Domestically Produced and Imported Peanuts; Change in the Maximum Percentage of Foreign Material Allowed Under Quality Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997, 998, and 999

[Docket Nos. FV99-997-2 IFR, FV99-998-1 IFR, and FV99-999-1 IFR]

Domestically Produced and Imported Peanuts; Change in the Maximum

Percentage of Foreign Material Allowed Under Quality Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule changes the outgoing quality control requirements

currently prescribed under Marketing Agreement No. 146 (Agreement). The

Agreement regulates the handling of peanuts grown in 16 States and is

administered locally by the Peanut Administrative Committee

(Committee). This rule relaxes the allowance for foreign material to

.20 percent from .10 percent in the three ``with splits'' edible grade

categories to make them consistent with the other seven edible grade

categories, as unanimously recommended by the Committee. The same

change applies to peanuts handled by handlers who have not signed the

Agreement, and to imported peanuts.

DATES: Effective October 21, 1999; comments received by December 17,

1999 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, room 2525-S, PO Box 96456, Washington, DC 20090-6456; Fax:

(202) 720-5698; or E-mail: [email protected]. All comments

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

this issue of the Federal Register and will be made available for

public inspection in the Office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT: Jim Wendland, Marketing Specialist, DC

Marketing Field Office, or George Kelhart, Technical Advisor, both of

the Marketing Order Administration Branch, Fruit and Vegetable

Programs, AMS, USDA, PO Box 96456, room 2525-S, Washington, DC 20090-

6456; telephone: (202) 720-2491, Fax: (202) 720-5698.

Small businesses may request information on complying with this

regulation from Jay Guerber, at the same address as above, or E-mail:

Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 146 (Agreement) (7 CFR part 998), regulating the handling

of peanuts grown in 16 States. The Agreement is effective under the

Agricultural Marketing Agreement Act of 1937, as amended (Act) (7

U.S.C. 601-674). Also, subparagraph (f)(2) of section 108B of the

Agricultural Act of 1949 (7 U.S.C. 1445c3) and section 155 of the

Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7271)

provide that the Secretary of Agriculture shall require that all

peanuts in the domestic and export markets fully comply with all

quality requirements under the Agreement. This has been implemented

through regulations governing peanuts handled by persons not subject to

the Agreement (non-signers program) (7 CFR part 997) and regulations

governing imports of peanuts (peanut import regulation) (7 CFR part

999). Thus, the Agreement and the non-signers regulations regulate the

quality of domestically produced peanuts and the peanut import

regulations regulate the quality of imported peanuts.

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to

[[Page 56134]]

have retroactive effect. This rule will not preempt any State or local

laws, regulations, or policies, unless they present an irreconcilable

conflict with this rule. There are no administrative procedures which

must be exhausted prior to any judicial challenge to the provisions of

this rule.

The outgoing quality requirements under the Agreement were changed

in August 1998, as unanimously recommended by the Peanut Administrative

Committee (Committee). The Committee is responsible for local

administration of Marketing Agreement No. 146's quality assurance

program in the 16-State peanut production area. The four basic

varieties of peanuts produced domestically are: Runners, which account

for about 75 percent of total U.S. production; Virginias, which have

the largest kernels; Spanish, which have smaller kernels but higher oil

content; and Valencias, which are very sweet and are grown mostly in

New Mexico. Each of the grades may be certified ``with splits'' (where

the two halves have come apart) provided all applicable quality

requirements are met. A Sound Split and Broken Kernels tolerance of 15

percent is allowed, of which not more than 3 percent will pass thru a

prescribed screen.

At its April 30, 1997, meeting the Committee unanimously

recommended that for the 1997 and subsequent crop years the outgoing

quality regulation and the terms and conditions of indemnification be

amended to provide that all lots of edible quality peanuts be eligible

for indemnification. This recommendation was adopted. Prior to 1997

only edible quality peanuts meeting specifications applicable to

indemnifiable grades were eligible for indemnification. Basically, this

indemnification program insured that if a handler's milled peanuts had

meet the Agreement's requirements when shipped but were later found to

be out of compliance, the Committee would provide reimbursement to the

handler for those peanuts if a valid claim was submitted.

This modification to Sec. 998.200 (a) of the Agreement removed

Table (2) INDEMNIFIABLE GRADES from the Agreement (63 FR 2846; January

16, 1998). The modification inadvertently eliminated the specifications

applicable to all nine of the INDEMNIFIABLE GRADE CATEGORIES. The

Committee's intent was to cause all edible grade categories of peanuts

to be eligible for indemnification benefits, not to eliminate any grade

specifications. The Committee therefore unanimously recommended

incorporating the last three categories of Table 2--Runner with splits,

Virginia with splits, and Spanish and Valencia with splits--into Table

1 which had been retained in Sec. 998.200. That recommendation was

finalized and published in the August 23, 1998, issue of the Federal

Register (63 FR 41323).

However, at that time, the Committee inadvertently did not include

a request for modification of the tolerance for foreign material in the

three categories which were moved. The foreign material allowance in

the three moved categories was .10 percent in the old Table 2.

Therefore, these three moved categories where not consistent with the

foreign material allowance of the other seven edible peanut categories

already listed in the MAXIMUM LIMITATIONS table in Sec. 998.200 of the

Agreement. Retaining different allowances would only cause confusion in

the industry. Therefore, in order to eliminate any confusion and

correct the situation, the Committee unanimously recommended at its

March 18, 1999, public meeting to request an increase in the allowance

for the three ``with splits'' categories to .20 percent. This would

make all 10 edible peanut categories consistent. This rule implements

that recommendation.

The Agricultural Act of 1949 and the Federal Agriculture

Improvement and Reform Act of 1996 provide that the Secretary of

Agriculture shall require that all peanuts in the domestic and export

markets fully comply with all quality requirements under the Agreement.

Thus, this action applies to Agreement signer and non-signer handlers,

and peanut importers for the remainder of the crop year ending June 30,

2000, and subsequent crop years.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this rule on small entities. Accordingly, AMS has

prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of

business subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. There are approximately

36 peanut handlers and 15 importers who are subject to regulation under

the Agreement, the non-signers program, or the peanut import

regulation, and approximately 23,000 commercial peanut producers in the

16-State production area. Small agricultural service firms, which

include handlers and importers, are defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts of less

than $5,000,000, and small agricultural producers are defined as those

having annual receipts of less than $500,000. Approximately 25 percent

of the signatory handlers, less than one-third of the importers,

virtually all of the non-signer handlers, and most of the producers may

be classified as small entities. In addition, based on the 1998

marketing year average price received by farmers of 25.5 cents per

pound times approximately 3.96 billion pounds production results in the

value of domestic production totaled about $1.01 billion. Dividing this

by approximately 23,000 producers results in an average annual producer

revenue of approximately $44,000. Regarding peanut importers,

approximately 15 business entities imported peanuts during the 1998

import quota period beginning January 1, 1998, for Mexico, and April 1,

1998, for Argentina and ``other countries'' and both ending 12 months

later. They appear to cover a broad range of business entities,

including fresh and processed food handlers, and both large and small

commodity brokers who buy agricultural products on behalf of others.

The majority of peanut importers are believed to be large business

entities with annual receipts of over $5,000,000. AMS is not aware of

any peanut producers (farmers) who imported peanuts during that quota

period. In view of the foregoing, it can be concluded that the majority

of peanut handlers, and producers may be classified as small entities,

but not the importers.

A small business guide on complying with fruit, vegetable, and

specialty crop marketing agreements and orders may be viewed at the

following web site: http://www.ams.usda.gov/fv/moab.html. Any questions

about the compliance guide should be sent to Jay Guerber at the

previously mentioned address in the FOR FURTHER INFORMATION CONTACT

section.

This rule changes the outgoing quality regulation by increasing the

allowance for foreign material in the three edible categories of

peanuts ``with splits'' to .20 percent from .10 percent, to make the

allowance for all 10 edible grade categories consistent. The three

edible categories are Runner with splits, Virginia with splits, and

Spanish and Valencia with splits.

The Agricultural Act of 1949 and the Federal Agriculture

Improvement and Reform Act of 1996 provide that the Secretary of

Agriculture shall require that all peanuts in the domestic and export

markets fully comply with all quality requirements under the Agreement.

Thus, this action applies to Agreement signer and non-signer handlers,

and peanut importers for the

[[Page 56135]]

remainder of the crop year ending June 30, 2000, and subsequent crop

years.

The Committee discussed alternatives to this rule, including making

no change, but unanimously concluded that such alternatives would not

be in the best interests of the industry.

This action relaxes the outgoing quality regulations imposed on all

domestic peanut handlers and importers. It is applied uniformly on all

peanut handlers and importers, and should tend to reduce their costs

slightly since less lots will likely have to be remilled to meet

outgoing quality requirements. Also, this relaxation may slightly

reduce any reporting and recordkeeping burden on regulated persons. As

with all Federal marketing agreement and order programs, reports and

forms are periodically reviewed to reduce information requirements and

duplication by industry and public sectors. In addition, the Department

has not identified any Federal rules that duplicate, overlap or

conflict with this rule.

Further, the Committee's meetings were widely publicized throughout

the peanut industry and all interested persons were invited to attend

the meetings and participate in deliberations on all issues. Like all

Committee meetings, the February 2, 1999, and March 18, 1999, meetings

were public meetings and all entities, both large and small, were able

to express views on this issue. The Committee itself consists of 18

members of whom 9 represent handlers and 9 represent producers.

Finally, interested persons are invited to submit information on the

regulatory and informational impacts of this action on small

businesses.

After consideration of all relevant material presented, including

the information and recommendation submitted by the Committee and other

available information, it is hereby found that this rule, as

hereinafter set forth, will tend to effectuate the declared policy of

the Act.

This rule invites comments on a change to the outgoing quality

control requirements currently prescribed under the Agreement, the Non-

signers Program and the Import Regulation. Any comments received will

be considered prior to finalization of this rule.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect and that good cause exists for not postponing the effective date

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

because: (1) This action relaxes the foreign material allowance for the

three ``with splits'' categories of peanuts; (2) harvesting of the

1999-2000 crop year domestic peanuts is already underway and the rule

should cover as much of the remainder of the crop year ending June 30,

2000, as possible; (3) all peanuts in the domestic and export markets

must fully comply with all quality requirements under the Agreement;

(4) the changes need to be effective before the 2000 Mexican peanut

import quota opens January 3, 2000, so that all peanut importers are

treated equally during 2000, as required by international trade

agreements; (5) many signatory handlers, importers, and others in the

industry are aware of this action, which was unanimously recommended by

the Committee at a public meeting and interested parties had an

opportunity to provide input; and (6) this interim final rule provides

a 60-day comment period, and all written comments timely received will

be considered prior to finalization of this rule.

List of Subjects

7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

7 CFR Part 998

Marketing agreements, Peanuts, Reporting and recordkeeping

requirements.

7 CFR Part 999

Dates, Food grades and standards, Hazelnuts, Imports, Nuts,

Peanuts, Prunes, Raisins, Reporting and recordkeeping requirements,

Walnuts.

For the reasons set forth in the preamble, 7 CFR parts 997, 998,

and 999 are amended as follows:

1. The authority citation for 7 CFR parts 997, 998, and 999

continues to read as follows:

Authority: 7 U.S.C. 601-674, 7 U.S.C. 1445c-3, and 7 U.S.C.

7271.

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO MARKETING

AGREEMENT NO. 146

2. In Sec. 997.30, the ``MAXIMUM LIMITATIONS'' table is amended in

the first column ``Type and grade category'', for the entries ``Runner

with splits * * *'', ``Virginia with splits * * *'', and ``Spanish and

Valencia with splits'' * * *, in the seventh column ``Foreign materials

(percent)'', by removing the number ``.10'' and adding ``.20'' in its

place.

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED PEANUTS

3. In Sec. 998.200, the ``MAXIMUM LIMITATIONS'' table is amended in

the first column, ``Type and grade category'', for the entries ``Runner

with splits * * *'', ``Virginia with splits * * *'', and ``Spanish and

Valencia with splits'' * * *, in the seventh column ``Foreign materials

(percent)'', by removing the number ``.10'' and adding ``.20'' in its

place.

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

4. In Sec. 999.600, the ``MINIMUM GRADE REQUIREMENTS--PEANUTS FOR

HUMAN CONSUMPTION'' table is amended in the first column, ``Type and

grade category'', for the entries ``Runner with splits * * *'',

``Virginia with splits * * *'', and ``Spanish and Valencia with

splits'' * * *, in the seventh column ``Foreign materials'' by removing

the number ``.10%'' and adding ``.20%'' in its place.

Dated: October 12, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-27134 Filed 10-15-99; 8:45 am]

BILLING CODE 3410-02-P