[Federal Register Volume 60, Number 161 (Monday, August 21, 1995)]
[Rules and Regulations]
[Pages 43353-43355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20644]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 997

[Docket No. FV95-997-1IFR]


Assessment Obligation for 1995-96 Crop Year Peanuts Under 7 CFR 
Part 997; Peanuts Not Subject to Peanut Marketing Agreement No. 146

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This document implements an administrative assessment on 
farmers stock peanuts received or acquired by handlers who are not 
signatory (non-signatory handlers) to Peanut Marketing Agreement No. 
146 (Agreement). The assessment rate for 1995-96 crop year peanuts 
shall be $.70 per net ton. In addition, this rule clarifies which 
categories of farmers stock peanuts are assessable. This rule also 
establishes that non-signatory handlers shall submit their pro rata 
assessment to the Secretary of Agriculture. The assessment rate is the 
same as the administrative assessment established by the Department on 
handlers who are signers of the Agreement (signatory handlers).

DATES: Effective July 1, 1995, through June 30, 1996. Comments which 
are received by September 20, 1995 will be considered prior to any 
finalization of this interim 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, P.O. Box 96456, room 
2523-S, Washington, D.C. 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: Richard Lower, Marketing Order 
Administration Branch, Fruit and Vegetable Division, AMS, USDA, room 
2523-S, P.O. Box 96456, Washington, D.C. 20090-6456; telephone: (202) 
720-2020, FAX (202) 720-5698.

SUPPLEMENTARY INFORMATION: This interim final rule is issued pursuant 
to the requirements of the Agricultural Marketing Agreement Act of 1937 
(Act), as amended (7 U.S.C. 601-674), and as further amended December 
12, 1989; Public Law 101-220, section 4 (1), (2), 103 Stat. 1878, 
December 12, 1989; and Public Law 103-66, section 8b(b)(1), 107 Stat. 
312, August 10, 1993.
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. The Department is establishing a 1995-96 crop year 
assessment rate applicable to non-signatory handlers effective July 1, 
1995-June 30, 1996. Farmers stock peanuts received or acquired by non-
signatory handlers during that crop year will be subject to the 
assessment. 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 interim final 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 action 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 45 handlers of peanuts who have not signed 
the Agreement and, thus, will be subject to the regulations specified 
herein. There are also approximately 47,000 producers of peanuts, who 
potentially might do business with these handlers. The Small Business 
Administration now defines small agricultural service firms (13 CFR 
121.601) as those having annual receipts of less than $5,000,000 and 
small agricultural producers as those whose annual receipts are less 
than $500,000. A majority of non-signatory handlers and peanut 
producers may be classified as small entities.
    The Agreement was established in 1965 and plays a very important 
role in maintaining the industry's quality control efforts. The Peanut 
Administrative Committee (Committee) was established by the Agreement 
and works with the Department in administering the marketing agreement 
program. Approximately 95 percent of the domestically produced peanut 
crop is marketed by handlers who are signatory to the Agreement.
    Since aflatoxin was found in peanuts in the mid-1960's, the 
domestic peanut industry has sought to minimize aflatoxin contamination 
in peanuts and peanut products. Agreement requirements provide that 
farmers stock peanuts with visible Aspergillus flavus mold (the 
principal source of aflatoxin) must be diverted to non-edible uses. 
Each lot of shelled peanuts destined for edible channels must be 
officially sampled and chemically tested for aflatoxin by Department 
laboratories or laboratories approved by the Committee.
    Public Law 101-220 amended section 608b of the Act to require that 
all peanuts handled by persons who have not entered into the Agreement 
(non-signers) be subject to quality and inspection requirements to the 
same extent and manner as are required under the Agreement. 
Approximately 5 percent of the U.S. peanut crop is marketed by non-
signer handlers.
    Regulations to implement Pub. L. 101-220 were issued and made 
effective on December 4, 1990 (55 FR 49980). The regulations, which 
have been amended several times, are published in 7 CFR Part 997--
Provisions Regulating the Quality of Domestically Produced Peanuts 
Handled by Persons Not Subject to the Peanut Marketing Agreement. Under 
these provisions, no peanuts may be sold or otherwise disposed of for 
human consumption if the peanuts fail to meet the edible quality 
requirements of the Agreement. All amendments were made to ensure that 
the non-signer handling requirements remain the same as, or are equal 
to, the handling requirements applied to signatory handlers under the 
Agreement.
    Public Law 103-66 (107 Stat. 312) provides for mandatory assessment 
of farmer's stock peanuts acquired by non-signatory peanut handlers. 
Under this 

[[Page 43354]]
law, paragraph (b) of section 1001, of the Agricultural Reconciliation 
Act of 1993, specifies that: (1) Any assessment (except indemnification 
assessments) imposed under the Agreement on signatory handlers also 
shall apply to non-signatory handlers, and (2) such assessment shall be 
paid to the Secretary.
    The Committee meets in February or March each year and recommends 
to the Secretary a per ton, administrative assessment of farmers stock 
peanuts received or acquired by signatory handlers for the upcoming 
crop year. The crop year covers the 12-month period from July 1 to June 
30.
    The Committee met on March 23, 1995, and unanimously recommended a 
$.70 administrative assessment per ton of 1995-96 crop year farmers 
stock peanuts received or acquired by signatory handlers. The 
Department published an interim final rule in the May 17, 1995, issue 
of the Federal Register (60 FR 26348) which implemented such an 
administrative assessment on signatory handlers.
    Peanuts will be assessed based on the rate applicable to the crop 
year in which the lot is presented for incoming inspection. Therefore, 
pursuant to Pub. L. 103-66, this interim final rule provides notice 
that, for the 1995-96 crop year, the Department will assess non-
signatory handlers a $.70 administrative assessment per net ton of 
farmers stock peanuts received or acquired by non-signatory handlers.
    This rule clarifies which categories of farmers stock peanuts are 
assessed. Segregation 1 peanuts are assessed under the Agreement and 
under this regulation. Until recently, all Segregation 2 and 3 peanuts 
were subject to assessment. However, the Committee recommended that 
signatory handler assessments should not be applied to Segregation 2 
and 3 peanuts that are crushed for oil. Crushing represents the minimum 
market value that handlers can receive for poor quality peanuts. Thus, 
it is reasonable that assessments should not be applied to such 
peanuts. The Secretary approved the Committee's recommendation by 
issuing an interim final rule in the July 17, 1995, issue of the 
Federal Register (60 FR 36207. Thus, this rule also establishes that 
Segregation 2 and 3 peanuts acquired by non-signatory handlers and 
disposed of to crushing shall not be assessed pursuant to Sec. 997.51. 
Under some surplus market conditions, Segregation 1 peanuts may also be 
crushed for oil. However, such peanuts are not exempt from assessments.
    The assessment will be applied to all such peanuts received or 
acquired for a handler's account, including the handler's own 
production. The assessment will be based on: (1) Tonnage reported on 
incoming inspection certificates of each handler's Segregation 1 
farmers stock peanuts received or acquired for the handler's account, 
and (2) Segregation 2 and 3 tonnage received or acquired for non-edible 
uses, except Segregation 2 and 3 peanuts sent to crushing.
    Segregation 1 peanuts are defined as farmers stock peanuts with not 
more than 2 percent damaged kernels nor more than 1.00 percent 
concealed damage caused by rancidity, mold, or decay and which are free 
from visible Aspergillus flavus. Segregation 2 peanuts are defined as 
farmers stock peanuts with more than 2 percent damaged kernels or more 
than 1.00 percent concealed damage caused by rancidity, mold, or decay 
and which are free from visible Aspergillus flavus. Segregation 3 
peanuts are defined as farmers stock peanuts with visible Aspergillus 
flavus.
    Handling is defined in Sec. 997.14 as engaging in the receiving or 
acquiring, cleaning and shelling, cleaning inshell, or crushing of 
peanuts and in the shipment (except as a common or contract carrier of 
peanuts owned by another) or sale of cleaned inshell or shelled peanuts 
or other activity causing peanuts to enter the current of commerce. 
Handling does not include the sale or delivery of peanuts by a producer 
to a handler or to an intermediary person engaged in delivering peanuts 
to handlers and the sale or delivery of peanuts by such intermediary to 
a handler.
    Section 997.15 defines a non-signatory handler as ``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 handler: Provided, That this term does not 
include handlers signatory to the Peanut Marketing Agreement.''
    Thus, for the 1995-96 crop year, a handler who receives or acquires 
a 100,000 pound shipment of Segregation 1 farmers stock peanuts will 
pay an assessment of $35 (100,000 pounds is 50 tons, times 70 cents per 
ton, equals $35).
    The assessment is applied, pro rata, on each non-signatory handler 
who is the first handler to receive or acquire an assessable lot of 
farmers stock peanuts. Only one assessment is applied to each farmers 
stock peanut lot. Assessments will not be applied on peanuts received 
or acquired from other handlers, speculators, buying points, brokers, 
or other entities who have paid assessments on the peanuts received or 
acquired.
    Assessments will not be applied on peanuts received on behalf of an 
area association pursuant to a peanut receiving and warehouse contract.
    Non-signatory producer/handlers who store peanuts of their own 
production (``farm-stored'' peanuts) will, at some point prior to 
further handling, obtain incoming inspection on such peanuts. At the 
time of incoming inspection, such producer/handlers shall pay their pro 
rata administrative assessment on such farm stored peanuts.
    Speculators, brokers, or other entities who take possession of 
farmers stock peanuts, submit such peanuts for incoming inspection, and 
subsequently enter such peanuts into edible and non-edible channels of 
commerce will pay assessments on such peanuts--except Segregation 2 and 
3 peanuts crushed for oil.
    A crop year's original assessment may be increased by the Secretary 
to cover a deficit in administrative funds, but only if based on a 
similar increase applied by the Secretary on signatory handlers. Such 
an increase will be applied on all assessable peanuts handled by non-
signatory handlers during the crop year in which the increased 
assessment occurred.
    Also pursuant to Pub. L. 103-66, this rule establishes that non-
signatory handlers pay their administrative assessment to the 
Secretary. The Secretary will bill non-signatory handlers on a periodic 
basis determined by the Secretary. Each non-signatory handler will be 
responsible for remitting payment by the date specified. Payment in the 
form of a personal check, cashier's check, or money order shall be 
remitted to the Department. Audits of each handler's account may be 
conducted by the Department to reconcile farmers stock peanuts received 
or acquired and assessments paid.
    This interim final rule is the third notice of intent to assess 
non-signatory peanut handlers. A similar assessment notice for the 1994 
crop year was published in the August 3, 1994 issue of the Federal 
Register (59 FR 39419). However, because the Department was unprepared 
to begin collecting farmers stock data and unable to commence an 
assessment billing and collection procedure, implementation of 
assessments was delayed until the 1995-96 crop year (60 FR 6394, 
February 2, 1995).
    The Department corrects an error in the sample assessment 
obligation calculation published in that final rule. 

[[Page 43355]]
The erroneous example indicated that application of a $.60 per ton 
assessment rate on 50,000 tons of Segregation 1 farmers stock peanuts 
would result in an assessment obligation of $60. However, the correct 
assessment obligation in that example should have been $30 (50 tons, 
times $.60 per ton, equals $30).
    Violation of this assessment regulation may result in a penalty in 
the form of an assessment by the Secretary equal to 140 percent of the 
support price of quota peanuts for the crop year during which the 
violation occurs. The support price for quota peanuts is determined 
under 7 U.S.C. 1445c-3.
    This administrative assessment rate will impose some additional 
costs on non-signatory handlers. However, the costs will be in the form 
of uniform assessments on all handlers who are not signatory to the 
Agreement as well as all signatory handlers.
    In accordance with the Paperwork Reduction Act of 1988 (44 U.S.C. 
Chapter 35), the information collection requirements that are contained 
in this rule have been previously approved by the Office of Management 
and Budget (OMB) and have been assigned OMB No. 0581-0163.
    Based on available information, the Administrator of the AMS has 
determined that the issuance of this interim final rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule is required by law. This administrative assessment will be 
applied uniformly to all non-signatory handlers and will be of benefit 
to all.
    Pursuant to 5 U.S.C. 553, it is also found and determined that, 
upon good cause, 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) Public Law 103-66 requires the Department 
to impose an administrative assessment on peanuts received or acquired 
for the account of non-signatory handlers; (2) notice of intent to 
assess the 1995 crop peanuts was published in the Federal Register as a 
finalization of an interim final rule on February 2, 1995 (60 FR 6394); 
(3) the peanut crop year begins July 1, and to achieve the intended 
purpose of the law this action should be taken promptly; and (4) this 
interim final rule provides a 30-day comment period and any comments 
received will be considered prior to finalization of any rule.

List of Subjects in 7 CFR Part 997

    Food grades and standards, Peanuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 997 is 
amended as follows:
PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY 
PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO THE PEANUT 
MARKETING AGREEMENT

    1. The authority citation for 7 CFR part 997 continues to read as 
follows:

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

    2. A new paragraph (b)(6) is added to Sec. 997.40 to read as 
follows:


Sec. 997.40  Reconditioning and disposition of peanuts failing quality 
requirements.

* * * * *
    (b) * * *
    (6) Peanuts handled pursuant to paragraphs (b)(4)(i) and 
(b)(4)(iii) of this section are exempt from Sec. 997.51 Assessments.
    3. A new undesignated centerheading and Sec. 997.100 are added to 
read as follows:

    Note: This section will not appear in the Code of Federal 
Regulations.

Implementing Regulation


Sec. 997.100  Assessments.

    For the 1995-96 crop year, the administrative assessment is $0.70 
per net ton of assessable farmers stock peanuts received or acquired by 
each non-signatory handler.

    Dated: August 15, 1995.
Terry C. Long,
Acting Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-20644 Filed 8-18-95; 8:45 am]
BILLING CODE 3410-02-P