and financial burdens associated with

collecting the information necessary to produce these reports and,

finally, the production of the reports. The Department recognizes the

burden that may be placed on first handlers due to the reports. In

order to reduce this burden on first handlers, we modified Sec. 1216.60

to eliminate the monthly requirement for first handlers to identify

each producer, the address of the producer, and the date assessments

were collected. However, we have also modified Sec. 1216.61 Books and

records to clarify what books and records first handlers and producers

must maintain and make available to the Secretary and Board employees

as necessary. This section now states that copies of FSA 1007 forms,

the names and addresses of producers, and the date when assessments

were collected must be maintained by first handler and producer. One

purpose of this change is to help ensure that this information is

available for enforcement purposes.

Paperwork Reduction Act

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

regulation (5 CFR Part 1320) which implements the Paperwork Reduction

Act of 1995 (44 U.S.C. Chapter 35), the information collection and

recordkeeping requirements that may be imposed by this Order have been

submitted to OMB for approval and have been approved under OMB control

number 0581-0093.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number for background form (number 1 below): 0505-0001.

Expiration Date of Approval: June 30, 1999.

OMB Number for other information collections: 0581-0093.

Expiration Date of Approval: November 30, 2000.

Type of Request: Revision of currently approved information

collections for advisory committees and boards and for research and

promotion programs.

[[Page 20110]]

Abstract: The information collection requirements in the request

are essential to carry out the intent of the Act.

In addition, there will be the additional burden on producers of

voting in referenda. The referendum ballot, which represents the

information collection requirement relating to referenda, is addressed

in a final rule on referendum procedures which is published separately

in this issue of the Federal Register.

Under this program, first handlers would be required to collect

assessments from producers and file reports with and submit assessments

to the Board. While the proposed Order would impose certain

recordkeeping requirements on first handlers, information required

under the proposed Order could be compiled from records currently

maintained. Such records shall be retained for at least two years

beyond the marketing year of their applicability. The estimated annual

cost of providing the information to the Board by an estimated 98

respondents (21 producers, 57 first handlers, and 20 producer

organizations) would be $4,059.85, or $5.00 per producer, $66.05 per

first handler, and $9.50 per producer organization.

The Order's provisions have been carefully reviewed, and every

effort has been made to minimize any unnecessary recordkeeping costs or

requirements, including efforts to utilize information already

submitted under other peanut programs administered by the Department.

Most of the proposed forms require the minimum information

necessary to effectively carry out the requirements of the program, and

their use is necessary to fulfill the intent of the Act. Such

information can be supplied from the FSA Form 1007 without data

processing equipment or outside technical expertise. FSA Form 1007

Inspection Certificate and Sales Memorandum is a standard form used

within the peanut industry to collect peanut crop characteristics and

value of the load from the producer to the first handler. This form

will provide the information that would be needed in order to complete

the first handlers form for the Board. In addition, there are no

additional training requirements for individuals filling out reports

and remitting assessments to the Board. The forms would be simple, easy

to understand, and place as small a burden as possible on the person

required to file the information.

Collecting information monthly would coincide with normal industry

business practices. Reporting other than monthly would impose an

additional and unnecessary recordkeeping burden on first handlers. The

timing and frequency of collecting information is intended to meet the

needs of the industry while minimizing the amount of work necessary to

fill out the required reports.

Information collection requirements that are included in this

proposal include:

(1) A background information form to be completed by candidates

nominated by certified producer organizations for appointment to the

Board.

Estimate of Burden: Public reporting for this collection of

information is estimated to average 0.5 hours per response for each

producer.

Respondents: Producers.

Estimated number of Respondents: 21 (average of 40 for initial

nominations to the Board and approximately 12 respondents annually

thereafter for each 3-year period).

Estimated number of Responses per Respondent: 1 every 3 years.

Estimated Total Annual Burden on Respondents: 20 hours for the

initial nominations to the board and 6 hours annually thereafter.

(2) A monthly report by each first handler of peanuts.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 0.5 hours per each first handler

reporting on peanuts handled.

Respondents: First handlers.

Estimated number of Respondents: 57.

Estimated number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 342 hours.

(3) Nomination information by which certified producer

organizations would nominate producers for membership on the Board.

Estimate of Burden: Public reporting burden for this collecting of

information is estimated to average 0.5 hours per response.

Respondents: Certified producer organizations.

Estimated number of Respondents: 20.

Estimated number of Responses per Respondent: 1 per year.

Estimated Total Annual Burden on Respondents: 10 hours.

(4) An application for peanut producer organizations for

certification of eligibility to nominate Board members.

Estimate of Burden: Public reporting for this collection of

information is estimated to average 0.5 hours per response for each

organization.

Respondents: Peanut producer organizations.

Estimated number of Respondents: 9.

Estimated number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 9 hours.

(5) A requirement to maintain records sufficient to verify reports

submitted under the Order.

Estimate of Burden: Public recordkeeping burden for keeping this

information is estimated to average 0.5 hours per recordkeeper

maintaining such records.

Recordkeepers: First handlers.

Estimated number of recordkeepers: 57.

Estimated total recordkeeping hours: 28.5 hours.

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

information is necessary for the proper performance of functions of the

Order and the Department's oversight of the program, including whether

the information 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 assumptions 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.

Information that is needed for recordkeeping would come from the FSA

1007 form. As stated earlier, this form is a standard form within the

peanut industry and its use would result in no new training of

personnel.

As discussed previously in the Regulatory Flexibility Analysis, one

comment was received regarding the effect of the paperwork burden on

first handlers. The concern of the commenter was that there would be

significant administrative and financial burdens associated with

collecting the information necessary to produce these reports and,

finally, the production of the reports. The Department recognizes the

burden that may be placed on first handlers due to the reports. In

order to reduce this burden on first handlers, we have modified

Sec. 1216.60 to eliminate the monthly requirement for first handlers to

identify the name and address of each producer and the date assessments

were collected. However, we have also modified Sec. 1216.61 Books and

records to clarify what books and records that first handlers and

producers must maintain and make available to the Secretary and Board

employees. This section now states that

[[Page 20111]]

copies of FSA 1007 forms, the name and addresses of producers, and the

date when assessments were collected must be maintained by the first

handler and producer. The purpose of this change is to help ensure that

this information is available for enforcement purposes.

Background

The Act authorizes the Secretary, under a generic authority, to

establish agricultural commodity research and promotion Orders. Section

516 of the Act provides permissive terms for Orders, and other sections

provide for alternatives. For example, Section 514 of the Act provides

for Orders applicable to (1) producers, (2) first handlers and others

in the marketing chain as appropriate, and (3) importers (if importers

are subject to assessment). Section 516 authorizes an Order to provide

for exemption of de minimis quantities of an agricultural commodity;

different payment and reporting schedules; coverage of research,

promotion, and information activities to expand, improve, or make more

efficient the marketing or use of an agricultural commodity in both

domestic and foreign markets; provision for reserve funds; provision

for credits for generic and branded activities; and assessment of

imports. 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 3 years after assessments first begin under

the Order. The Order also may provide for its approval in a referendum

based upon different voting patterns. Section 515 provides for

establishment of a board from among producers, first handlers and

others in the marketing chain as appropriate, and importers, if imports

are subject to assessment.

This proposed Order includes provisions for both domestic and

foreign market expansion and improvement, reserve funds, and an initial

referendum to be conducted prior to the Order going into effect and

with approval based upon a majority of those persons voting in the

referendum.

The Act provides for a number of optional provisions that allow the

tailoring of Orders for different commodities.

The proponent, working in cooperation with 20 state and regional

peanut industry organizations representing the nine primary peanut-

producing states, has requested the establishment of a national peanut

promotion, research, and information Order pursuant to the Act. The Act

authorizes the establishment and operation of generic promotion

programs which includes a combination of promotion, research, industry

information, and consumer information activities funded by mandatory

assessments. These programs are designed to maintain and expand markets

and uses for agricultural commodities. This proposal provides for the

development and financing of an effective and coordinated program of

research, promotion, and information for peanuts. The purpose of the

program is to strengthen the position of peanuts in domestic and

foreign markets, and to develop, maintain, and expand markets for

peanuts.

The program would not become effective until approved by peanut

producers in a referendum to be conducted by USDA. Section 518 of the

Act provides for the Department (1) to conduct an initial referendum,

preceding a proposed Order's effective date, among persons who would

pay assessments under the program or (2) to implement a proposed Order,

pending the conduct of a referendum, among persons subject to

assessments, within 3 years after assessments first begin.

In accordance with Section 518(e) of the Act, the results of the

referendum must be determined one of three ways: (1) approval by a

majority of those persons voting; (2) approval by persons voting who

represent a majority of the volume of the commodity covered by the

program; or (3) approval by a majority of the persons voting who also

represent a majority of the volume of the commodity produced, handled,

or imported by the persons voting.

The proponent proposes that the Department conduct an initial

referendum preceding the proposed Order's effective date and that

approval of the Order be determined by a simple majority of the

producers voting.

In accordance with the Act, the Department would oversee the

program's operations. In addition, the Act requires the Secretary to

conduct subsequent referenda: (1) not later than 7 years after

assessments first begin under the Order; or (2) at the request of the

board established under the Order; or (3) at the request of 10 percent

or more of the number of persons eligible to vote. The proponent group

has requested that a referendum be conducted every 5 years to determine

if producers want the program to continue.

In addition to these criteria, the Act provides that the Secretary

may conduct a referendum at any time to determine whether the

continuation, suspension, or termination of the Order or a provision of

the Order is favored by persons eligible to vote.

The proponent states that the United States Congress has

established a number of programs since the early 1930's to support and

stabilize farm prices and income and to adjust production in 1934. In

1949, a revised system of marketing quotas and acreage allotments for

peanuts began. Since then, Congress has amended and changed the peanut

program a number of times, with the latest changes made to the peanut

title in 1996 with the passage of the Federal Agriculture Improvement

and Reform (FAIR) Act. The new program retains its price support and

supply management elements while operating at no cost to the government

other than administrative expenses common to all price support

programs. The new program also lowers the loan rate for quota peanuts

from $678 per ton to $610 per ton and freezes that price for the life

of the program, through 2002. In addition, the quota level, which the

Secretary could not set below 1.35 million tons prior to passage of the

FAIR Act, has been reduced to equal the anticipated domestic demand for

peanuts.

The proponent has identified a number of market and production

factors that suggest the need for a national research, promotion, and

information program for peanuts. The most basic problem affecting

peanut marketing is a drop in demand caused by negative health

perceptions of peanuts' fat content, competition from other snack

foods, and lack of awareness among young people.

In addition, the proponent cites other factors. Government

purchases of peanut butter are down. If purchases return to historic

heights, purchases will still not be enough to reverse supply/demand

trends. Also, a 1997 Gallup survey revealed that 87 percent of all

consumers are peanut users, while 13 percent did not consume any

peanuts in the past year. Per capita consumption of peanuts has been

decreasing. It appears now that demand trends have bottomed out and are

starting to rise. National promotion could bolster this trend.

The same survey indicated that the percent of peanut non-users is

increasing, as is the percent of young people not consuming peanuts or

peanut products. Thirty-five percent of all consumers surveyed

indicated they did not consume any snack peanuts, and more than 40

percent thought peanuts contained cholesterol when, in fact, peanuts

contain none.

The proponent also states that 26 percent of all consumers did not

consume any peanut butter in 1997. Peanut butter could be an affordable

[[Page 20112]]

alternative for low-income consumers in comparison to other sandwich

options, but fewer and fewer low income consumers are using peanut

butter as an alternative.

In addition, in 1996, the farm value of U.S. peanuts fell below $1

billion, to $970 million, for the first time since 1982.

Further, the domestic industry is facing increased competition in

the United States and abroad from lower-priced peanuts produced in

other countries. The value of peanuts and peanut products imported into

the United States exceeded $100 million in 1996.

All of these factors have led the domestic peanut industry to seek

a national promotion program to find ways to further increase the

consumption of U.S. peanuts.

Section 516(f) of the Act allows an Order to authorize the levying

of assessments on imports of the commodity covered by the program or on

products containing that commodity, at a rate comparable to the rate

determined for the domestic agricultural commodity covered by the

Order. The program would not assess imports.

The assessment levied on domestically produced peanuts will be used

to pay for promotion, research, and consumer and industry information

as well as administration, maintenance, and functioning of the Board.

Expenses incurred by the Secretary in implementing and administering

the Order, including referenda costs, also would be paid from

assessments.

Sections 516(e)(1) and (2) of the Act state that the Secretary may

provide credits of assessments for generic and branded activities. The

proponent did not elect to propose credits for generic or branded

activities. Therefore, the terms ``generic activities'' and ``branded

activities'' are not defined in the Order, and credits for assessments

on generic and branded activities would not be made.

First handlers will be responsible for the collection of

assessments from the producer and payment to the Promotion Board. First

handlers will be required to maintain records for each producer for

whom peanuts are handled, including peanuts produced by the first

handler. In addition, first handlers will be required to file reports

regarding the collection, payment, or remittance of the assessments.

All information obtained from persons subject to this Order as a

result of recordkeeping and reporting requirements will be kept

confidential by all officers, employees, and agents of the Department

and of the Board. However, this information may be disclosed only if

the Secretary considers the information relevant, and the information

is revealed in a judicial proceeding or administrative hearing brought

at the direction or on the request of the Secretary or to which the

Secretary or any officer of the Department is a party. Other exceptions

for disclosure of confidential information would include the issuance

of general statements based on reports or on information relating to a

number of persons subject to an Order if the statements do not identify

the information furnished by any person or the publication, by

direction of the Secretary of the name of any person violating the

Order and a statement of the particular provisions of the Order

violated by the person.

The proposed Order provides for the Department to conduct an

initial referendum preceding the proposed Order's effective date.

Therefore, the proposed Order must be approved by a majority of the

producers voting for approval in the referendum. The proposed Order

also provides for subsequent referenda to be conducted (1) every 5

years after the program is in effect, (2) at the request of the Board

established under the Order, or (3) when requested by 10 percent or

more of peanut producers covered by the Order. In addition, the

Secretary may conduct a referendum at any time.

The Act requires that such a proposed Order provide for the

establishment of a Board to administer the program under USDA

supervision. The proponent's proposal provides for a 10-member National

Peanut Board.

To ensure fair and equitable representation of the peanut industry

on the Board, the Act requires membership on the Board to reflect the

geographical distribution of the production of peanuts. To that end,

this proposal provides that each primary peanut-producing state will be

represented on the Board by one producer member and alternate and that

the minor peanut-producing states will be represented collectively by

one at-large producer member and alternate. Based on current

information on production in the various states, the Order defines the

primary peanut-producing states as Alabama, Florida, Georgia, New

Mexico, North Carolina, Oklahoma, South Carolina, Texas, and Virginia,

provided that these states maintain three-year average production of at

least 10,000 tons of peanuts.

Upon implementation of the Order and pursuant to the Act, the Board

will at least once in each five-year period, but not more frequently

than once in each three-year period, review the geographical

distribution of peanuts in the United States and make a recommendation

to the Secretary after considering the results of its review and other

information it deems relevant regarding the reapportionment of the

Board.

Members and alternates would serve for three-year terms, except

that the members and alternates appointed to the initial Board would

serve proportionately for two-, three-, and four-year terms. No member

or alternate would serve more than two consecutive three-year terms.

The Department received an entire proposed Order from the American

Farm Bureau Federation on June 15, 1998.

Prior to publication, the Department modified the proponent's

proposal to make it consistent with the Act, other similar national

research and promotion programs, and other Federal peanut programs

administered by the Department; for consistency throughout the text;

and for clarity.

In the definitions and throughout the text of the Order, ``farmer

stock peanuts'' was changed to ``farmers stock peanuts'' for

consistency with industry use and existing regulations.

A definition for ``first handler'' was added for consistency with

similar national research and promotion programs, and subsequent

sections were renumbered accordingly.

The definition of ``information'' was rewritten to include

activities designed to enhance peanuts' image, to add definitions of

``consumer information'' and ``producer information,'' and to conform

with the Act.

The definition of ``quota peanuts'' was rewritten to reference 7

CFR Part 729.

In Sec. 1216.41 (Nominations), the phrase ``qualified nominating

organizations'' was changed to read ``certified nominating

organizations'' for consistency with the text.

In addition, Sec. 1216.50 (h) was revised to be consistent with the

Act. Paragraph (e)(5) Limitation on spending of Sec. 515 of the Act

states that a Board ``may not expend for administration (except for

reimbursements to the Secretary . . .)'' an amount that exceeds 15

percent of the Board's income during any fiscal year. The proposal

submitted set a more stringent limitation of 10 percent and stated that

administrative expenses included reimbursement to the Secretary. The

Order may set the more stringent limitation of 10 percent because that

amount is less than the 15 percent provided in the Act. However, the

Order may not provide that

[[Page 20113]]

reimbursements to the Secretary are covered by the limitation on

spending.

Other minor changes which did not materially affect the text were

made for consistency. For instance, in the definitions, ``additional

peanuts are . . .'' was changed to read ``additional peanuts means . .

.'' As another example, in sections containing only one paragraph, the

paragraph designation was removed. Minor grammatical changes also were

made.

The proponent also submitted ``Subpart B--Voting Procedures and

Approval of the Peanut Promotion, Research, and Information Order.''

This proposed subpart was revised and included as Sec. 1216.81 of the

proposed Order.

A proposed rule seeking comments on the national research and

promotion program for peanuts was published on November 6, 1998 in the

Federal Register [63 FR 59893]. Comments were invited on the entire

proposal with the deadline for comments on January 5, 1999. Fourteen

comments were received. Comments were received from 10 peanut producers

associations or growers associations, two manufacturer associations,

one manufacturer, and one peanut producer. Four commenters simply

stated that they supported the proposal and/or recommended that USDA

conduct the referendum as early in Spring 1999 as possible. The other

comments are discussed below.

Two comments were submitted about Sec. 1216.03 which defines area

marketing associations. Each felt that the statement in Sec. 1216.03

that area marketing associations will assist in the collection of

assessments conflicted with the assessment provisions in

Sec. 1216.51(h). To correct this we have accepted their solution of

changing the word ``will'' to ``may'' in Sec. 1216.03.

One comment noted that Sec. 1216.06 includes peanuts for crushing

for exportation and asked if peanuts for domestic crushing were covered

by the proposed Order. In response, Sec. 1216.11 Handle includes

peanuts for domestic crushing.

One comment was received about Sec. 1216.18 which defines peanut

producer organizations eligible for receipt of check-off funds. The

commenter felt that any peanut producer organization that is involved

in lobbying activities should not be eligible for receipt of check-off

funds. We do not find merit in this comment. Any peanut producer

organization that receives funds will only be eligible for the funds

after meeting the certification as outlined in Sec. 1216.70 and will be

prohibited from using Board funds for lobbying, pursuant to

Sec. 1216.49.

A comment was submitted about Sec. 1216.23 which defines quota

peanuts. The commenter felt that this definition should provide for the

assessment of peanuts that are not marketed and held back in storage.

We disagree and believe that the term does not need further

clarification in the proposed Order. Section 1216.51 Assessments

outlines which peanuts are to be assessed and how to handle farmers

stock peanuts. In addition, Sec. 1216.11 defines handle. The intent of

this Order is only to assess peanuts that enter the current of

commerce.

A comment was received on Sec. 1216.24 which defines research as

any type of test, study, or analysis designed to advance the image,

desirability, use, marketability, production, product development, or

quality of peanuts, including research relating to nutritional value

and cost of production. The commenter felt that this section allowed

for research to justify the continued existence of the FSA peanut

program. We don't find merit in this comment. The research as outlined

is performed to increase the marketability of peanuts and not justify

other peanut programs.

A comment was submitted on Sec. 1216.41 which outlines the

nomination procedures. The commenter felt that the nomination

procedures should be clarified to indicate that all peanut producers

eligible to serve on the Board would participate in the nomination

process. We have accepted the comment and revised the third sentence in

Sec. 1216.41 (a) to read: ``The nominees shall be chosen at an open

meeting by election among peanut producers eligible to serve on the

Board.''

In addition, we have adopted the following recommendations made by

the same commenter and revised Sec. 1216.41 to require (1) widespread

announcements in addition to public notice to all growers; (2) 30 day

advanced notice prior to a nomination meeting; and (3) USDA personnel

to be present to oversee and to verify eligibility and count ballots.

The commenter also requested USDA to conduct the nomination meeting for

the initial Board appointments. However, by having USDA personnel

present at the initial meeting, we do not find it necessary for USDA to

hold the initial grower meetings for nominations. Therefore, that part

of the comment is denied. In addition, this commenter wished for pre-

addressed ballots to be issued at nomination meetings and a list of

persons eligible to vote at the open nominations meeting be issued upon

entrance to said meetings. These comments are denied. USDA's role in

these meetings is to oversee the process and not set the procedures of

the meetings.

A comment was received in respect to Sec. 1216.48(j) which outlines

the powers and duties of the National Peanut Board. The commenter

questioned why the Board would act as intermediary between the

Secretary and any producer or first handler, especially when there is

no first handler member on the Board. It is true that there is no

handler member on the Board. However, handlers would be collecting the

assessments under the program and remitting them to the Board.

Therefore, a handler's first point of contact regarding the

requirements of the program would be the staff of the Board. This does

not preclude any first handler from contacting the Secretary.

Therefore, this comment is denied.

One comment was received about Sec. 1216.49. This section deals

with the prohibited activities of the Board, employees, and agents of

the Board. The commenter felt that this section should be modified

using stronger language to ensure that funds are not used for other

activities other than promotion, research and consumer/producer

information. We deny this comment. This language is consistent with

other National Promotion Programs and has prohibited improper

activities.

Three comments were received about Sec. 1216.50(h). This section

limits the amount the Board may spend on administration, maintenance,

and functioning in any fiscal year to no more than 10 percent of

assessments. Two comments recommended lowering this to 5 percent of the

assessments. The third comment recommended maintaining the 10 percent

requirement. The first two comments are denied. Although 10 percent is

stated in the proposed Order, the Board may in fact operate below that

rate, but to mandate this amount could restrict the Board in its daily

operations.

Five comments were received on Sec. 1216.50(i) which addresses

budget and expenses. Each commenter had concerns that the use of the

words ``quota peanuts'' to describe the peanuts that would be assessed

was too narrow in scope. We accept their comments and have revised

Sec. 1216.50(i) to state that the allocation of funds would be based on

the assessments collected from all peanuts.

Two comments about Sec. 1216.50(i) were received addressing the

allocation of the assessments. The commenters recommended that this

provision be revised to ensure that no less than 80 percent of the

Board's funds are used in

[[Page 20114]]

national programs. We believe that this comment has merit. To reduce

the possibility of having more than the 20 percent of the Board's funds

spent on state or regional research, we have revised Sec. 1216.50(i) to

state that the Board shall allocate, to the extent practicable, no less

than 80 percent of the assessments to national and regional promotion,

research, and information and no more than 20 percent to state or

regional research.

Two comments were received about Sec. 1216.50(k) which provided for

assessments collected from the gross sales of contract export

additional peanuts to be provided to a primary contractor for the

promotion and related research of export peanuts. Each commenter felt

that assessments collected from contract export additional peanuts

would not share the burden of research at the state and regional level.

We don't find merit in these comments. We feel that Sec. 1216.50(k)

provides for either market or production research to be conducted.

Research that is done for export peanuts does overlap with research for

domestic peanuts. In addition, Sec. 1216.50(l) provides the Board with

the flexibility to change how funds are used in Sec. 1216.50(k).

Therefore, this comment is denied.

One comment stated that half of the financial burden should be

shifted to handlers, whereas Sec. 1216.51(a) specifies that assessments

will be paid by producers. This comment is denied. The proponent group,

which was comprised of producers, recommended only a producer

assessment.

One comment was received concerning the language of the Act and

payment of assessments. The commenter questioned whether the Act's

assessment language covered only handler paid type programs. The Act

authorizes producer assessment type programs as provided in this

proposal. We do not find merit in this comment.

A comment was received in regard to Sec. 1216.51(b) which deals

with the collection of the assessments. The commenter believed that the

words ``. . . peanuts owned by the first handler . . .'' is vague and

subject to interpretation. We agree with this comment and have changed

Sec. 1216.51(b) to read: ``. . . peanuts produced by the first handler

. . .''

Three comments were received on Sec. 1216.51(c) which sets the

assessment rate. The commenters wished to change the basis of the

assessments to either a per ton basis or a percent of the support

price. We do not find merit in these comments. This proposal was

submitted by producer groups which recommended the assessments be

collected on a percent of the price paid (the ``value of segment'' on

FSA 1007). They maintain this is the most equitable system. If

assessments were based on the number of tons, an inequity would exist

because of the variation in prices paid for different types and

qualities of peanuts. Also, there would have to be at least two

assessment rates: one for quota peanuts and one for contract export

additional peanuts. Basing the assessment on the price paid allows the

program to have one assessment rate that is applied equally to all

peanuts. If the assessment were based on the support price, the

proposed Order would have to be revised if the support program is

changed or eliminated. For example, if the support price is lowered,

the promotion program assessment would need to be raised to compensate

for the loss in income in order to assure continuity in the Board's

programs. Basing assessments on the price paid would provide continuity

in funding for a national program, regardless of the changes in or the

existence of the support program. Therefore, these comments are denied.

In addition, a comment was submitted about the use of the words

``price paid'' in Sec. 1216.51(c). The commenter felt that the use of

the words ``price paid'' can be subject to interpretation. We have

accepted this comment and added the following language to

Sec. 1216.51(c): Price paid shall mean the value of segment on the FSA

1007 form.

One comment requested clarification of who is responsible for

collection assessments on peanuts when the immediate buyback is used.

In response, Sec. 1216.51(d) states that area marketing associations

shall remit assessments to the Board on all peanuts placed under loan,

which would have included buyback peanuts.

Two comments were submitted on Sec. 1216.51(f) which addresses late

payments. The commenters requested confirmation that late payments of

assessments should be subject to penalties in the form of interest and

not any damages that may have been incurred from the late payment. In

response, it should be noted that Sec. 1216.51(f) only provides for

late payment charges in the form of interest on the outstanding balance

due as recommended by the commenters. Therefore no change to this

section is made.

Three comments were submitted on the Board having the ability to

raise or lower the rate of assessment with the approval of the

Secretary. The concern was that the Board could raise the rate without

a producer referendum. In order to assure that producers have the

ability to vote on the raising of the assessment rate, a new

Sec. 1216.51(i) has been added to the Order. This section would require

a producer referendum in addition to notice and comment rulemaking when

the Board recommends raising the assessment rate. Further, the Act

provides for this action.

One comment was submitted on Sec. 1216.60 which addresses the

reports that first handlers must submit at the time monthly assessments

are paid. The commenter felt there would be significant administrative

and financial burdens associated with preparing these reports. The

Department recognizes the burden that may be placed on first handlers.

In order to reduce this burden on first handlers, we have changed

Sec. 1216.60 to eliminate the requirement to identify each producer,

the address of the producer, and the date assessments were collected.

In addition, Sec. 1216.60 has been re-worded to correspond with the

change in Sec. 1216.51(c) which now defines the price paid as the entry

in the value of segment section on the FSA 1007 form as recommended by

the commenter. Also, we have added a new Sec. 1216.60(b) to clarify

when first handlers are to submit monthly reports and assessments.

We also have modified Sec. 1216.61 Books and records to clarify

what books and records that first handlers and producers must maintain

and make available to the Secretary and Board employees. This section

now states that copies of FSA 1007 forms, the names and addresses of

producers, and the date when assessments were collected must be

maintained by the first handler and producer. The purpose of this

change is to help ensure that this information is available for

enforcement purposes.

A comment was submitted on Sec. 1216.62 which deals with

confidential treatment. The commenter stated that this section does not

provide adequate safeguards for the confidentiality of proprietary

information. We disagree with this comment. This confidentiality

provision is common to other similar national programs and has

prevented any improper release of information. Therefore, we deem it

sufficient in this Order. In addition, the Act states that any person

who willfully violates this provision shall be subject, on conviction,

to a fine of not more $1,000 or to imprisonment for not more than 1

year, or both.

Nonetheless, to address the commenter's concern, the modification

to Sec. 1216.61 Books and Records clarifies that only the Secretary

and agents and employees of the Board (not

[[Page 20115]]

Board members) will have access to first handlers' and producers'

records.

Three comments were submitted on Sec. 1216.81(b), formerly

Sec. 1216.80(b), which outlines the implementation of the Order. Each

commenter felt that this section was unclear and may contradict the

definition of producer in Sec. 1216.21. We concur with these comments.

Therefore, in order to assure a clear understanding of the

implementation provisions, we have inserted in Sec. 1216.81(b) a

reference to the definition of producer in Sec. 1216.21.

Comments were submitted on Sec. 1216.87 Amendments, formerly

Sec. 1216.86. The comments were in favor of requiring a referendum

especially when increasing the assessment. As indicated above, we agree

that there should be a referendum before the assessment rate is raised.

However, we deny the comment because the addition of Sec. 1216.51(i)

addresses the need of a referendum to raise the assessment rate.

In summary, Sec. 1216.03, Sec. 1216.41, Sec. 1216.50(i),

Sec. 1216.51(b), Sec. 1216.51(c), Sec. 1216.51(i), Sec. 1216.60(a),

Sec. 1216.60(b), Sec. 1216.60(c), Sec. 1216.60(d), Sec. 1216.61, and

Sec. 1216.81(b) have been revised as a result of comments received.

Other changes to the proposed rule made by AMS are noted and discussed

below.

Section 1216.03 was revised to use the word ``may'' instead of

``will'' in describing the role of an area marketing association in

collecting assessments.

Section 1216.08 was added by AMS to provide a definition for the

Department's Farm Service Agency. This will provide clarity to the

proposed Order. Section of the Order have been renumbered accordingly.

Section 1216.41 was revised to ensure that the nominating process

is open to all peanut producers. This was accomplished by adding new

subsections (d) and (e).

Section 1216.50(i) was revised to change ``quota peanuts'' to ``all

peanuts'' available. In addition, language was added to provide at

least 80 percent of the assessments for national programs.

Section 1216.50(j) was modified by AMS. The language ``and

approved'' was removed from this section. AMS felt that this language

was repetitive and unnecessary.

Section 1216.50(k) was modified by AMS. The language ``to an

appropriate organization approved by the Secretary as the primary

contractor'' was removed from this section. This will provide

flexibility to the Board.

Section 1216.51(b) was revised for clarification by changing

``owned'' to ``produced''. Section 1216.51(i) was revised to include

the following language: Price paid is the value of segment entry on the

FSA 1007 form. A new sub-section (i) was added to Sec. 1216.51 to

require a producer referendum on raising the assessment rate.

Section 1216.60 was revised to reduce the burden that was placed on

first handlers. In order to accomplish this, sub-sections (a) and (b)

were re-written.

Section 1216.61 was revised to state that copies of FSA 1007 forms,

the names and addresses of producers, and the date when assessments

were collected must be maintained by first handlers and producers.

A new Sec. 1216.80 Right of the Secretary was added to provide

conformity with existing programs. This section was added by AMS for

consistency with similar National Research and Promotion Programs, and

subsequent sections were renumbered accordingly.

Section 1216.81(b) was revised to prevent any contradiction with

Sec. 1216.21 by citing Sec. 1216.21 in Sec. 1216.81(b).

Other minor changes which did not materially affect the text of the

Order were made for clarity.

The Order is summarized as follows: Sections 1216.01 through

1216.29 of the proposed Order define certain terms, such as peanuts,

minor peanut-producing states, primary peanut-producing states,

producer, and quota peanuts, which are used in the proposed Order.

Sections 1216.40 through 1216.49 include provisions relating to the

Board establishment and membership, nominations, selections and

acceptance, term of office, vacancies, alternate members, and

compensation and reimbursement; procedures for conducting Board

business; and powers and duties of the Board, which is the governing

body authorized to administer the Order through the implementation of

programs, plans, projects, budgets, and contracts to promote and

disseminate information about peanuts, subject to oversight by the

Secretary. These sections also include maintenance of books and records

by the Board and prohibited activities of the Board, its employees, and

agents.

In order to ensure support throughout the production area for all

Board votes, Sec. 1216.46(b) provides that all Board members' votes

would be weighted by the value of production represented by each

member. The votes of members from primary peanut-producing states would

represent their respective states' three-year running average of total

gross farm income derived from all peanut sales. The votes of the at-

large Board member would equal the collective value of production from

all minor peanut-producing states' three-year running average of total

gross farm income from all peanut sales. Any Board action would require

the concurring votes of members collectively representing more than 50

percent of the total U.S. gross farm income derived from all peanut

sales plus an additional two votes from other Board members, provided a

minimum of five members concur. Therefore, regardless of the volume

voted by the members, no Board action would be approved unless at least

five members voted in favor of it. Similarly, if five members vote in

favor of a motion and those five members do not represent more than 50

percent of the total U.S. gross farm income derived from all peanut

sales, the motion would not be approved.

Sections 1216.50 through 1216.55 would cover budget review and

approval; authorize the collection of assessments; use of assessments,

including reimbursement of necessary expenses incurred by the Board for

the performance of its duties, including expenses incurred for the

Department's oversight responsibilities; specify who pays the

assessment and how; authorize the imposition of a late-payment charge

on past-due assessments; address programs, plans, and projects; require

the Board to conduct periodically an independent review of its overall

program; specify a program operating reserve; and cover the investment

of assessment funds.

There will be an assessment rate of 1 percent of the price paid for

all farmers stock peanuts sold. Peanut producers may sell their peanuts

commercially or put them in a government loan program. For peanuts sold

commercially, the first handler would remit the assessment to the

Board. The assessment would be 1 percent of the price paid for the

peanuts. Under a loan program administered by FSA, a peanut producer

also has the option of delivering the peanuts to an area marketing

association and receiving payment for the peanuts from CCC. If the

peanut promotion program is implemented, the area association would

deduct 1 percent of the payment from the producer's proceeds and remit

that amount to the Board as the producer's initial assessment payment

on the peanuts. After the association sells the peanuts, the area

association reimburses CCC the amount of the payment to the producer

and deducts its expenses from the selling price. If the peanut

promotion program is implemented and if there is any profit from the

sale of the peanuts,

[[Page 20116]]

the association would deduct 1 percent of the profit, remit that amount

to the Board to pay the producer's assessment, and pay the balance to

the producer.

The Board may raise or lower the rate of assessment with the

approval of the Secretary and a producer referendum.

The federal debt collection procedures referenced in

Sec. 1216.51(g) include those set forth in 7 CFR 3.1 through 3.36 for

all research and promotion programs administered by AMS (60 FR 12533,

March 7, 1995).

Sections 1216.60 through 1206.62 concern reporting and

recordkeeping requirements for persons subject to the Order and protect

the confidentiality of information from such books, records, or

reports.

Section 1216.70 describes the certification requirements for

peanut-producer organizations to be eligible to nominate Board members

and submit requests for funds from the Board.

Sections 1216.80 through 1216.88 describe the rights of the

Secretary; authorize the Secretary to suspend or terminate the Order

when deemed appropriate; prescribe proceedings after suspension or

termination; address personal liability, separability, and amendments;

and address patents, copyrights, trademarks, information, publications,

and product formulations developed through the use of assessment funds.

The Department has determined that this Order is consistent with

and will effectuate the purposes of the Act.

For the Order to become effective, the Order must be approved by a

simple majority of peanut producers voting in a referendum.

Referendum Order

It is hereby directed that a referendum be conducted among peanut

producers to determine whether they favor implementation of the Peanut

Promotion, Research, and Consumer Information Order.

The referendum shall be conducted from May 24 through June 11,

1999. Ballots will be mailed to all known eligible peanut producers on

or before May 17, 1999. Eligible voters who do not receive a ballot by

mail should call the following toll-free telephone number to receive a

ballot: 1 (888) 720-9917. All ballots will be subject to verification.

Ballots must be received by the referendum agents no later than June

11, 1999, to be counted.

Daniel R. Williams II and Martha B. Ransom, Research and Promotion

Branch, Fruit and Vegetable Programs, Agricultural Marketing Service,

U.S. Department of Agriculture, Room 2535-S, Stop 0244, Washington,

D.C. 20250-0244, are designated as the referendum agents of the

Secretary of Agriculture to conduct the referendum. The Procedure for

the Conduct of Referenda in Connection with the Peanut Promotion,

Research, and Consumer Information Order, 7 CFR 1216.101-1216.107,

which is being published separately in this issue of the Federal

Register, shall be used to conduct the referendum.

List of Subjects in 7 CFR Part 1216

Administrative practice and procedure, Advertising, Consumer

information, Marketing agreements, Peanuts, 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:

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

1. The authority citation for part 1216 continues to read as

follows:

Authority: 7401-7425.

2. Subpart A is added to part 1216 to read as follows:

Subpart A--Peanut Promotion, Research, and Information Order

Definitions

Sec.

1216.01 Act.

1216.02 Additional peanuts.

1216.03 Area marketing association.

1216.04 Board.

1216.05 Conflict of interest.

1216.06 Contract export additional peanuts.

1216.07 Department.

1216.08 Farm Service Agency.

1216.09 Farmers stock peanuts.

1216.10 First handler.

1216.11 Fiscal year.

1216.12 Handle.

1216.13 Information.

1216.14 Market.

1216.15 Minor peanut-producing states.

1216.16 Order.

1216.17 Part and subpart.

1216.18 Peanuts.

1216.19 Peanut producer organization.

1216.20 Person.

1216.21 Primary peanut-producing states.

1216.22 Producer.

1216.23 Promotion.

1216.24 Quota peanuts.

1216.25 Research.

1216.26 Secretary.

1216.27 Suspend.

1216.28 State.

1216.29 Terminate.

1216.30 United States.

National Peanut Board

1216.40 Establishment and membership.

1216.41 Nominations.

1216.42 Selection.

1216.43 Term of office.

1216.44 Vacancies.

1216.45 Alternate members.

1216.46 Procedure.

1216.47 Compensation and reimbursement.

1216.48 Powers and duties of the National Peanut Board.

1216.49 Prohibited activities.

Expenses and Assessments

1216.50 Budget and expenses.

1216.51 Assessments.

1216.52 Programs, plans, and projects.

1216.53 Independent evaluation.

1216.54 Operating reserve.

1216.55 Investment of funds.

Reports, Books, and Records

1216.60 Reports.

1216.61 Books and records.

1216.62 Confidential treatment.

Certification of Peanut Producer Organizations

1216.70 Certification.

Miscellaneous

1216.80 Right of the Secretary.

1216.81 Implementation of Order.

1216.82 Suspension and termination.

1216.83 Proceedings after termination.

1216.84 Effect of termination or amendment.

1216.85 Personal liability.

1216.86 Separability.

1216.87 Amendments.

1216.88 Patents, copyrights, trademarks, information, publications,

and product formulations.

Subpart A--Peanut Promotion, Research, and Information Order

Definitions

Sec. 1216.01 Act.

Act means the Commodity Promotion, Research, and Information Act of

1996 (7 U.S.C. 7401-7425; Public Law 104-127, 110 Stat. 1029), or any

amendments thereto.

Sec. 1216.02 Additional peanuts.

Additional peanuts means peanuts which are marketed from a farm

other than peanuts marketed or considered marketed as quota peanuts.

Sec. 1216.03 Area marketing association.

Area marketing association means an association selected and

approved by the Secretary to conduct activities under regulations of

the Department's Farm Service Agency. Under an inter agency agreement,

area marketing associations may assist in the collection of assessments

under this subpart. The approved area marketing associations and the

areas served by such associations are as follows:

(a) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves

the southeastern area consisting of Puerto Rico, the U.S. Virgin

Islands, and the states of Alabama, Florida, Georgia,

[[Page 20117]]

Mississippi, and that part of South Carolina south and west of the

Santee-Congaree-Broad Rivers;

(b) Peanut Growers Cooperative Marketing Association of Franklin,

Virginia (PGCMA). PGCMA serves the Virginia-Carolina area consisting of

the District of Columbia, and the states of Connecticut, Delaware,

Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts,

Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York,

North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont,

Virginia, West Virginia, Wisconsin, and that part of South Carolina

north and east of the Santee-Congaree-Broad Rivers; and

(c) Southwestern Peanut Growers Association of Gorman, Texas

(SWPGA). SWPGA serves the southwestern area consisting of the states of

Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas,

Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota,

Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming,

and all other territories of the United States not listed in paragraph

(a) or (b) of this section.

Sec. 1216.04 Board.

Board means the administrative body referred to as the National

Peanut Board established pursuant to Sec. 1216.40.

Sec. 1216.05 Conflict of interest.

Conflict of interest means a situation in which a member or

employee of the Board has a direct or indirect financial interest in a

person who performs a service for, or enters into a contract with, the

Board for anything of economic value.

Sec. 1216.06 Contract export additional peanuts.

Contract export additional peanuts are additional peanuts for

exportation, including peanuts for crushing for exportation, for which

a contract has been entered into between a first handler and a

producer.

Sec. 1216.07 Department.

Department means the U.S. Department of Agriculture.

Sec. 1216.08 Farm Service Agency.

Farm Service Agency or FSA means the U.S. Department of

Agriculture's Farm Service Agency.

Sec. 1216.09 Farmers stock peanuts.

Farmers stock peanuts means picked or threshed peanuts produced in

the United States which have not been changed (except for removal of

foreign material, loose shelled kernels and excess moisture) from the

condition in which picked or threshed peanuts are customarily marketed

by producers, plus any loose shelled kernels that are removed from

farmers stock peanuts before such farmers stock peanuts are marketed.

Sec. 1216.10 First handler.

First handler means 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.

Sec. 1216.11 Fiscal year.

Fiscal year is synonymous with crop year and means the 12-month

period beginning with August 1 of any year and ending with July 31 of

the following year, or such other period as determined by the Board and

approved by the Secretary.

Sec. 1216.12 Handle.

Handle means to engage in the receiving or acquiring, cleaning and

shelling, cleaning in-shell, or crushing of peanuts and in the shipment

(except as a common or contract carrier of peanuts owned by another) or

sale of cleaned in-shell or shelled peanuts, or other activity causing

peanuts to enter the current of commerce: Provided, that this term does

not include sales or deliveries of peanuts by a producer to a handler

or to an intermediary person engaged in delivering peanuts to

handler(s) and Provided further, that this term does not include sales

or deliveries of peanuts by such intermediary person(s) to a handler.

Sec. 1216.13 Information.

Information means information and programs that are designed to

increase efficiency in processing and to develop new markets, marketing

strategies, increased market efficiency, and activities that are

designed to enhance the image of peanuts on a national or international

basis. These include:

(a) Consumer information, which means any action taken to provide

information to, and broaden the understanding of, the general public

regarding the consumption, use, nutritional attributes, and care of

peanuts; and

(b) Producer information, which means information and programs that

will lead to the development of new markets, new marketing strategies,

or increased efficiency for the peanut industry, and activities to

enhance the image of the peanut industry.

Sec. 1216.14 Market.

Market means to sell or otherwise dispose of peanuts into

interstate, foreign, or intrastate commerce by buying, marketing,

distributing, or otherwise placing peanuts into commerce.

Sec. 1216.15 Minor peanut-producing states.

Minor peanut-producing states means all peanut-producing states

with the exception of Alabama, Florida, Georgia, New Mexico, North

Carolina, Oklahoma, South Carolina, Texas, and Virginia.

Sec. 1216.16 Order.

Order means an Order issued by the Secretary under section 514 of

the Act that provides for a program of generic promotion, research, and

information regarding agricultural commodities authorized under the

Act.

Sec. 1216.17 Part and subpart.

Part means the Peanut Promotion, Research, and Information Order

and all rules, regulations, and supplemental Orders issued pursuant to

the Act and the Order. The Order shall be a ``subpart'' of such part.

Sec. 1216.18 Peanuts.

Peanuts means the seeds of the legume arachis hypogaea and includes

both in-shell and shelled peanuts other than those marketed by the

producer in green form for consumption as boiled peanuts.

Sec. 1216.19 Peanut producer organization.

Peanut producer organization means a state-legislated peanut

promotion, research, and education commission or organization. For

states without a state-legislated peanut promotion, research, and

education commission or organization, ``peanut producer organization''

means any organization which has the primary purpose of representing

peanut producers and has peanut producers as members.

Sec. 1216.20 Person.

Person means any individual, group of individuals, partnership,

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

Sec. 1216.21 Primary peanut-producing states.

Primary peanut-producing states means Alabama, Florida, Georgia,

New Mexico, North Carolina, Oklahoma, South Carolina, Texas, and

Virginia, Provided, these states maintain three-year average production

of at least 10,000 tons of peanuts.

[[Page 20118]]

Sec. 1216.22 Producer.

Producer means any person engaged in the production and sale of

peanuts and who 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.

Sec. 1216.23 Promotion.

Promotion means any action taken by the National Peanut Board under

this Order, including paid advertising, to present a favorable image of

peanuts to the public to improve the competitive position of peanuts in

the marketplace, including domestic and international markets, and to

stimulate sales of peanuts.

Sec. 1216.24 Quota peanuts.

Quota peanuts means peanuts which are:

(a) Eligible for domestic edible uses; and

(b) Marketed or considered marketed from a farm as quota peanuts

pursuant to the provisions of 7 CFR Part 729 and are not in excess of

the effective farm poundage quota established for the farm on which

such peanuts were produced.

Sec. 1216.25 Research.

Research means any type of test, study, or analysis designed to

advance the image, desirability, use, marketability, production,

product development, or quality of peanuts, including research relating

to nutritional value and cost of production.

Sec. 1216.26 Secretary.

Secretary means the Secretary of Agriculture of the United States,

or any officer or employee of the U.S. Department of Agriculture to

whom authority has heretofore been delegated, or to whom authority may

hereafter be delegated, to act in the Secretary's stead.

Sec. 1216.27 Suspend.

Suspend means to issue a rule under section 553 of title 5, United

States Code, to temporarily prevent the operation of an Order during a

particular period of time specified in the rule.

Sec. 1216.28 State.

State means any of the 50 states, the District of Columbia, the

Commonwealth of Puerto Rico, or any territory or possession of the

United States.

Sec. 1216.29 Terminate.

Terminate means to issue a rule under section 553 of title 5,

United States Code, to cancel permanently the operation of an Order

beginning on a date certain specified in the rule.

Sec. 1216.30 United States.

United States means collectively the 50 states, the District of

Columbia, the Commonwealth of Puerto Rico, and the territories and

possessions of the United States.

National Peanut Board

Sec. 1216.40 Establishment and membership.

(a) Establishment of a National Peanut Board. There is hereby

established a National Peanut Board, hereinafter called the Board,

composed of no more than 10 peanut producers and alternates, appointed

by the Secretary from nominations as follows:

(1) Nine members and alternates. One member and one alternate shall

be appointed from each primary peanut-producing state, who are

producers and whose nominations have been submitted by certified peanut

producer organizations within a primary peanut-producing state.

(2) The minor peanut-producing states shall collectively have one

at-large member and one alternate, who are producers, to be appointed

by the Secretary from nominations submitted by certified peanut

producer organizations within minor peanut-producing states or from

other certified farm organizations that include peanut producers as

part of their membership.

(b) Adjustment of membership. At least once in each five-year

period, but not more frequently than once in each three-year period,

the Board, or a person or agency designated by the Board, shall review

the geographical distribution of peanuts in the United States and make

recommendation(s) to the Secretary to continue without change, or

whether changes should be made in the number of representatives on the

Board to reflect changes in the geographical distribution of the

production of peanuts.

Sec. 1216.41 Nominations.

(a) All nominations authorized under Sec. 1216.40 shall be made

within such a period of time as the Secretary shall prescribe. Eligible

peanut producer organizations within each state as certified pursuant

to Sec. 1216.70 shall nominate two qualified persons for each member

and each alternate member. The nominees shall be elected at an open

meeting among peanut producers eligible to serve on the Board. Any

certified peanut producer organization representing a minor peanut-

producing state may nominate two eligible persons for each member and

two eligible persons for each alternate member.

(b) As soon as practicable after this subpart becomes effective,

the Secretary shall obtain nominations for appointment to the initial

promotion Board from certified nominating organizations. In any

subsequent year in which an appointment to the Board is to be made,

nominations for positions whose terms will expire shall be obtained

from certified nominating organizations by the Board's staff and

submitted to the Secretary by May 1 of such year, or other such date as

approved by the Secretary.

(c) Except for initial Board members, whose nomination process will

be initiated by the Secretary, the Board shall issue the call for

nominations by March 1 of each year.

(d) The nomination meeting shall be announced 30 days in advance:

(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

(2) By such other means as deemed advisable.

(e) At nominations meetings, Department personnel will be present

to oversee and to verify eligibility and count ballots.

Sec. 1216.42 Selection.

From the nominations, the Secretary shall select the members of the

Board and alternates for each primary peanut-producing state. The

Secretary shall select one member and one alternate from all

nominations submitted by certified peanut producer organizations

representing minor peanut-producing states.

Sec. 1216.43 Term of office.

All members and alternates of the Board shall each serve for terms

of three years, except that the members and alternates appointed to the

initial Board shall serve proportionately for two-, three-, and four-

year terms, with the length of the terms determined at random. No

member or alternate may serve more than two consecutive three-year

terms. An alternate, after serving two consecutive three-year terms,

may serve as a member for an additional two consecutive three-year

terms. A member, after serving two consecutive three-year terms, may

serve as an alternate for an additional two consecutive three-year

terms. Each member and alternate shall continue to serve until a

successor is selected and has qualified.

(a) Those members serving initial terms of two or four years may

serve one successive three-year term.

[[Page 20119]]

(b) Any successor serving one year or less may serve two

consecutive three-year terms.

Sec. 1216.44 Vacancies.

To fill any vacancy resulting from the failure to qualify of any

person selected as a member or as an alternate member of the Board, or

in the event of death, removal, resignation, or disqualification of any

member or alternate member of the Board, a successor for the unexpired

term of such member or alternate member of the Board shall be nominated

and selected in the manner specified in Sec. 1216.40.

Sec. 1216.45 Alternate members.

An alternate member of the Board, during the absence of the member

for the primary peanut-producing state or at-large member for whom the

person is the alternate, shall act in the place and stead of such

member and perform such duties as assigned. In the event of death,

removal, resignation, or disqualification of any member, the alternate

for that state or at-large member shall act for the member until a

successor for such member is selected and qualified. In the event that

both a producer member of the Board and the alternate are unable to

attend a meeting, the Board may not designate any other alternate to

serve in such member's or alternate's place and stead for such a

meeting.

Sec. 1216.46 Procedure.

(a) A majority of the members of the Board, including alternate

members acting for members, shall constitute a quorum.

(b) At assembled meetings, all votes shall be cast in person. Board

actions shall be weighted by value of production as determined by a

primary peanut-producing state's three-year running average of total

gross farm income derived from all peanut sales. The at-large Board

member's vote shall be weighted by the collective value of production

from all minor peanut-producing states' three-year running average of

total gross farm income derived from all peanut sales. Any Board action

shall require the concurring votes of members or alternates from states

representing more than 50 percent of total U.S. gross farm income

derived from all peanut sales, plus an additional two votes from any

other Board members, provided a minimum of five votes concur.

(c) For routine and noncontroversial matters which do not require

deliberation and the exchange of views, and in matters of an emergency

nature when there is not time to call an assembled meeting of the

Board, the Board may also take action as prescribed in this section by

mail, facsimile, telephone, or any telecommunication method appropriate

for the conduct of business, but any such action shall be confirmed in

writing within 30 days.

(d) There shall be no voting by proxy.

(e) The chairperson shall be a voting member.

Sec. 1216.47 Compensation and reimbursement.

The members of the Board, and alternates when acting as members,

shall serve without compensation but shall be reimbursed for reasonable

travel expenses, as approved by the Board, incurred by them in the

performance of their duties as Board members.

Sec. 1216.48 Powers and duties of the National Peanut Board.

The Board shall have the following powers and duties:

(a) To administer the Order in accordance with its terms and

conditions and to collect assessments;

(b) To develop and recommend to the Secretary for approval such

bylaws as may be necessary for the functioning of the Board, and such

rules as may be necessary to administer the Order, including activities

authorized to be carried out under the Order;

(c) To meet, organize, and select from among the members of the

Board a chairperson, other officers, committees, and subcommittees, as

the Board determines to be appropriate;

(d) To employ persons, other than the members, as the Board

considers necessary to assist the Board in carrying out its duties and

to determine the compensation and specify the duties of such persons;

(e) To develop programs and projects, and enter into contracts or

agreements, which must be approved by the Secretary before becoming

effective, for the development and carrying out of programs or projects

of research, information, or promotion, and the payment of costs

thereof with funds collected pursuant to this subpart. Each contract or

agreement shall provide that any person who enters into a contract or

agreement with the Board shall develop and submit to the Board a

proposed activity; keep accurate records of all of its transactions

relating to the contract or agreement; account for funds received and

expended in connection with the contract or agreement; make periodic

reports to the Board of activities conducted under the contract or

agreement; and make such other reports available as the Board or the

Secretary considers relevant. Any contract or agreement shall provide

that:

(1) The contractor or agreeing party shall develop and submit to

the Board a program, plan, or project together with a budget or budgets

that show the estimated cost to be incurred for such program, plan, or

project;

(2) The contractor or agreeing party shall keep accurate records of

all its transactions and make periodic reports to the Board of

activities conducted, submit accounting for funds received and

expended, and make such other reports as the Secretary or the Board may

require;

(3) The Secretary may audit the records of the contracting or

agreeing party periodically; and

(4) Any subcontractor who enters into a contract with a Board

contractor and who receives or otherwise uses funds allocated by the

Board shall be subject to the same provisions as the contractor;

(f) To prepare and submit for approval of the Secretary fiscal year

budgets in accordance with Sec. 1216.50;

(g) To maintain such records and books and prepare and submit such

reports and records from time to time to the Secretary as the Secretary

may prescribe; to make appropriate accounting with respect to the

receipt and disbursement of all funds entrusted to it; and to keep

records that accurately reflect the actions and transactions of the

Board;

(h) To cause its books to be audited by a competent auditor at the

end of each fiscal year and at such other times as the Secretary may

request, and to submit a report of the audit directly to the Secretary;

(i) To give the Secretary the same notice of meetings of the Board

as is given to members in order that the Secretary's representative(s)

may attend such meetings, and to keep and report minutes of each

meeting of the Board to the Secretary;

(j) To act as intermediary between the Secretary and any producer

or first handler;

(k) To furnish to the Secretary any information or records that the

Secretary may request;

(l) To receive, investigate, and report to the Secretary complaints

of violations of the Order;

(m) To recommend to the Secretary such amendments to the Order as

the Board considers appropriate; and

(n) To work to achieve an effective, continuous, and coordinated

program of promotion, research, consumer information, evaluation, and

industry information designed to strengthen the peanut industry's

position in the marketplace; maintain and expand existing markets and

uses for peanuts; and to carry out programs, plans, and

[[Page 20120]]

projects designed to provide maximum benefits to the peanut industry.

Sec. 1216.49 Prohibited activities.

The Board may not engage in, and shall prohibit the employees and

agents of the Board from engaging in:

(a) Any action that would be a conflict of interest;

(b) Using funds collected by the Board under the Order to undertake

any action for the purpose of influencing legislation or governmental

action or policy, including local, state, national, and international,

other than recommending to the Secretary amendments to the Order; and

(c) Any advertising, including promotion, research, and information

activities authorized to be carried out under the Order, that is false

or misleading or disparaging to another agricultural commodity.

Expenses and Assessments

Sec. 1216.50 Budget and expenses.

(a) At least 60 days prior to the beginning of each fiscal year,

and as may be necessary thereafter, the Board shall prepare and submit

to the Secretary a budget for the fiscal year covering its anticipated

expenses and disbursements in administering this subpart. Each such

budget shall include:

(1) A statement of objectives and strategy for each program, plan,

or project;

(2) A summary of anticipated revenue, with comparative data for at

least one preceding year (except for the initial budget);

(3) A summary of proposed expenditures for each program, plan, or

project; and

(4) Staff and administrative expense breakdowns, with comparative

data for at least one preceding year (except for the initial budget).

(b) Each budget shall provide adequate funds to defray its proposed

expenditures and to provide for a reserve as set forth in this subpart.

(c) Subject to this section, any amendment or addition to an

approved budget must be approved by the Secretary, including shifting

funds from one program, plan, or project to another. Shifts of funds

which do not cause an increase in the Board's approved budget and which

are consistent with governing bylaws need not have prior approval by

the Secretary.

(d) The Board is authorized to incur such expenses, including

provision for a reasonable reserve, as the Secretary finds are

reasonable and likely to be incurred by the Board for its maintenance

and functioning, and to enable it to exercise its powers and perform

its duties in accordance with the provisions of this subpart. Such

expenses shall be paid from funds received by the Board.

(e) With approval of the Secretary, the Board may borrow money for

the payment of administrative expenses, subject to the same fiscal,

budget, and audit controls as other funds of the Board. Any funds

borrowed by the Board shall be expended only for startup costs and

capital outlays and are limited to the first year of operation of the

Board.

(f) The Board may accept voluntary contributions, but these shall

only be used to pay expenses incurred in the conduct of programs,

plans, and projects. Such contributions shall be free from any

encumbrance by the donor and the Board shall retain complete control of

their use.

(g) The Board shall reimburse the Secretary for all expenses

incurred by the Secretary in the implementation, administration, and

supervision of the Order, including all referendum costs in connection

with the Order.

(h) The Board may not expend for administration, maintenance, and

functioning of the Board in any fiscal year an amount that exceeds 10

percent of the assessments and other income received by the Board for

that fiscal year. Reimbursements to the Secretary required under

paragraph (g) of this section are excluded from this limitation on

spending.

(i) The Board shall allocate, to the extent practicable, no less

than 80 percent of the assessments collected on all peanuts available

for any fiscal year on national and regional promotion, research, and

information activities. The Board shall allocate, to the extent

practicable, no more than 20 percent of assessments collected on all

peanuts available for any fiscal year for use in state or regional

research programs. Specific percentages and amounts shall be determined

annually by the Board, with the approval of the Secretary.

(j) Certified peanut producer organizations may submit requests for

funding for research and/or generic promotion projects. Amounts

approved for each state shall not exceed the pro rata share of funds

available for that state as determined by the Board and approved by the

Secretary. Amounts allocated by the Board for state research or

promotion activities will be based on requests submitted to the Board

when it is determined that they meet the goals and objectives stated in

the Order.

(k) Assessments collected, less pro rata administrative expenses,

from the gross sales of contract export additional peanuts shall be

allocated by the Board for the promotion and related research of export

peanuts.

(l) The Board shall determine annually how total funds shall be

allocated pursuant to paragraphs (i), (j), and (k) of this section,

with the approval of the Secretary.

Sec. 1216.51 Assessments.

(a) The funds to cover the Board's expenses shall be acquired by

the levying of assessments upon producers in a manner prescribed by the

Secretary.

(b) Each first handler, at such times and in such manner as

prescribed by the Secretary, shall collect from each producer and pay

assessments to the Board on all peanuts handled, including peanuts

produced by the first handler, no later than 60 days after the last day

of the month in which the peanuts were marketed.

(c) Such assessments shall be levied at a rate of 1 percent of the

price paid for all farmers stock peanuts sold. Price paid is the value

of segment entry on the FSA 1007 form.

(d) For peanuts placed under loan with the Department's Commodity

Credit Corporation, each area marketing association shall remit to the

Board the following:

(1) One (1) percent of the initial price paid for either quota or

additional peanuts no more than 60 days after the last day of the month

in which the peanuts were placed under loan; and

(2) One (1) percent of the profit from the sale of the peanuts

within 60 days after the final day of the area association's fiscal

year.

(e) All assessments collected under this section are to be used for

expenses and expenditures pursuant to this Order and for the

establishment of an operating reserve as prescribed in the Order.

(f) The Board shall impose a late payment charge on any person who

fails to remit to the Board the total amount for which the person is

liable on or before the payment due date established under this

section. The late payment charge will be in the form of interest on the

outstanding portion of any amount for which the person is liable. The

rate of interest shall be prescribed in regulations issued by the

Secretary.

(g) Persons failing to remit total assessments due in a timely

manner may also be subject to actions under federal debt collection

procedures.

(h) The Board may authorize other organizations to collect

assessments on its behalf with the approval of the Secretary.

(i) The assessment rate may not be increased unless the new rate is

[[Page 20121]]

approved by a referendum among eligible producers.

Sec. 1216.52 Programs, plans, and projects.

(a) The Board shall receive and evaluate, or on its own initiative

develop, and submit to the Secretary for approval any program, plan, or

project authorized under this subpart. Such programs, plans, or

projects shall provide for:

(1) The establishment, issuance, effectuation, and administration

of appropriate programs for promotion, research, and information,

including producer and consumer information, with respect to peanuts;

and

(2) The establishment and conduct of research with respect to the

use, nutritional value, sale, distribution, and marketing of peanuts

and peanut products, and the creation of new products thereof, to the

end that marketing and use of peanuts may be encouraged, expanded,

improved, or made more acceptable and to advance the image,

desirability, or quality of peanuts.

(b) No program, plan, or project shall be implemented prior to its

approval by the Secretary. Once a program, plan, or project is so

approved, the Board shall take appropriate steps to implement it.

(c) Each program, plan, or project implemented under this subpart

shall be reviewed or evaluated periodically by the Board to ensure that

it contributes to an effective program of promotion, research, or

consumer information. If it is found by the Board that any such

program, plan, or project does not contribute to an effective program

of promotion, research, or consumer information, then the Board shall

terminate such program, plan, or project.

(d) No program, plan, or project shall make any false claims on

behalf of peanuts or use unfair or deceptive acts or practices with

respect to the quality, value, or use of any competing product. Peanuts

of all domestic origins shall be treated equally.

Sec. 1216.53 Independent evaluation.

The Board shall, not less often than every five years, authorize

and fund, from funds otherwise available to the Board, an independent

evaluation of the effectiveness of the Order and other programs

conducted by the Board pursuant to the Act. The Board shall submit to

the Secretary, and make available to the public, the results of each

periodic independent evaluation conducted under this section.

Sec. 1216.54 Operating reserve.

The Board shall establish an operating monetary reserve and may

carry over to subsequent fiscal years excess funds in a reserve so

established; Provided, that funds in the reserve shall not exceed any

fiscal year's anticipated expenses.

Sec. 1216.55 Investment of funds.

The Board may invest, pending disbursement, funds it receives under

this subpart, only in obligations of the United States or any agency of

the United States; general obligations of any state or any political

subdivision of a state; interest bearing accounts or certificates of

deposit of financial institutions that are members of the Federal

Reserve system; or obligations that are fully guaranteed as to

principal and interest by the United States.

Reports, Books, and Records

Sec. 1216.60 Reports.

(a) Each producer and first handler subject to this part shall be

required to report to the employees of the Board, at such times and in

such manner as it may prescribe, such information as may be necessary

for the Board to perform its duties. Such reports shall include, but

shall not be limited to the following:

(1) Number of pounds of peanuts produced or handled;

(2) Price paid to producers (entry in value of segment section on

the FSA 1007 form); and

(3) Total assessments collected.

(b) First Handlers shall submit monthly reports to the Board. These

reports shall accompany the payment of the collected assessments and

shall be due 60 days after the last day of the month in which the

peanuts were marketed.

Sec. 1216.61 Books and records.

Each first handler and producer subject to this subpart shall

maintain and make available for inspection by the Secretary and

employees and agents of the Board such books and records as are

necessary to carry out the provisions of this subpart and the

regulations issued thereunder, including such records as are necessary

to verify any reports required. Such records shall include but are not

limited to the following: copies of FSA 1007 forms, the names and

address of producers, and the date the assessments were collected. Such

records shall be retained for at least two years beyond the marketing

year of their applicability.

Sec. 1216.62 Confidential treatment.

All information obtained from books, records, or reports under the

Act, this subpart, and the regulations issued thereunder shall be kept

confidential by all persons, including all employees and former

employees of the Board, all officers and employees and former officers

and employees of contracting and subcontracting agencies or agreeing

parties having access to such information. Such information shall not

be available to Board members, producers, importers, exporters, or

handlers. Only those persons having a specific need for such

information to effectively administer the provisions of this subpart

shall have access to such information. Only such information so

obtained as the Secretary deems relevant shall be disclosed by them,

and then only in a judicial proceeding or administrative hearing

brought at the direction, or on the request, of the Secretary, or to

which the Secretary or any officer of the United States is a party, and

involving this subpart. Nothing in this section shall be deemed to

prohibit:

(a) The issuance of general statements based upon the reports of

the number of persons subject to this subpart or statistical data

collected therefrom, which statements do not identify the information

furnished by any person; and

(b) The publication, by direction of the Secretary, of the name of

any person who has been adjudged to have violated this subpart,

together with a statement of the particular provisions of this subpart

violated by such person.

Certification of Peanut Producer Organizations

Sec. 1216.70 Certification.

(a) Organizations receiving certification from the Secretary will

be entitled to submit nominations for Board membership to the Secretary

for appointment and to submit requests for funding to the Board.

(b) For major peanut-producing states, state-legislated peanut

promotion, research, and information organizations may request

certification, provided the state-legislated promotion program submits

a factual report that shall contain information deemed relevant and

specified by the Secretary for the making of such determination

pursuant to paragraph (e) of this section.

(c) If a state-legislated peanut promotion, research and

information organization in a major peanut-producing state does not

elect to seek certification from the Secretary within a specified time

period as determined by the Secretary, or does not meet eligibility

requirements as specified by the Secretary, then any peanut producer

organization whose primary purpose is to represent peanut producers

within a primary peanut-producing state, or any other organization

which has peanut

[[Page 20122]]

producers as part of its membership, may request certification.

Certification shall be based, in addition to other available

information, upon a factual report submitted by the organization that

shall contain information deemed relevant and specified by the

Secretary for the making of such determination pursuant to paragraph

(e) of this section.

(d) For minor peanut-producing states, any organization that has

peanut producers as part of its membership may request certification.

(e) The information required for certification by the Secretary may

include, but is not limited to, the following:

(1) The geographic distribution within the state covered by the

organization's active membership;

(2) The nature and size of the organization's active membership in

the state, proportion of total such active membership accounted for by

producers, a map showing the peanut-producing counties in such state in

which the organization has members, the volume of peanuts produced in

each such county, the number of peanut producers in each such county,

and the size of the organization's active peanut producer membership in

each such county;

(3) The extent to which the peanut producer membership of such

organization is represented in setting the organization's policies;

(4) Evidence of stability and permanency of the organization;

(5) Sources from which the organization's operating funds are

derived;

(6) Functions of the organization;

(7) The organization's ability and willingness to further the aims

and objectives of the Act and Order; and,

(8) Demonstrated experience administering generic state promotion

and research programs.

(f) The Secretary's determination as to eligibility or

certification of an organization shall be final.

Miscellaneous

Sec. 1216.80 Right of the Secretary.

All fiscal matters, programs, plans, or projects, rules or

regulations, reports, or other substantive actions proposed and

prepared by the Board shall be submitted to the Secretary for approval.

Sec. 1216.81 Implementation of the Order.

The Order shall not become effective unless:

(a) The Secretary determines that the Order is consistent with and

will effectuate the purposes of the Act; and

(b) The Order is approved by a simple majority of the peanut

producers as defined in Sec. 1216.21 voting in a referendum who, during

a representative period determined by the Secretary, have been engaged

in the production of peanuts.

Sec. 1216.82 Suspension and termination.

(a) The Secretary shall suspend or terminate this subpart or a

provision thereof if the Secretary finds that this subpart or a

provision thereof obstructs or does not tend to effectuate the purposes

of the Act, or if the Secretary determines that this subpart or a

provision thereof is not favored by persons voting in a referendum

conducted pursuant to the Act.

(b) Every five years, the Secretary shall hold a referendum to

determine whether peanut producers favor the continuation of the Order.

The Secretary will also conduct a referendum if 10 percent or more of

all eligible peanut producers request the Secretary to hold a

referendum. In addition, the Secretary may hold a referendum at any

time.

(c) The Secretary shall suspend or terminate this subpart at the

end of the marketing year whenever the Secretary determines that its

suspension or termination is approved or favored by a simple majority

of the producers voting in a referendum who, during a representative

period determined by the Secretary, have been engaged in the production

of peanuts.

(d) If, as a result of the referendum conducted under paragraph (b)

of this section, the Secretary determines that this subpart is not

approved, the Secretary shall:

(1) Not later than 180 days after making the determination, suspend

or terminate, as the case may be, collection of assessments under this

subpart; and

(2) As soon as practical, suspend or terminate, as the case may be,

activities under this subpart in an orderly manner.

Sec. 1216.83 Proceedings after termination.

(a) Upon the termination of this subpart, the Board shall recommend

not more than three of its members to the Secretary to serve as

trustees for the purpose of liquidating the affairs of the Board. Such

persons, upon designation by the Secretary, shall become trustees of

all the funds and property then in the possession or under control of

the Board, including claims for any funds unpaid or property not

delivered, or any other claim existing at the time of such termination.

(b) The said trustees shall:

(1) Continue in such capacity until discharged by the Secretary;

(2) Carry out the obligations of the Board under any contracts or

agreements entered into pursuant to the Order;

(3) From time to time, account for all receipts and disbursements

and deliver all property on hand, together with all books and records

of the Board and the trustees, to such person or persons as the

Secretary may direct; and

(4) Upon request of the Secretary execute such assignments or other

instruments necessary and appropriate to vest in such persons title and

right to all funds, property and claims vested in the Board or the

trustees pursuant to the Order.

(c) Any person to whom funds, property or claims have been

transferred or delivered pursuant to the Order shall be subject to the

same obligations imposed upon the Board and upon the trustees.

(d) Any residual funds not required to defray the necessary

expenses of liquidation shall be turned over to the Secretary to be

disposed of, to the extent practical, to the peanut producer

organizations, certified pursuant to Sec. 1216.70, in the interest of

continuing peanut promotion, research, and information programs.

Sec. 1216.84 Effect of termination or amendment.

Unless otherwise expressly provided by the Secretary, the

termination of this subpart or of any regulation issued pursuant

thereto, or the issuance of any amendment to either thereof, shall not:

(a) Affect or waive any right, duty, obligation or liability which

shall have arisen or which may thereafter arise in connection with any

provision of this subpart or any regulation issued thereunder; or

(b) Release or extinguish any violation of this subpart or any

regulation issued thereunder; or

(c) Affect or impair any rights or remedies of the United States,

or of the Secretary or of any other persons, with respect to any such

violation.

Sec. 1216.85 Personal liability.

No member or alternate member of the Board shall be held personally

responsible, either individually or jointly with others, in any way

whatsoever, to any person for errors in judgment, mistakes, or other

acts, either of commission or omission, as such member or alternate,

except for acts of dishonesty or willful misconduct.

Sec. 1216.86 Separability.

If any provision of this subpart is declared invalid or the

applicability thereof to any person or circumstances is held invalid,

the validity of the remainder of this subpart or the

[[Page 20123]]

applicability thereof to other persons or circumstances shall not be

affected thereby.

Sec. 1216.87 Amendments.

Amendments to this subpart may be proposed, from time to time, by

the Board or by any interested person affected by the provisions of the

Act, including the Secretary.

Sec. 1216.88 Patents, copyrights, trademarks, information,

publications, and product formulations.

Patents, copyrights, trademarks, information, publications, and

product formulations developed through the use of funds received by the

Board under this subpart shall be the property of the U.S. Government

as represented by the Board and shall, along with any rents, royalties,

residual payments, or other income from the rental, sales, leasing,

franchising, or other uses of such patents, copyrights, trademarks,

information, publications, or product formulations, inure to the

benefit of the Board; shall be considered income subject to the same

fiscal, budget, and audit controls as other funds of the Board; and may

be licensed subject to approval by the Secretary. Upon termination of

this subpart, Sec. 1216.82 shall apply to determine disposition of all

such property.

Dated: April 19, 1999.

Enrique E. Figueroa,

Administrator, Agricultural Marketing Service.

[FR Doc. 99-10134 Filed 4-22-99; 8:45 am]

BILLING CODE 3410-02-P