[Federal Register Volume 59, Number 91 (Thursday, May 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11489]


[[Page Unknown]]

[Federal Register: May 12, 1994]


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DEPARTMENT OF AGRICULTURE
7 CFR Part 998

[Docket No. FV94-998-1IFR]

 

Expenses, Assessment Rate, and Indemnification Reserve for 
Marketing Agreement No. 146 Regulating the Quality of Domestically 
Produced Peanuts

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule authorizes expenditures for 
administration and indemnification, establishes an assessment rate, and 
authorizes continuation of an indemnification reserve under Marketing 
Agreement 146 (agreement) for the 1994-95 crop year. This rule also 
increases the administrative assessment rate for the 1993-94 crop year. 
Authorization of this budget enables the Peanut Administrative 
Committee (Committee) to incur operating expenses, collect funds to pay 
those expenses, and settle indemnification claims during the 1994-95 
crop year. Authorization of the increase in the administrative 
assessment rate for the 1993-94 crop year enables the Committee to 
collect sufficient funds to pay expenses projected for the remainder of 
that year. Funds to administer this program are derived from 
assessments on handlers who have signed the agreement.

DATES: Section 998.407 is effective July 1, 1994, through June 30, 
1995. Section 998.406 is effective July 1, 1993, through June 30, 1994. 
Comments received by June 13, 1994, 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 in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, PO Box 96456, room 
2523-S, Washington, DC 20090-6456, FAX 202-720-5698. Comments should 
reference the docket number and the date and page number of this issue 
of the Federal Register and will be available for public inspection in 
the Office of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Martha Sue Clark, Marketing Order 
Administration Branch, Fruit and Vegetable Division, AMS, USDA, PO Box 
96456, room 2523-S, Washington, DC 20090-6456, telephone 202-720-9918, 
or William G. Pimental, Southeast Marketing Field Office, Fruit and 
Vegetable Division, AMS, USDA, PO Box 2276, Winter Haven, FL 33883-
2276, telephone 813-299-4770.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement 146 (7 CFR part 998) regulating the quality of domestically 
produced peanuts. This agreement is effective under the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), 
hereinafter referred to as the Act.
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This interim final rule has been reviewed under Executive Order 
12887, Civil Justice Reform. Under the agreement now in effect, peanut 
handlers signatory to the agreement are subject to assessments. Funds 
to administer the peanut agreement program are derived from such 
assessments, and deductible type insurance for 1994-95 indemnification 
expenses. This rule authorizes expenditures and establishes an 
assessment rate for the Committee for the crop year beginning July 1, 
1994, and increases the administrative assessment rate for the crop 
year which began July 1, 1993. 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.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this rule on small 
entities.
    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 47,000 producers of peanuts in the 16 
States covered under the agreement, and approximately 76 handlers 
regulated under the agreement. Small agricultural producers have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts of less than $500,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$3,500,000. A majority of the producers may be classified as small 
entities, and some of the handlers covered under the agreement are 
small entities.
    Under the agreement, the assessment rate for a particular crop year 
applies to all assessable tonnage handled from the beginning of such 
year (i.e., July 1). An annual budget of expenses is prepared by the 
Committee and submitted to the Department for approval. The members of 
the Committee are handlers and producers of peanuts. They are familiar 
with the Committee's needs and with the costs for goods, services, and 
personnel for program operations and, thus, are in a position to 
formulate appropriate budgets. The budgets are formulated and discussed 
at industry-wide meetings. Thus, all directly affected persons have an 
opportunity to provide input in recommending the budget, assessment 
rate, and indemnification reserve. The handlers of peanuts who are 
directly affected have signed the marketing agreement authorizing the 
expenses that may be incurred and the imposition of assessments.
    The assessment rate recommended by the Committee for the 1994-95 
crop year was derived by dividing anticipated expenses by expected 
receipts and acquisitions of farmers' stock peanuts. It applies to all 
assessable peanuts received or acquired by handlers from July 1, 1994. 
Because that rate is applied to actual receipts and acquisitions, it 
must be established at a rate which will produce sufficient income to 
pay the Committee's expenses.
    The Committee met on March 16, 1994, and unanimously recommended 
1994-95 crop year administrative expenses of $1,056,000 and an 
administrative assessment rate of $0.60 per net ton of assessable 
farmers' stock peanuts received or acquired by handlers. In comparison, 
1993-94 crop year budgeted administrative expenditures were $1,020,000, 
and the administrative assessment rate was initially recommended and 
fixed at $0.60 per ton.
    Administrative budget items for 1994-95 which have increased 
compared to those budgeted for 1993-94 (in parentheses) are: Executive 
salaries, $140,146 ($134,304), clerical salaries, $132,500 ($127,479), 
field representatives salaries, $290,420 ($278,778), field 
representatives travel, $110,000 ($107,000), insurance and bonds, 
$8,500 ($7,500), and furniture and equipment, $9,500 ($4,000). Items 
which have decreased compared to those budgeted for 1993-94 (in 
parentheses) are: Payroll taxes, $43,000 ($45,000), office rent and 
parking, $50,000 ($52,500), postage and mailing, $12,000 ($13,000), and 
audit fees, $9,200 ($9,500). All other items are budgeted at last 
year's amounts. The administrative budget includes $14,234 for 
contingencies ($4,439 last year).
    The Committee also unanimously recommended 1994 crop 
indemnification claims payments of up to $9,000,000 and an 
indemnification assessment of $2.00 per net ton of farmers' stock 
peanuts received or acquired by handlers to continue its 
indemnification program. The 1993-94 crop year indemnification 
assessment was $1.00 per net ton. Because of the high number of claims 
being processed during the 1993-94 crop year, the Committee recommended 
a higher assessment rate so that sufficient reserve funds will be 
available. The $9,000,000 of indemnification claims coverage to be 
provided on 1994 crop peanuts includes $5,000,000 in excess loss 
insurance to be purchased by the Committee--the same as last year.
    The cost of the indemnification insurance premium and the costs to 
carry out indemnification procedures (sampling and testing of 2-AB and 
3-AB Subsamples, and crushing supervision, of indemnified peanuts, 
pursuant to Sec. 998.200 (c), are additional indemnification costs 
which must be authorized and paid from available indemnification funds. 
Such costs are not expected to exceed $2,000,000.
    The total assessment rate is $2.60 per ton of assessable peanuts 
($0.60 for administrative and $2.00 for indemnification). Assessments 
are due on the 15th of the month following the month in which the 
farmers' stock peanuts are received or acquired. Application of the 
recommended rates to the estimated assessable tonnage of 1,760,000 will 
yield $1,056,000 for program administration and $3,520,000 for 
indemnification. The indemnification amount, when added to expected 
cash carry over from 1993-94 indemnification operations of $12,609,100, 
will provide $16,129,100, which should be adequate for the 1994 fund, 
and to maintain an adequate reserve.
    The 1993-94 budget was published in the Federal Register as an 
interim final rule on June 11, 1993 (58 FR 32600), and finalized on 
August 13, 1993 (58 FR 43066). The administrative expenses and 
assessment rate for the 1993-94 crop year were based on an estimated 
assessable tonnage of 1,700,000. Due to an unexpected short crop, the 
assessable tonnage is estimated to be only 1,476,377. In order to have 
sufficient revenue to cover budgeted expenses of $1,020,000, the 
Committee unanimously recommended that the 1993-94 crop year 
administrative assessment be increased from $0.60 to $0.70 per net ton 
of assessable farmers' stock peanuts.
    While this action will impose some additional costs on handlers, 
the costs are in the form of uniform assessments on all handlers 
signatory to the agreement. Some of the additional costs may be passed 
on to producers. However, these costs will be significantly offset by 
the benefits derived from the operation of the marketing agreement. 
Therefore, the Administrator of the AMS has determined that this action 
will not have a significant economic impact on a substantial number of 
small entities.
    After consideration of all relevant matter presented, including the 
information and recommendations 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.
    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) The Committee needs to have sufficient funds to pay its 
expenses which are incurred on a continuous basis; (2) the 1993-94 crop 
year began on July 1, 1993, and the 1994-95 crop year begins on July 1, 
1994, and the marketing agreement requires that the rate of assessment 
for the fiscal period apply to all assessable peanuts handled during 
the fiscal period; (3) handlers are aware of these actions which were 
unanimously recommended by the Committee at a public meeting and are 
similar to other budget actions issued in past years; and (4) this 
interim final rule provides a 30-day comment period, and all comments 
timely received will be considered prior to finalization of this 
action.

List of Subjects in 7 CFR Part 998

    Marketing agreements, Peanuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 998 is 
amended as follows:

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF 
DOMESTICALLY PRODUCED PEANUTS

    1. The authority citation for 7 CFR part 998 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    Note: These sections will not appear in the Annual Code of 
Federal Regulations.

    2. A new section Sec. 998.407 is added to read as follows:


Sec. 998.407  Expenses, assessment rate, and indemnification reserve.

    (a) Administrative expenses. The budget of expenses for the Peanut 
Administrative Committee for the crop year beginning July 1, 1994, 
shall be in the amount of $1,056,000, such amount being reasonable and 
likely to be incurred for the maintenance and functioning of the 
Committee and for such purposes as the Secretary may, pursuant to the 
provisions of the marketing agreement, determine to be appropriate.
    (b) Indemnification expenses. Expenses of the Committee not to 
exceed $9,000,000 for indemnification claims payments and claims 
expenses, pursuant to the terms and conditions of indemnification 
applicable to the 1994 crop effective July 1, 1994, are authorized. In 
addition, indemnification expenses, in an undetermined amount estimated 
not to exceed $2,000,000, which are incurred by the Committee for 
excess loss insurance, sampling and testing fees for 2-AB and 3-AB 
Subsamples, and fees for the supervision of the crushing of indemnified 
peanuts are also authorized.
    (c) Rate of assessment. Each handler shall pay to the Committee, in 
accordance with Sec. 998.48 of the marketing agreement, an assessment 
at the rate of $2.60 per net ton of farmers' stock peanuts received or 
acquired other than from those described in Secs. 998.31(c) and (d). A 
total of $0.60 shall be for administrative expenses and a total of 
$2.00 shall be for indemnification. Assessments are due on the 15th of 
the month following the month in which the farmers' stock peanuts are 
received or acquired.
    (d) Indemnification reserve. Monetary additions to the 
indemnification reserve, established in the 1965 crop year pursuant to 
Sec. 998.48 of the agreement, shall continue. That portion of the total 
assessment funds accrued from the $2.00 rate not expended on 
indemnification claims payments on 1994 crop peanuts and related 
expenses shall be kept in such reserve and shall be available to pay 
indemnification expenses on subsequent crops.


Sec. 998.406  [Amended]

    3. In Sec. 998.406, paragraph (c) is amended by removing ``$1.60'' 
and adding in its place ``$1.70'' and by removing ``$0.60'' and adding 
in its place ``$0.70.''

    Dated: May 5, 1994.
Robert C. Keeney,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 94-11489 Filed 5-11-94; 8:45 am]
BILLING CODE 3410-02-P