Peanut Promotion, Research, and Information Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1216

[FV-98-702-FR]

Peanut Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule establishes a Peanut Promotion, Research, and

Consumer Information Order (Order) under the Commodity Promotion,

Research, and Information Act of 1996. Under the order, producers will

pay an assessment of 1 percent of the price of farmers stock peanuts

sold to first handlers. First handlers and marketing associations will

remit the assessments to the National Peanut Board (Board). The Board

will use the funds collected to conduct a generic program of promotion,

research, consumer information, and industry information to maintain

and expand markets for peanuts. The U.S. Department of Agriculture

(USDA or the Department) conducted a referendum among eligible peanut

producers to determine whether they favor the implementation of the

Order. The order was approved by a majority of those voting in the

referendum.

DATES: July 30, 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 South Building, 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.

Previous documents in this proceeding: Proposed Rule Number 1

(November 1998 proposed rule) on the Order published in the November 6,

1998, issue of the Federal Register [63 FR 59893]; a proposed rule on

referendum procedures published in the November 6, 1998, issue of the

Federal Register [63 FR 59907]; Proposed Rule Number 2 (April 1999

proposed rule) on the Order, which included a Referendum Order,

published in the April 23, 1999, issue of the Federal Register [64 FR

20107]; a final rule on referendum procedures published in the April

23, 1999, issue of the Federal Register [64 FR 20102 ]; and an

amendment to the Referendum Order published in the June 14, 1999, issue

of the Federal Register [64 FR 31736].

Executive Order 12988

This 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 two years after the effective date of the Order, provision, or

obligation subject to challenge in the petition. The petitioner will

have the opportunity for a hearing on the petition. 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 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 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 proposed that peanut producers approve the program in a

referendum in advance of its implementation and that producer members

would serve on the 10-member National Peanut Board (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 program or any provision under it is not in accordance

with law and requesting a modification of the Order or an exemption

from the Order.

While the Order will impose certain recordkeeping requirements on

first handlers, information required under the Order can 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)--will collect and remit all

assessments to the Board. Their responsibilities will 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 Order

and 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 seek nomination to serve on the Board and those who

vote in referenda. In addition, the Order requires producers to keep

records and

[[Page 41253]]

to provide information to the Board or the Secretary when requested.

However, it is not anticipated that producers will be required to

submit forms to the Board. Most likely, the information will 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.

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) is be $4,059.85 or $5.00 per producer, $66.05

per first handler, and $9.50 per producer organization.

The Department will oversee program operations and will conduct a

referendum: (1) Every five years to determine whether peanut producers

support continuation of the program, as requested by the proponent, (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 will 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

once grew 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--is 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 this

growing season 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 establishes a fixed assessment paid by producers (to be

collected by first handlers) at a rate of

[[Page 41254]]

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. At the recommendation of the

proponent, this program does not include a de minimis exemption.

At the assessment rate of 1 percent of farm value, the Board is

expected to collect approximately $10 million annually, assuming 1

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

percent rate of assessment will represent approximately 1 percent of

producers' average return. During the 1995-96 crop year, the average

price for peanuts was $0.293 per pound.

Each primary producing state will have one member on the Board, and

the minor peanut-producing states will be represented collectively by

one member on the Board. Each member will have an alternate. Therefore,

the Board will have 10 members and 10 alternates.

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 are considered minor states: Arizona,

California, Louisiana, Mississippi, and Tennessee.

Peanut producers or producer organizations will nominate producers

to serve as members on the Board. USDA will ensure that the nominees

represent the peanut industry in accordance with the Order and the Act.

After the Board is appointed by the Secretary, the Board will

recommend programs and projects, a budget, and any rules and

regulations that might be necessary for the administration of the

program.

The recordkeeping and reporting requirements for the Order are

designed to minimize the burden on first handlers. They are designed to

collect as much of the necessary information as possible from forms

already submitted to another USDA agency. In addition, any information

collection that cannot occur through forms already in use will pose a

minimal additional burden.

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) is $4,059.85, which represents $5.00 per

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

organization.

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

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 programs 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 a program to provide for: the

exemption of de minimis quantities of an agricultural commodity;

different payment and reporting schedules; types of research,

promotion, and information activities in both domestic and foreign

markets; reserve funds; credits for generic and branded activities; and

the assessment of imports. In addition, Section 518 of the Act provides

for referenda to ascertain approval of program to be conducted either

prior to its going into effect or within three years after assessments

first begin under the program. A program 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 the 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 proponent's 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 the Order on small entities, the November 1998 proposed

rule invited comments concerning the potential effects of the Order.

One comment was received concerning the paperwork burden on first

handlers. As a result of the comment, changes were made in the order,

as discussed in the April 1999 proposed rule.

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 are imposed by this Order were

submitted to OMB for approval and were approved under OMB control

number 0581-0093.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB No. for background form (number 1 below): 0505-0001.

Expiration date of approval: November 30, 1999.

OMB No. 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.

Abstract: The information collection requirements in the request

are essential to carry out the intent of the Order and the Act.

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

who vote in referenda. The referendum ballot, which represents the

information collection requirement relating to referenda, was addressed

in the final rule on referendum procedures.

Under this program, first handlers are required to collect

assessments from producers and file reports with and submit assessments

to the Board. While the Order imposes certain recordkeeping

requirements on first handlers, information required under the Order

can 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) is $4,059.85, which represents

$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 forms require the minimum information necessary to

effectively carry out the requirements of

[[Page 41255]]

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

Order and the Act. Much 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 contains the information that is 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 will be simple, easy

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

required to file the information.

Collecting information monthly coincides with normal industry

business practices. Reporting other than monthly will 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.

As discussed in the RFA section of this rule and in the April 1999

proposed rule, the paperwork burdens on first handlers were modified as

a result of a comment received in response to the November 1998

proposed rule.

Information collection requirements that are included in this rule

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 the 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.

Total Estimated 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 will 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.

Background

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

establish agricultural commodity research and promotion programs.

Section 516 of the Act provides permissive terms for programs, and

other sections provide 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: the exemption of de minimis

quantities of an agricultural commodity; different payment and

reporting schedules; different types of research, promotion, and

information activities in domestic and foreign markets; reserve funds;

credits for generic and branded activities; and the assessment of

imports. In addition, Section 518 of the Act provides for referenda to

ascertain approval of a program to be conducted either prior to its

going into effect or within three years after assessments first begin

under the program. A program 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.

On June 15, 1998, the proponent, working in cooperation with 20

state and regional peanut industry organizations representing the nine

primary peanut-producing states, submitted a proposal for a national

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

The Department published the proponent's proposal, with

modifications, for public comment in the November 1998 proposed rule.

Fourteen comments were received by the January 5, 1999, deadline. These

comments, and related changes to the Order, were discussed in the April

1999 proposed rule, which included a Referendum Order.

The Order is summarized as follows: Sections 1216.01 through

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

peanut-producing states, primary peanut-producing states, producer, and

quota peanuts, which are used in the 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

will be weighted by the value of production represented by each member.

The votes of members from

[[Page 41256]]

primary peanut-producing states will 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 will 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 will 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 will be approved unless at least five members vote 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 will not be

approved.

Sections 1216.50 through 1216.55 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 will remit the assessment to the Board.

The assessment will 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. The area association

will 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 there is

any profit from the sale of the peanuts, the association will 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.

In preparing this rule, AMS made editorial changes to three

sections. First, AMS revised the definitions of ``suspend''

(Sec. 1216.27) and ``terminate'' (Sec. 1216.29) to cover any part of

the Order, in addition to the entire Order. This is consistent with

other national programs. The third section which was modified slightly

was Sec. 1216.70(e)(2), in keeping with the government's policy of

plain language in regulations. The phrase ``proportion of total such

active membership accounted for by producers'' was changed to

``proportion of the organization's active membership accounted for by

producers.'' In addition, in the same section, the word ``such'' was

removed.

General Findings

The Department conducted a referendum among peanut producers from

May 14 through July 2, 1999, to determine whether the Order would

become effective. The representative period for establishing voter

eligibility was from August 1, 1997, through July 31, 1998 (1997 crop

year). All peanut producers who produced peanuts during the 1997 crop

year and at the time of the referendum (1998 crop year) were eligible

to vote.

It is determined that a majority of the eligible peanut producers

voting favored implementation of the Order. After consideration of all

relevant material presented, including the initial proposal, comments

received, and the referendum results, it is found that the Order is

consistent with and effectuate the declared policy and purpose of the

Act.

Pursuant to the provisions in 5 U.S.C. 553, it is found and

determined that good cause exists for not postponing the effective date

of this action until 30 days after publication in the Federal Register

because: (1) This action implements a program requested by the nation's

peanut producers to begin with the 1999 crop year; (2) interested

parties were allowed 60 days to comment on the program and a referendum

was held among peanut producers--who will bear the cost of this

program; (3) in the referendum a majority of the eligible peanut

producers who voted favored implementation of the program; (4) the 1999

crop year begins on August 1, 1999; (5) domestic peanuts are marketed

mainly between August 1 and December 31 of each year; (6) it is

important that the 1999 crop be covered by the program; and (3) no

useful purpose would be served by a delay of the effective date.

List of Subjects in 7 CFR Part 1216

Administrative practice and procedure, Advertising, Consumer

Information, Marketing agreements, Peanut promotion, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, Title 7 of Chapter XI of

the Code of Federal Regulations is amended as follows:

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

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

follows:

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

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

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

Definitions

Sec.

1216.1 Act.

1216.2 Additional peanuts.

1216.3 Area marketing association.

1216.4 Board.

1216.5 Conflict of interest.

1216.6 Contract export additional peanuts.

1216.7 Department.

1216.8 Farm Service Agency.

1216.9 Farmers stock peanuts.

1216.10 First handler.

[[Page 41257]]

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.

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. 1216.1 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. 1216.2 Additional peanuts.

Additional peanuts means peanuts which are marketed from a farm

other than peanuts marketed or considered marketed as quota peanuts.

Sec. 1216.3 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 interagency 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, 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. 1216.4 Board.

Board means the administrative body referred to as the National

Peanut Board established pursuant to Sec. 1216.40.

Sec. 1216.5 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. 1216.6 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. 1216.7 Department.

Department means the U.S. Department of Agriculture.

Sec. 1216.8 Farm Service Agency.

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

Agriculture's Farm Service Agency.

Sec. 1216.9 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.

[[Page 41258]]

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.

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 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, or part

thereof, 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, or

part thereof, 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

[[Page 41259]]

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.

(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.

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

[[Page 41260]]

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 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

[[Page 41261]]

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

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

[[Page 41262]]

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 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 the organization's active membership accounted

for by producers, a map showing the peanut-producing counties in the

state in which the organization has members, the volume of peanuts

produced in each county, the number of peanut producers in each county,

and the size of the organization's active peanut producer membership in

each 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.

[[Page 41263]]

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 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: July 26, 1999.

Barbara C. Robinson,

Acting Administrator, Agricultural Marketing Service.

[FR Doc. 99-19461 Filed 7-28-99; 8:45 am]

BILLING CODE 3410-02-P