[Federal Register Volume 64, Number 78 (Friday, April 23, 1999)]
[Proposed Rules]
[Pages 20107-20123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10134]



  Federal Register / Vol. 64, No. 78 / Friday, April 23, 1999 / 
Proposed Rules  

[[Page 20107]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1216

[FV-98-702-PR 2]


Proposed Peanut Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule and referendum Order.

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SUMMARY: This proposed rule would establish an industry-funded 
promotion, research, and information program for peanuts. A proposed 
program--the Peanut Promotion, Research, and Information Order 
(Order)--was submitted to U.S. Department of Agriculture (USDA or 
Department) by the American Farm Bureau Federation. Under the Order, 
peanut producers would pay an assessment of 1 percent of the price of 
farmers stock peanuts sold to first handlers. First handlers and 
marketing associations would remit the assessments to the proposed 
National Peanut Board (Board). The proposed program would be 
implemented under the Commodity Promotion, Research, and Information 
Act of 1996 (Act). In addition, the USDA is announcing that a 
referendum will be conducted among eligible peanut producers to 
determine whether they favor the implementation of the program.

DATES: In Order to be eligible to vote, peanut producers must have 
produced peanuts during the period from August 1, 1997, through July 
30, 1998 (representative period). The voting period for the referendum 
will be May 24 through June 11, 1999.

FOR FURTHER INFORMATION CONTACT: Daniel R. Williams II, Research and 
Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244, 
1400 Independence Avenue, S.W., Room 2535-S, Washington, D.C. 20250-
0244; telephone (202) 720-9916 or fax (202) 205-2800.

SUPPLEMENTARY INFORMATION: This Order is issued pursuant to the 
Commodity Promotion, Research, and Information Act of 1996, 7 U.S.C. 
7401-7425; Public Law 104-127, enacted April 4, 1996, hereinafter 
referred to as the Act.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
Section 524 of the Act provides that the Act shall not affect or 
preempt any other Federal or state law authorizing promotion or 
research relating to an agricultural commodity.
    Under Section 519 of the Act, a person subject to the Order may 
file a petition with the Secretary stating that the Order, any 
provision of the Order, or any obligation imposed in connection with 
the Order, is not established in accordance with the law, and 
requesting a modification of the Order or an exemption from the Order. 
Any petition filed challenging the Order, any provision of the Order, 
or any obligation imposed in connection with the Order, shall be filed 
within 2 years after the effective date of the Order, provision, or 
obligation subject to challenge in the petition. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, the 
Secretary of Agriculture (Secretary) will issue a ruling on a petition. 
The Act provides that the district court of the United States for any 
district in which the petitioner resides or conducts business shall 
have the jurisdiction to review a final ruling on the petition, if the 
petitioner files a complaint for that purpose not later than 20 days 
after the date of the entry of the Secretary's final ruling.

Executive Order 12866

    This proposed rule has been determined not significant for purposes 
of Executive Order 12866 and therefore has not been reviewed by the 
Office of Management and Budget (OMB).

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 
601 et seq.], the Agency has examined the impact of the proposed rule 
on small entities. The purpose of the RFA is to fit regulatory actions 
to the scale of businesses subject to such actions so that small 
businesses will not be disproportionately burdened.
    The Act authorizes generic programs of promotion, research, and 
information for agricultural commodities. Congress found that it is in 
the national public interest and vital to the welfare of the 
agricultural economy of the United States to maintain and expand 
existing markets and develop new markets and uses for agricultural 
commodities through industry-funded, government-supervised, generic 
commodity promotion programs.
    This program is intended to develop and finance an effective and 
coordinated program of promotion, research, and consumer information to 
maintain and expand the markets for peanuts. A proposal was submitted 
by the American Farm Bureau Federation (proponent), working in 
cooperation with 20 state and regional peanut grower organizations 
representing the nine primary peanut-producing states and other states. 
The proponent has proposed that peanut producers approve the program in 
a referendum in advance of its implementation, and producer members 
would serve on the 10 member Board that would administer the program 
under USDA's supervision. In addition, any person subject to the 
program may file with the Secretary a petition stating that the Order 
or any provision is not in accordance with law and requesting a 
modification of the Order or an exemption from the Order.
    While the proposed Order would impose certain recordkeeping 
requirements on first handlers, information required under the proposed 
Order could be compiled from records currently maintained. First 
handlers and area marketing associations--for peanuts placed under loan 
with the Commodity Credit Corporation (CCC) in the price support 
program administered for CCC by USDA's Farm Service Agency (FSA)--would 
collect and remit all assessments to the Board. Their responsibilities 
would include accurate recordkeeping and accounting of all peanuts 
purchased or contracted for, including the number of pounds handled, 
price paid to the producer, and when peanuts are purchased. The forms 
require the minimum information necessary to effectively carry out the 
requirements of the program, and their use is necessary to fulfill the 
intent of the Act. Such records shall be retained for at least two 
years. These requirements are either already being conducted as a 
normal business practice or are required by other USDA peanut 
regulations. The added burden to first handlers and area marketing 
associations for a peanut promotion, research, and information program 
is therefore expected to be minimal.
    There is also a minimal burden on producers. The burden relates to 
those producers who would seek nomination to serve on the Board and 
those who vote in referenda. In addition, the proposed Order would 
require producers to keep records and to provide information to the 
Board or the Secretary when requested. However, it is not anticipated 
that producers would be required to submit forms to the Board. Most 
likely, the information would be obtained through an audit of a 
producer's records to confirm information provided by a first handler 
or if a first handler did not file the required reports as part of the 
Board's compliance operation.

[[Page 20108]]

    The estimated annual cost of providing the information to the Board 
by an estimated 98 respondents (21 producers, 57 first handlers, and 20 
producer organizations) would be $4,059.85 or $5.00 per producer, 
$66.05 per first handler, and $9.50 per producer organization.
    The Department would oversee program operations and, if the program 
is implemented, would conduct a referendum (1) every five years to 
determine whether peanut producers support continuation of the program, 
(2) at the request of the Board established under the Order, or (3) at 
the request of 10 percent or more of the number of persons eligible to 
vote in referenda. Additionally, the Secretary may conduct a referendum 
at any time to determine whether the continuation, suspension, or 
termination of the Order or a provision of the Order is favored by 
those eligible to vote in referenda.
    There are approximately 25,000 producers and 57 first handlers of 
peanuts that would be subject to the program. Most of the producers 
would be classified as small businesses under the criteria established 
by the Small Business Administration (SBA) (13 CFR 121.601). Most first 
handlers would not be classified as small businesses. The SBA defines 
small agricultural handlers as those whose annual receipts are less 
than $5 million, and small agricultural producers are defined as those 
having annual receipts of not more than $500,000 annually.
    According to USDA's National Agricultural Statistics Service 
(NASS), the nine major peanut-producing states in the United States 
account for 99 percent of the peanuts grown in this country. The 
combined production from these states totaled 3.5 billion pounds in 
1997. The farm value of peanuts in 1997 reached $932 million. NASS 
reports that Georgia was the largest producer (38 percent of the 
total), followed by Texas (23 percent), Alabama (11 percent), North 
Carolina (9 percent), Florida (6 percent), Virginia (5 percent), 
Oklahoma (5 percent), New Mexico (1 percent), and South Carolina (1 
percent). According to 1992 Census of Agriculture (Census) data, small 
amounts of peanuts were also grown in seven other states.
    According to the proponent, based on Census data for these nine 
states, 36 percent of the peanut-producing counties in the United 
States acquired 35 percent or more of their total crop income from 
peanuts. Twenty-four percent of the counties had 50 percent or more of 
their crop income from peanuts. From a state perspective, 70 percent of 
the crop income in Alabama's peanut-producing counties is generated 
from peanuts. For Virginia, the percentage is 48 percent. In addition, 
16,194 farms harvested peanuts in 1992. Of these, 15,914 were located 
in the nine primary peanut-producing states.
    Three main types of peanuts are grown in the United States: 
Florunners, Virginia and Spanish. The southeast growing region grows 
mostly the medium-kernel Runner peanuts. The southwest growing region 
used to grow two-thirds Spanish and one-third Runner peanuts, but now 
more Runners than Spanish are grown. Virtually all of the Spanish 
peanut production is in Oklahoma and Texas. In the Virginia-Carolina 
region, mainly large-kernel Virginia peanuts are grown. New Mexico 
grows a fourth type of peanut, the Valencia.
    Peanut manufacturers produce three principal peanut products: 
peanut butter, packaged nuts (including salted, unsalted, flavored, and 
honey-roasted nuts), and peanut candies. In most years, half of all 
peanuts produced in the United States for edible purposes are used to 
manufacture peanut butter. Packaged nuts account for almost one-third 
of all processed peanuts. Some of these (commonly referred to as 
``ballpark'' peanuts) are roasted in the shell, while a much larger 
quantity is used as shelled peanuts packed as dry-roasted peanuts, 
salted peanuts, and salted mixed nuts. Some peanuts are ground to 
produce peanut granules and flour. Other peanuts are crushed to produce 
oil.
    According to USDA's Foreign Agricultural Service, U.S. exports of 
peanuts (including peanut meal, oil, and peanut butter) totaled 880 
million in-shell equivalent pounds in 1997, with a value of $285 
million (U.S. point of departure for the foreign country). Of the total 
quantity, 60 percent was shelled peanuts used as nuts, 11 percent was 
blanched or otherwise prepared or preserved peanuts, 10 percent was in-
shell peanuts, 7 percent was peanut butter, 4 percent was shelled oil 
stock peanuts, 4 percent was crude peanut oil, and 3 percent was 
refined peanut oil.
    The major destinations for domestic shelled peanuts for use as nuts 
are Canada, Mexico, the United Kingdom, and the Netherlands. Blanched 
or otherwise prepared peanuts are sent mainly to Western Europe, 
especially the Netherlands, France, and Spain. In-shell peanuts are 
mainly exported to Canada and various countries in Western Europe. 
Peanut butter is sent to many countries, with the largest amounts going 
to Canada and Saudi Arabia. Peanut oil and oil stock peanuts are 
exported world-wide, but major destinations can vary from year to year.
    Approximately 250 million in-shell equivalent pounds of peanuts and 
processed peanuts (including oil and peanut butter) were imported in 
1997 with a combined value (f.o.b. country of origin) of $73 million. 
Most of the imports (45 percent) were shelled peanuts for use as nuts. 
The major U.S. supplier is Argentina, but several other countries 
export shelled peanuts to the United States, including Mexico, 
Nicaragua, and South Africa.
    Peanut butter imports are also significant and accounted for about 
32 percent of the total quantity of nuts (in-shell basis) imported in 
1997. Most peanut butter imports come from Canada and Argentina. The 
other major import category--crude and refined peanut oil--are shipped 
mainly from Argentina and Nicaragua and account for approximately 18 
percent of total imports (in-shell equivalent basis). In-shell peanuts, 
primarily from Mexico, accounted for nearly 3 percent of total imports 
in 1997. About 3 percent of total imports consisted of blanched or 
other processed peanuts, mainly from China. Imports of oil stock 
shelled peanuts were negligible.
    Most peanuts produced in other countries are crushed for oil and 
protein meal. The United States is the main producer of peanuts used in 
such edible products as peanut butter, roasted peanuts, and peanut 
candies. Peanuts are one of the world's principal oilseeds, ranking 
fourth behind soybeans, cottonseed, and rapeseed. India and China 
usually account for half of the world's peanut production.
    According to the ``Agricultural Statistics Report'' published by 
USDA, during the 1995-96 season, the average annual production per U.S. 
producer was 144,228 pounds of peanuts. Peanuts produced during these 
growing seasons provided average annual gross sales of $42,222 per 
peanut producer. The value of the 1995-96 crop was approximately $1.013 
billion. During the same period, per capita consumption in the United 
States was 5.7 pounds of peanuts.
    The Order would authorize a fixed assessment paid by producers (to 
be collected by first handlers) at a rate of 1 percent of the price 
paid for all farmers stock peanuts, regardless of whether the peanuts 
are sold commercially or placed under loan with CCC in the price 
support program administered for CCC by FSA.
    Section 516(a)(1) of the Act provides authority to the Secretary to 
exempt from the Order any de minimis quantity of an agricultural 
commodity otherwise covered by the Order. The proponent

[[Page 20109]]

has elected not to provide for exemptions for a de minimis amount 
regarding peanuts. Therefore, the term de minimis is not defined in the 
proposed Order, and a de minimis exemption is not included.
    At the proposed rate of assessment of 1 percent of farm value, the 
Board would collect approximately $10 million annually, assuming 1 
billion pounds of peanuts are produced. It is expected that the 1 
percent rate of assessment would represent approximately 1 percent of 
producers' average return. In 1995-96, the average price for peanuts 
was $0.293 per pound.
    USDA will keep all individuals informed throughout the referendum 
process to ensure that they are aware of and are able to participate in 
the referendum. USDA will publicize information regarding the 
referendum process so that trade associations and related industry 
media can be kept informed. If the program is implemented, the newly 
established Board would recommend to USDA regulations for the program.
    In addition, the peanut industry would nominate producers to serve 
as members on the Board. The Board would recommend the assessment rate, 
programs and projects, a budget, and any other rules and regulations 
that might be necessary for the administration of the program. USDA 
would ensure that the nominees represent the peanut industry in 
accordance with the Act. Primary peanut-producing states are defined in 
the Order as Alabama, Florida, Georgia, New Mexico, North Carolina, 
Oklahoma, South Carolina, Texas, and Virginia, provided that these 
states maintain 3-year average production of at least 10,000 tons of 
peanuts each. Minor peanut-producing states are defined in the Order as 
all peanut-producing states other than the primary peanut-producing 
states. Currently, the following states would be considered minor 
states: Arizona, California, Louisiana, Mississippi, and Tennessee.
    Each primary producing state would have one member on the Board, 
and the minor peanut-producing states would be represented collectively 
by one member on the Board. Each member would have an alternate. 
Therefore, the Board would have 10 members and 10 alternates.
    Proposed recordkeeping and reporting requirements for the peanut 
promotion, research, and information program would be designed to 
minimize the burden on first handlers. It is USDA's goal to collect as 
much information as possible from forms already submitted to another 
USDA agency. In addition, any information collection that could not 
occur through forms already in use would pose a minimal additional 
burden. The peanut promotion program would be designed to strengthen 
the position of peanuts in the marketplace, maintain and expand 
existing domestic and foreign markets, and develop new uses and markets 
for peanuts.
    The estimated annual cost of providing the information to the 
proposed Board by an estimated 98 respondents (21 producers, 57 first 
handlers, and 20 producer organizations) would be $4,059.85, or $5.00 
per producer, $66.05 per first handler, and $9.50 per producer 
organization.
    With regard to alternatives to this proposed rule, the Act itself 
does provide for authority to tailor a program according to the 
individual needs of an industry. Provision is made for permissive terms 
in an Order in Section 516 of the Act, and other sections provide for 
alternatives. For example, Section 514 of the Act provides for Orders 
applicable to (1) producers, (2) first handlers and other persons in 
the marketing chain as appropriate, and (3) importers (if imports are 
subject to assessment). Section 516 authorizes an Order to provide for 
exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; coverage of research, 
promotion, and information activities to expand, improve, or make more 
efficient the marketing or use of an agricultural commodity in both 
domestic and foreign markets; provision for reserve funds; provision 
for credits for generic and branded activities; and assessment of 
imports. In addition, Section 518 of the Act provides for referenda to 
ascertain approval of an Order to be conducted either prior to its 
going into effect or within 3 years after assessments first begin under 
the Order. An Order also may provide for its approval in a referendum 
to be based upon (1) a majority of those persons voting; (2) persons 
voting for approval who represent a majority of the volume of the 
agricultural commodity; or (3) a majority of those persons voting for 
approval who also represent a majority of the volume of the 
agricultural commodity. Section 515 of the Act provides for 
establishment of a board from among producers, first handlers, and 
others in the marketing chain as appropriate and importers, if 
importers are subject to assessment.
    The proposal included provisions for both domestic and foreign 
market expansion and improvement; reserve funds; and an initial 
referendum to be conducted prior to the Order going into effect, with 
approval based upon a majority of those persons voting in a referendum.
    In order to conduct the Regulatory Flexibility Analysis regarding 
the impact of this proposed Order on small entities, the proposed rule 
that was published in the Federal Register on November 6, 1998 (63 FR 
59907) invited comments concerning the potential effects of the 
proposed Order. Concerning the information collection burden, one 
comment was received regarding the effect of the paperwork burden on 
first handlers. The concern of the commenter was that there would be 
significant administrative and financial burdens associated with 
collecting the information necessary to produce these reports and, 
finally, the production of the reports. The Department recognizes the 
burden that may be placed on first handlers due to the reports. In 
order to reduce this burden on first handlers, we modified Sec. 1216.60 
to eliminate the monthly requirement for first handlers to identify 
each producer, the address of the producer, and the date assessments 
were collected. However, we have also modified Sec. 1216.61  Books and 
records to clarify what books and records first handlers and producers 
must maintain and make available to the Secretary and Board employees 
as necessary. This section now states that copies of FSA 1007 forms, 
the names and addresses of producers, and the date when assessments 
were collected must be maintained by first handler and producer. One 
purpose of this change is to help ensure that this information is 
available for enforcement purposes.

Paperwork Reduction Act

    In accordance with the Office of Management and Budget (OMB) 
regulation (5 CFR Part 1320) which implements the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements that may be imposed by this Order have been 
submitted to OMB for approval and have been approved under OMB control 
number 0581-0093.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    OMB Number for background form (number 1 below): 0505-0001.
    Expiration Date of Approval: June 30, 1999.
    OMB Number for other information collections: 0581-0093.
    Expiration Date of Approval: November 30, 2000.
    Type of Request: Revision of currently approved information 
collections for advisory committees and boards and for research and 
promotion programs.

[[Page 20110]]

    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the Act.
    In addition, there will be the additional burden on producers of 
voting in referenda. The referendum ballot, which represents the 
information collection requirement relating to referenda, is addressed 
in a final rule on referendum procedures which is published separately 
in this issue of the Federal Register.
    Under this program, first handlers would be required to collect 
assessments from producers and file reports with and submit assessments 
to the Board. While the proposed Order would impose certain 
recordkeeping requirements on first handlers, information required 
under the proposed Order could be compiled from records currently 
maintained. Such records shall be retained for at least two years 
beyond the marketing year of their applicability. The estimated annual 
cost of providing the information to the Board by an estimated 98 
respondents (21 producers, 57 first handlers, and 20 producer 
organizations) would be $4,059.85, or $5.00 per producer, $66.05 per 
first handler, and $9.50 per producer organization.
    The Order's provisions have been carefully reviewed, and every 
effort has been made to minimize any unnecessary recordkeeping costs or 
requirements, including efforts to utilize information already 
submitted under other peanut programs administered by the Department.
    Most of the proposed forms require the minimum information 
necessary to effectively carry out the requirements of the program, and 
their use is necessary to fulfill the intent of the Act. Such 
information can be supplied from the FSA Form 1007 without data 
processing equipment or outside technical expertise. FSA Form 1007 
Inspection Certificate and Sales Memorandum is a standard form used 
within the peanut industry to collect peanut crop characteristics and 
value of the load from the producer to the first handler. This form 
will provide the information that would be needed in order to complete 
the first handlers form for the Board. In addition, there are no 
additional training requirements for individuals filling out reports 
and remitting assessments to the Board. The forms would be simple, easy 
to understand, and place as small a burden as possible on the person 
required to file the information.
    Collecting information monthly would coincide with normal industry 
business practices. Reporting other than monthly would impose an 
additional and unnecessary recordkeeping burden on first handlers. The 
timing and frequency of collecting information is intended to meet the 
needs of the industry while minimizing the amount of work necessary to 
fill out the required reports.
    Information collection requirements that are included in this 
proposal include:
    (1) A background information form to be completed by candidates 
nominated by certified producer organizations for appointment to the 
Board.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
producer.
    Respondents: Producers.
    Estimated number of Respondents: 21 (average of 40 for initial 
nominations to the Board and approximately 12 respondents annually 
thereafter for each 3-year period).
    Estimated number of Responses per Respondent: 1 every 3 years.
    Estimated Total Annual Burden on Respondents: 20 hours for the 
initial nominations to the board and 6 hours annually thereafter.
    (2) A monthly report by each first handler of peanuts.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per each first handler 
reporting on peanuts handled.
    Respondents: First handlers.
    Estimated number of Respondents: 57.
    Estimated number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 342 hours.
    (3) Nomination information by which certified producer 
organizations would nominate producers for membership on the Board.
    Estimate of Burden: Public reporting burden for this collecting of 
information is estimated to average 0.5 hours per response.
    Respondents: Certified producer organizations.
    Estimated number of Respondents: 20.
    Estimated number of Responses per Respondent: 1 per year.
    Estimated Total Annual Burden on Respondents: 10 hours.
    (4) An application for peanut producer organizations for 
certification of eligibility to nominate Board members.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
organization.
    Respondents: Peanut producer organizations.
    Estimated number of Respondents: 9.
    Estimated number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 9 hours.
    (5) A requirement to maintain records sufficient to verify reports 
submitted under the Order.
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.5 hours per recordkeeper 
maintaining such records.
    Recordkeepers: First handlers.
    Estimated number of recordkeepers: 57.
    Estimated total recordkeeping hours: 28.5 hours.
    Comments were invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of functions of the 
Order and the Department's oversight of the program, including whether 
the information will have practical utility; (b) the accuracy of USDA's 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology. 
Information that is needed for recordkeeping would come from the FSA 
1007 form. As stated earlier, this form is a standard form within the 
peanut industry and its use would result in no new training of 
personnel.
    As discussed previously in the Regulatory Flexibility Analysis, one 
comment was received regarding the effect of the paperwork burden on 
first handlers. The concern of the commenter was that there would be 
significant administrative and financial burdens associated with 
collecting the information necessary to produce these reports and, 
finally, the production of the reports. The Department recognizes the 
burden that may be placed on first handlers due to the reports. In 
order to reduce this burden on first handlers, we have modified 
Sec. 1216.60 to eliminate the monthly requirement for first handlers to 
identify the name and address of each producer and the date assessments 
were collected. However, we have also modified Sec. 1216.61 Books and 
records to clarify what books and records that first handlers and 
producers must maintain and make available to the Secretary and Board 
employees. This section now states that

[[Page 20111]]

copies of FSA 1007 forms, the name and addresses of producers, and the 
date when assessments were collected must be maintained by the first 
handler and producer. The purpose of this change is to help ensure that 
this information is available for enforcement purposes.

Background

    The Act authorizes the Secretary, under a generic authority, to 
establish agricultural commodity research and promotion Orders. Section 
516 of the Act provides permissive terms for Orders, and other sections 
provide for alternatives. For example, Section 514 of the Act provides 
for Orders applicable to (1) producers, (2) first handlers and others 
in the marketing chain as appropriate, and (3) importers (if importers 
are subject to assessment). Section 516 authorizes an Order to provide 
for exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; coverage of research, 
promotion, and information activities to expand, improve, or make more 
efficient the marketing or use of an agricultural commodity in both 
domestic and foreign markets; provision for reserve funds; provision 
for credits for generic and branded activities; and assessment of 
imports. In addition, Section 518 of the Act provides for referenda to 
ascertain approval of an Order to be conducted either prior to its 
going into effect or within 3 years after assessments first begin under 
the Order. The Order also may provide for its approval in a referendum 
based upon different voting patterns. Section 515 provides for 
establishment of a board from among producers, first handlers and 
others in the marketing chain as appropriate, and importers, if imports 
are subject to assessment.
    This proposed Order includes provisions for both domestic and 
foreign market expansion and improvement, reserve funds, and an initial 
referendum to be conducted prior to the Order going into effect and 
with approval based upon a majority of those persons voting in the 
referendum.
    The Act provides for a number of optional provisions that allow the 
tailoring of Orders for different commodities.
    The proponent, working in cooperation with 20 state and regional 
peanut industry organizations representing the nine primary peanut-
producing states, has requested the establishment of a national peanut 
promotion, research, and information Order pursuant to the Act. The Act 
authorizes the establishment and operation of generic promotion 
programs which includes a combination of promotion, research, industry 
information, and consumer information activities funded by mandatory 
assessments. These programs are designed to maintain and expand markets 
and uses for agricultural commodities. This proposal provides for the 
development and financing of an effective and coordinated program of 
research, promotion, and information for peanuts. The purpose of the 
program is to strengthen the position of peanuts in domestic and 
foreign markets, and to develop, maintain, and expand markets for 
peanuts.
    The program would not become effective until approved by peanut 
producers in a referendum to be conducted by USDA. Section 518 of the 
Act provides for the Department (1) to conduct an initial referendum, 
preceding a proposed Order's effective date, among persons who would 
pay assessments under the program or (2) to implement a proposed Order, 
pending the conduct of a referendum, among persons subject to 
assessments, within 3 years after assessments first begin.
    In accordance with Section 518(e) of the Act, the results of the 
referendum must be determined one of three ways: (1) approval by a 
majority of those persons voting; (2) approval by persons voting who 
represent a majority of the volume of the commodity covered by the 
program; or (3) approval by a majority of the persons voting who also 
represent a majority of the volume of the commodity produced, handled, 
or imported by the persons voting.
    The proponent proposes that the Department conduct an initial 
referendum preceding the proposed Order's effective date and that 
approval of the Order be determined by a simple majority of the 
producers voting.
    In accordance with the Act, the Department would oversee the 
program's operations. In addition, the Act requires the Secretary to 
conduct subsequent referenda: (1) not later than 7 years after 
assessments first begin under the Order; or (2) at the request of the 
board established under the Order; or (3) at the request of 10 percent 
or more of the number of persons eligible to vote. The proponent group 
has requested that a referendum be conducted every 5 years to determine 
if producers want the program to continue.
    In addition to these criteria, the Act provides that the Secretary 
may conduct a referendum at any time to determine whether the 
continuation, suspension, or termination of the Order or a provision of 
the Order is favored by persons eligible to vote.
    The proponent states that the United States Congress has 
established a number of programs since the early 1930's to support and 
stabilize farm prices and income and to adjust production in 1934. In 
1949, a revised system of marketing quotas and acreage allotments for 
peanuts began. Since then, Congress has amended and changed the peanut 
program a number of times, with the latest changes made to the peanut 
title in 1996 with the passage of the Federal Agriculture Improvement 
and Reform (FAIR) Act. The new program retains its price support and 
supply management elements while operating at no cost to the government 
other than administrative expenses common to all price support 
programs. The new program also lowers the loan rate for quota peanuts 
from $678 per ton to $610 per ton and freezes that price for the life 
of the program, through 2002. In addition, the quota level, which the 
Secretary could not set below 1.35 million tons prior to passage of the 
FAIR Act, has been reduced to equal the anticipated domestic demand for 
peanuts.
    The proponent has identified a number of market and production 
factors that suggest the need for a national research, promotion, and 
information program for peanuts. The most basic problem affecting 
peanut marketing is a drop in demand caused by negative health 
perceptions of peanuts' fat content, competition from other snack 
foods, and lack of awareness among young people.
    In addition, the proponent cites other factors. Government 
purchases of peanut butter are down. If purchases return to historic 
heights, purchases will still not be enough to reverse supply/demand 
trends. Also, a 1997 Gallup survey revealed that 87 percent of all 
consumers are peanut users, while 13 percent did not consume any 
peanuts in the past year. Per capita consumption of peanuts has been 
decreasing. It appears now that demand trends have bottomed out and are 
starting to rise. National promotion could bolster this trend.
    The same survey indicated that the percent of peanut non-users is 
increasing, as is the percent of young people not consuming peanuts or 
peanut products. Thirty-five percent of all consumers surveyed 
indicated they did not consume any snack peanuts, and more than 40 
percent thought peanuts contained cholesterol when, in fact, peanuts 
contain none.
    The proponent also states that 26 percent of all consumers did not 
consume any peanut butter in 1997. Peanut butter could be an affordable

[[Page 20112]]

alternative for low-income consumers in comparison to other sandwich 
options, but fewer and fewer low income consumers are using peanut 
butter as an alternative.
    In addition, in 1996, the farm value of U.S. peanuts fell below $1 
billion, to $970 million, for the first time since 1982.
    Further, the domestic industry is facing increased competition in 
the United States and abroad from lower-priced peanuts produced in 
other countries. The value of peanuts and peanut products imported into 
the United States exceeded $100 million in 1996.
    All of these factors have led the domestic peanut industry to seek 
a national promotion program to find ways to further increase the 
consumption of U.S. peanuts.
    Section 516(f) of the Act allows an Order to authorize the levying 
of assessments on imports of the commodity covered by the program or on 
products containing that commodity, at a rate comparable to the rate 
determined for the domestic agricultural commodity covered by the 
Order. The program would not assess imports.
    The assessment levied on domestically produced peanuts will be used 
to pay for promotion, research, and consumer and industry information 
as well as administration, maintenance, and functioning of the Board. 
Expenses incurred by the Secretary in implementing and administering 
the Order, including referenda costs, also would be paid from 
assessments.
    Sections 516(e)(1) and (2) of the Act state that the Secretary may 
provide credits of assessments for generic and branded activities. The 
proponent did not elect to propose credits for generic or branded 
activities. Therefore, the terms ``generic activities'' and ``branded 
activities'' are not defined in the Order, and credits for assessments 
on generic and branded activities would not be made.
    First handlers will be responsible for the collection of 
assessments from the producer and payment to the Promotion Board. First 
handlers will be required to maintain records for each producer for 
whom peanuts are handled, including peanuts produced by the first 
handler. In addition, first handlers will be required to file reports 
regarding the collection, payment, or remittance of the assessments.
    All information obtained from persons subject to this Order as a 
result of recordkeeping and reporting requirements will be kept 
confidential by all officers, employees, and agents of the Department 
and of the Board. However, this information may be disclosed only if 
the Secretary considers the information relevant, and the information 
is revealed in a judicial proceeding or administrative hearing brought 
at the direction or on the request of the Secretary or to which the 
Secretary or any officer of the Department is a party. Other exceptions 
for disclosure of confidential information would include the issuance 
of general statements based on reports or on information relating to a 
number of persons subject to an Order if the statements do not identify 
the information furnished by any person or the publication, by 
direction of the Secretary of the name of any person violating the 
Order and a statement of the particular provisions of the Order 
violated by the person.
    The proposed Order provides for the Department to conduct an 
initial referendum preceding the proposed Order's effective date. 
Therefore, the proposed Order must be approved by a majority of the 
producers voting for approval in the referendum. The proposed Order 
also provides for subsequent referenda to be conducted (1) every 5 
years after the program is in effect, (2) at the request of the Board 
established under the Order, or (3) when requested by 10 percent or 
more of peanut producers covered by the Order. In addition, the 
Secretary may conduct a referendum at any time.
    The Act requires that such a proposed Order provide for the 
establishment of a Board to administer the program under USDA 
supervision. The proponent's proposal provides for a 10-member National 
Peanut Board.
    To ensure fair and equitable representation of the peanut industry 
on the Board, the Act requires membership on the Board to reflect the 
geographical distribution of the production of peanuts. To that end, 
this proposal provides that each primary peanut-producing state will be 
represented on the Board by one producer member and alternate and that 
the minor peanut-producing states will be represented collectively by 
one at-large producer member and alternate. Based on current 
information on production in the various states, the Order defines the 
primary peanut-producing states as Alabama, Florida, Georgia, New 
Mexico, North Carolina, Oklahoma, South Carolina, Texas, and Virginia, 
provided that these states maintain three-year average production of at 
least 10,000 tons of peanuts.
    Upon implementation of the Order and pursuant to the Act, the Board 
will at least once in each five-year period, but not more frequently 
than once in each three-year period, review the geographical 
distribution of peanuts in the United States and make a recommendation 
to the Secretary after considering the results of its review and other 
information it deems relevant regarding the reapportionment of the 
Board.
    Members and alternates would serve for three-year terms, except 
that the members and alternates appointed to the initial Board would 
serve proportionately for two-, three-, and four-year terms. No member 
or alternate would serve more than two consecutive three-year terms.
    The Department received an entire proposed Order from the American 
Farm Bureau Federation on June 15, 1998.
    Prior to publication, the Department modified the proponent's 
proposal to make it consistent with the Act, other similar national 
research and promotion programs, and other Federal peanut programs 
administered by the Department; for consistency throughout the text; 
and for clarity.
    In the definitions and throughout the text of the Order, ``farmer 
stock peanuts'' was changed to ``farmers stock peanuts'' for 
consistency with industry use and existing regulations.
    A definition for ``first handler'' was added for consistency with 
similar national research and promotion programs, and subsequent 
sections were renumbered accordingly.
    The definition of ``information'' was rewritten to include 
activities designed to enhance peanuts' image, to add definitions of 
``consumer information'' and ``producer information,'' and to conform 
with the Act.
    The definition of ``quota peanuts'' was rewritten to reference 7 
CFR Part 729.
    In Sec. 1216.41 (Nominations), the phrase ``qualified nominating 
organizations'' was changed to read ``certified nominating 
organizations'' for consistency with the text.
    In addition, Sec. 1216.50 (h) was revised to be consistent with the 
Act. Paragraph (e)(5)  Limitation on spending of Sec. 515 of the Act 
states that a Board ``may not expend for administration (except for 
reimbursements to the Secretary . . .)'' an amount that exceeds 15 
percent of the Board's income during any fiscal year. The proposal 
submitted set a more stringent limitation of 10 percent and stated that 
administrative expenses included reimbursement to the Secretary. The 
Order may set the more stringent limitation of 10 percent because that 
amount is less than the 15 percent provided in the Act. However, the 
Order may not provide that

[[Page 20113]]

reimbursements to the Secretary are covered by the limitation on 
spending.
    Other minor changes which did not materially affect the text were 
made for consistency. For instance, in the definitions, ``additional 
peanuts are . . .'' was changed to read ``additional peanuts means . . 
.'' As another example, in sections containing only one paragraph, the 
paragraph designation was removed. Minor grammatical changes also were 
made.
    The proponent also submitted ``Subpart B--Voting Procedures and 
Approval of the Peanut Promotion, Research, and Information Order.'' 
This proposed subpart was revised and included as Sec. 1216.81 of the 
proposed Order.
    A proposed rule seeking comments on the national research and 
promotion program for peanuts was published on November 6, 1998 in the 
Federal Register [63 FR 59893]. Comments were invited on the entire 
proposal with the deadline for comments on January 5, 1999. Fourteen 
comments were received. Comments were received from 10 peanut producers 
associations or growers associations, two manufacturer associations, 
one manufacturer, and one peanut producer. Four commenters simply 
stated that they supported the proposal and/or recommended that USDA 
conduct the referendum as early in Spring 1999 as possible. The other 
comments are discussed below.
    Two comments were submitted about Sec. 1216.03 which defines area 
marketing associations. Each felt that the statement in Sec. 1216.03 
that area marketing associations will assist in the collection of 
assessments conflicted with the assessment provisions in 
Sec. 1216.51(h). To correct this we have accepted their solution of 
changing the word ``will'' to ``may'' in Sec. 1216.03.
    One comment noted that Sec. 1216.06 includes peanuts for crushing 
for exportation and asked if peanuts for domestic crushing were covered 
by the proposed Order. In response, Sec. 1216.11 Handle includes 
peanuts for domestic crushing.
    One comment was received about Sec. 1216.18 which defines peanut 
producer organizations eligible for receipt of check-off funds. The 
commenter felt that any peanut producer organization that is involved 
in lobbying activities should not be eligible for receipt of check-off 
funds. We do not find merit in this comment. Any peanut producer 
organization that receives funds will only be eligible for the funds 
after meeting the certification as outlined in Sec. 1216.70 and will be 
prohibited from using Board funds for lobbying, pursuant to 
Sec. 1216.49.
    A comment was submitted about Sec. 1216.23 which defines quota 
peanuts. The commenter felt that this definition should provide for the 
assessment of peanuts that are not marketed and held back in storage. 
We disagree and believe that the term does not need further 
clarification in the proposed Order. Section 1216.51 Assessments 
outlines which peanuts are to be assessed and how to handle farmers 
stock peanuts. In addition, Sec. 1216.11 defines handle. The intent of 
this Order is only to assess peanuts that enter the current of 
commerce.
    A comment was received on Sec. 1216.24 which defines research as 
any type of test, study, or analysis designed to advance the image, 
desirability, use, marketability, production, product development, or 
quality of peanuts, including research relating to nutritional value 
and cost of production. The commenter felt that this section allowed 
for research to justify the continued existence of the FSA peanut 
program. We don't find merit in this comment. The research as outlined 
is performed to increase the marketability of peanuts and not justify 
other peanut programs.
    A comment was submitted on Sec. 1216.41 which outlines the 
nomination procedures. The commenter felt that the nomination 
procedures should be clarified to indicate that all peanut producers 
eligible to serve on the Board would participate in the nomination 
process. We have accepted the comment and revised the third sentence in 
Sec. 1216.41 (a) to read: ``The nominees shall be chosen at an open 
meeting by election among peanut producers eligible to serve on the 
Board.''
    In addition, we have adopted the following recommendations made by 
the same commenter and revised Sec. 1216.41 to require (1) widespread 
announcements in addition to public notice to all growers; (2) 30 day 
advanced notice prior to a nomination meeting; and (3) USDA personnel 
to be present to oversee and to verify eligibility and count ballots. 
The commenter also requested USDA to conduct the nomination meeting for 
the initial Board appointments. However, by having USDA personnel 
present at the initial meeting, we do not find it necessary for USDA to 
hold the initial grower meetings for nominations. Therefore, that part 
of the comment is denied. In addition, this commenter wished for pre-
addressed ballots to be issued at nomination meetings and a list of 
persons eligible to vote at the open nominations meeting be issued upon 
entrance to said meetings. These comments are denied. USDA's role in 
these meetings is to oversee the process and not set the procedures of 
the meetings.
    A comment was received in respect to Sec. 1216.48(j) which outlines 
the powers and duties of the National Peanut Board. The commenter 
questioned why the Board would act as intermediary between the 
Secretary and any producer or first handler, especially when there is 
no first handler member on the Board. It is true that there is no 
handler member on the Board. However, handlers would be collecting the 
assessments under the program and remitting them to the Board. 
Therefore, a handler's first point of contact regarding the 
requirements of the program would be the staff of the Board. This does 
not preclude any first handler from contacting the Secretary. 
Therefore, this comment is denied.
    One comment was received about Sec. 1216.49. This section deals 
with the prohibited activities of the Board, employees, and agents of 
the Board. The commenter felt that this section should be modified 
using stronger language to ensure that funds are not used for other 
activities other than promotion, research and consumer/producer 
information. We deny this comment. This language is consistent with 
other National Promotion Programs and has prohibited improper 
activities.
    Three comments were received about Sec. 1216.50(h). This section 
limits the amount the Board may spend on administration, maintenance, 
and functioning in any fiscal year to no more than 10 percent of 
assessments. Two comments recommended lowering this to 5 percent of the 
assessments. The third comment recommended maintaining the 10 percent 
requirement. The first two comments are denied. Although 10 percent is 
stated in the proposed Order, the Board may in fact operate below that 
rate, but to mandate this amount could restrict the Board in its daily 
operations.
    Five comments were received on Sec. 1216.50(i) which addresses 
budget and expenses. Each commenter had concerns that the use of the 
words ``quota peanuts'' to describe the peanuts that would be assessed 
was too narrow in scope. We accept their comments and have revised 
Sec. 1216.50(i) to state that the allocation of funds would be based on 
the assessments collected from all peanuts.
    Two comments about Sec. 1216.50(i) were received addressing the 
allocation of the assessments. The commenters recommended that this 
provision be revised to ensure that no less than 80 percent of the 
Board's funds are used in

[[Page 20114]]

national programs. We believe that this comment has merit. To reduce 
the possibility of having more than the 20 percent of the Board's funds 
spent on state or regional research, we have revised Sec. 1216.50(i) to 
state that the Board shall allocate, to the extent practicable, no less 
than 80 percent of the assessments to national and regional promotion, 
research, and information and no more than 20 percent to state or 
regional research.
    Two comments were received about Sec. 1216.50(k) which provided for 
assessments collected from the gross sales of contract export 
additional peanuts to be provided to a primary contractor for the 
promotion and related research of export peanuts. Each commenter felt 
that assessments collected from contract export additional peanuts 
would not share the burden of research at the state and regional level. 
We don't find merit in these comments. We feel that Sec. 1216.50(k) 
provides for either market or production research to be conducted. 
Research that is done for export peanuts does overlap with research for 
domestic peanuts. In addition, Sec. 1216.50(l) provides the Board with 
the flexibility to change how funds are used in Sec. 1216.50(k). 
Therefore, this comment is denied.
    One comment stated that half of the financial burden should be 
shifted to handlers, whereas Sec. 1216.51(a) specifies that assessments 
will be paid by producers. This comment is denied. The proponent group, 
which was comprised of producers, recommended only a producer 
assessment.
    One comment was received concerning the language of the Act and 
payment of assessments. The commenter questioned whether the Act's 
assessment language covered only handler paid type programs. The Act 
authorizes producer assessment type programs as provided in this 
proposal. We do not find merit in this comment.
    A comment was received in regard to Sec. 1216.51(b) which deals 
with the collection of the assessments. The commenter believed that the 
words ``. . . peanuts owned by the first handler . . .'' is vague and 
subject to interpretation. We agree with this comment and have changed 
Sec. 1216.51(b) to read: ``. . . peanuts produced by the first handler 
. . .''
    Three comments were received on Sec. 1216.51(c) which sets the 
assessment rate. The commenters wished to change the basis of the 
assessments to either a per ton basis or a percent of the support 
price. We do not find merit in these comments. This proposal was 
submitted by producer groups which recommended the assessments be 
collected on a percent of the price paid (the ``value of segment'' on 
FSA 1007). They maintain this is the most equitable system. If 
assessments were based on the number of tons, an inequity would exist 
because of the variation in prices paid for different types and 
qualities of peanuts. Also, there would have to be at least two 
assessment rates: one for quota peanuts and one for contract export 
additional peanuts. Basing the assessment on the price paid allows the 
program to have one assessment rate that is applied equally to all 
peanuts. If the assessment were based on the support price, the 
proposed Order would have to be revised if the support program is 
changed or eliminated. For example, if the support price is lowered, 
the promotion program assessment would need to be raised to compensate 
for the loss in income in order to assure continuity in the Board's 
programs. Basing assessments on the price paid would provide continuity 
in funding for a national program, regardless of the changes in or the 
existence of the support program. Therefore, these comments are denied.
    In addition, a comment was submitted about the use of the words 
``price paid'' in Sec. 1216.51(c). The commenter felt that the use of 
the words ``price paid'' can be subject to interpretation. We have 
accepted this comment and added the following language to 
Sec. 1216.51(c): Price paid shall mean the value of segment on the FSA 
1007 form.
    One comment requested clarification of who is responsible for 
collection assessments on peanuts when the immediate buyback is used. 
In response, Sec. 1216.51(d) states that area marketing associations 
shall remit assessments to the Board on all peanuts placed under loan, 
which would have included buyback peanuts.
    Two comments were submitted on Sec. 1216.51(f) which addresses late 
payments. The commenters requested confirmation that late payments of 
assessments should be subject to penalties in the form of interest and 
not any damages that may have been incurred from the late payment. In 
response, it should be noted that Sec. 1216.51(f) only provides for 
late payment charges in the form of interest on the outstanding balance 
due as recommended by the commenters. Therefore no change to this 
section is made.
    Three comments were submitted on the Board having the ability to 
raise or lower the rate of assessment with the approval of the 
Secretary. The concern was that the Board could raise the rate without 
a producer referendum. In order to assure that producers have the 
ability to vote on the raising of the assessment rate, a new 
Sec. 1216.51(i) has been added to the Order. This section would require 
a producer referendum in addition to notice and comment rulemaking when 
the Board recommends raising the assessment rate. Further, the Act 
provides for this action.
    One comment was submitted on Sec. 1216.60 which addresses the 
reports that first handlers must submit at the time monthly assessments 
are paid. The commenter felt there would be significant administrative 
and financial burdens associated with preparing these reports. The 
Department recognizes the burden that may be placed on first handlers. 
In order to reduce this burden on first handlers, we have changed 
Sec. 1216.60 to eliminate the requirement to identify each producer, 
the address of the producer, and the date assessments were collected. 
In addition, Sec. 1216.60 has been re-worded to correspond with the 
change in Sec. 1216.51(c) which now defines the price paid as the entry 
in the value of segment section on the FSA 1007 form as recommended by 
the commenter. Also, we have added a new Sec. 1216.60(b) to clarify 
when first handlers are to submit monthly reports and assessments.
    We also have modified Sec. 1216.61  Books and records to clarify 
what books and records that first handlers and producers must maintain 
and make available to the Secretary and Board employees. This section 
now states that copies of FSA 1007 forms, the names and addresses of 
producers, and the date when assessments were collected must be 
maintained by the first handler and producer. The purpose of this 
change is to help ensure that this information is available for 
enforcement purposes.
    A comment was submitted on Sec. 1216.62 which deals with 
confidential treatment. The commenter stated that this section does not 
provide adequate safeguards for the confidentiality of proprietary 
information. We disagree with this comment. This confidentiality 
provision is common to other similar national programs and has 
prevented any improper release of information. Therefore, we deem it 
sufficient in this Order. In addition, the Act states that any person 
who willfully violates this provision shall be subject, on conviction, 
to a fine of not more $1,000 or to imprisonment for not more than 1 
year, or both.
    Nonetheless, to address the commenter's concern, the modification 
to Sec. 1216.61  Books and Records clarifies that only the Secretary 
and agents and employees of the Board (not

[[Page 20115]]

Board members) will have access to first handlers' and producers' 
records.
    Three comments were submitted on Sec. 1216.81(b), formerly 
Sec. 1216.80(b), which outlines the implementation of the Order. Each 
commenter felt that this section was unclear and may contradict the 
definition of producer in Sec. 1216.21. We concur with these comments. 
Therefore, in order to assure a clear understanding of the 
implementation provisions, we have inserted in Sec. 1216.81(b) a 
reference to the definition of producer in Sec. 1216.21.
    Comments were submitted on Sec. 1216.87  Amendments, formerly 
Sec. 1216.86. The comments were in favor of requiring a referendum 
especially when increasing the assessment. As indicated above, we agree 
that there should be a referendum before the assessment rate is raised. 
However, we deny the comment because the addition of Sec. 1216.51(i) 
addresses the need of a referendum to raise the assessment rate.
    In summary, Sec. 1216.03, Sec. 1216.41, Sec. 1216.50(i), 
Sec. 1216.51(b), Sec. 1216.51(c), Sec. 1216.51(i), Sec. 1216.60(a), 
Sec. 1216.60(b), Sec. 1216.60(c), Sec. 1216.60(d), Sec. 1216.61, and 
Sec. 1216.81(b) have been revised as a result of comments received. 
Other changes to the proposed rule made by AMS are noted and discussed 
below.
    Section 1216.03 was revised to use the word ``may'' instead of 
``will'' in describing the role of an area marketing association in 
collecting assessments.
    Section 1216.08 was added by AMS to provide a definition for the 
Department's Farm Service Agency. This will provide clarity to the 
proposed Order. Section of the Order have been renumbered accordingly.
    Section 1216.41 was revised to ensure that the nominating process 
is open to all peanut producers. This was accomplished by adding new 
subsections (d) and (e).
    Section 1216.50(i) was revised to change ``quota peanuts'' to ``all 
peanuts'' available. In addition, language was added to provide at 
least 80 percent of the assessments for national programs.
    Section 1216.50(j) was modified by AMS. The language ``and 
approved'' was removed from this section. AMS felt that this language 
was repetitive and unnecessary.
    Section 1216.50(k) was modified by AMS. The language ``to an 
appropriate organization approved by the Secretary as the primary 
contractor'' was removed from this section. This will provide 
flexibility to the Board.
    Section 1216.51(b) was revised for clarification by changing 
``owned'' to ``produced''. Section 1216.51(i) was revised to include 
the following language: Price paid is the value of segment entry on the 
FSA 1007 form. A new sub-section (i) was added to Sec. 1216.51 to 
require a producer referendum on raising the assessment rate.
    Section 1216.60 was revised to reduce the burden that was placed on 
first handlers. In order to accomplish this, sub-sections (a) and (b) 
were re-written.
    Section 1216.61 was revised to state that copies of FSA 1007 forms, 
the names and addresses of producers, and the date when assessments 
were collected must be maintained by first handlers and producers.
    A new Sec. 1216.80  Right of the Secretary was added to provide 
conformity with existing programs. This section was added by AMS for 
consistency with similar National Research and Promotion Programs, and 
subsequent sections were renumbered accordingly.
    Section 1216.81(b) was revised to prevent any contradiction with 
Sec. 1216.21 by citing Sec. 1216.21 in Sec. 1216.81(b).
    Other minor changes which did not materially affect the text of the 
Order were made for clarity.
    The Order is summarized as follows: Sections 1216.01 through 
1216.29 of the proposed Order define certain terms, such as peanuts, 
minor peanut-producing states, primary peanut-producing states, 
producer, and quota peanuts, which are used in the proposed Order.
    Sections 1216.40 through 1216.49 include provisions relating to the 
Board establishment and membership, nominations, selections and 
acceptance, term of office, vacancies, alternate members, and 
compensation and reimbursement; procedures for conducting Board 
business; and powers and duties of the Board, which is the governing 
body authorized to administer the Order through the implementation of 
programs, plans, projects, budgets, and contracts to promote and 
disseminate information about peanuts, subject to oversight by the 
Secretary. These sections also include maintenance of books and records 
by the Board and prohibited activities of the Board, its employees, and 
agents.
    In order to ensure support throughout the production area for all 
Board votes, Sec. 1216.46(b) provides that all Board members' votes 
would be weighted by the value of production represented by each 
member. The votes of members from primary peanut-producing states would 
represent their respective states' three-year running average of total 
gross farm income derived from all peanut sales. The votes of the at-
large Board member would equal the collective value of production from 
all minor peanut-producing states' three-year running average of total 
gross farm income from all peanut sales. Any Board action would require 
the concurring votes of members collectively representing more than 50 
percent of the total U.S. gross farm income derived from all peanut 
sales plus an additional two votes from other Board members, provided a 
minimum of five members concur. Therefore, regardless of the volume 
voted by the members, no Board action would be approved unless at least 
five members voted in favor of it. Similarly, if five members vote in 
favor of a motion and those five members do not represent more than 50 
percent of the total U.S. gross farm income derived from all peanut 
sales, the motion would not be approved.
    Sections 1216.50 through 1216.55 would cover budget review and 
approval; authorize the collection of assessments; use of assessments, 
including reimbursement of necessary expenses incurred by the Board for 
the performance of its duties, including expenses incurred for the 
Department's oversight responsibilities; specify who pays the 
assessment and how; authorize the imposition of a late-payment charge 
on past-due assessments; address programs, plans, and projects; require 
the Board to conduct periodically an independent review of its overall 
program; specify a program operating reserve; and cover the investment 
of assessment funds.
    There will be an assessment rate of 1 percent of the price paid for 
all farmers stock peanuts sold. Peanut producers may sell their peanuts 
commercially or put them in a government loan program. For peanuts sold 
commercially, the first handler would remit the assessment to the 
Board. The assessment would be 1 percent of the price paid for the 
peanuts. Under a loan program administered by FSA, a peanut producer 
also has the option of delivering the peanuts to an area marketing 
association and receiving payment for the peanuts from CCC. If the 
peanut promotion program is implemented, the area association would 
deduct 1 percent of the payment from the producer's proceeds and remit 
that amount to the Board as the producer's initial assessment payment 
on the peanuts. After the association sells the peanuts, the area 
association reimburses CCC the amount of the payment to the producer 
and deducts its expenses from the selling price. If the peanut 
promotion program is implemented and if there is any profit from the 
sale of the peanuts,

[[Page 20116]]

the association would deduct 1 percent of the profit, remit that amount 
to the Board to pay the producer's assessment, and pay the balance to 
the producer.
    The Board may raise or lower the rate of assessment with the 
approval of the Secretary and a producer referendum.
    The federal debt collection procedures referenced in 
Sec. 1216.51(g) include those set forth in 7 CFR 3.1 through 3.36 for 
all research and promotion programs administered by AMS (60 FR 12533, 
March 7, 1995).
    Sections 1216.60 through 1206.62 concern reporting and 
recordkeeping requirements for persons subject to the Order and protect 
the confidentiality of information from such books, records, or 
reports.
    Section 1216.70 describes the certification requirements for 
peanut-producer organizations to be eligible to nominate Board members 
and submit requests for funds from the Board.
    Sections 1216.80 through 1216.88 describe the rights of the 
Secretary; authorize the Secretary to suspend or terminate the Order 
when deemed appropriate; prescribe proceedings after suspension or 
termination; address personal liability, separability, and amendments; 
and address patents, copyrights, trademarks, information, publications, 
and product formulations developed through the use of assessment funds.
    The Department has determined that this Order is consistent with 
and will effectuate the purposes of the Act.
    For the Order to become effective, the Order must be approved by a 
simple majority of peanut producers voting in a referendum.

Referendum Order

    It is hereby directed that a referendum be conducted among peanut 
producers to determine whether they favor implementation of the Peanut 
Promotion, Research, and Consumer Information Order.
    The referendum shall be conducted from May 24 through June 11, 
1999. Ballots will be mailed to all known eligible peanut producers on 
or before May 17, 1999. Eligible voters who do not receive a ballot by 
mail should call the following toll-free telephone number to receive a 
ballot: 1 (888) 720-9917. All ballots will be subject to verification. 
Ballots must be received by the referendum agents no later than June 
11, 1999, to be counted.
    Daniel R. Williams II and Martha B. Ransom, Research and Promotion 
Branch, Fruit and Vegetable Programs, Agricultural Marketing Service, 
U.S. Department of Agriculture, Room 2535-S, Stop 0244, Washington, 
D.C. 20250-0244, are designated as the referendum agents of the 
Secretary of Agriculture to conduct the referendum. The Procedure for 
the Conduct of Referenda in Connection with the Peanut Promotion, 
Research, and Consumer Information Order, 7 CFR 1216.101-1216.107, 
which is being published separately in this issue of the Federal 
Register, shall be used to conduct the referendum.

List of Subjects in 7 CFR Part 1216

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Peanuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, it is proposed that 
Title 7, Chapter XI of the Code of Federal Regulations be amended as 
follows:

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

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

    Authority: 7401-7425.

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

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

Definitions

Sec.
1216.01  Act.
1216.02  Additional peanuts.
1216.03  Area marketing association.
1216.04  Board.
1216.05  Conflict of interest.
1216.06  Contract export additional peanuts.
1216.07  Department.
1216.08  Farm Service Agency.
1216.09  Farmers stock peanuts.
1216.10  First handler.
1216.11  Fiscal year.
1216.12  Handle.
1216.13  Information.
1216.14  Market.
1216.15  Minor peanut-producing states.
1216.16  Order.
1216.17  Part and subpart.
1216.18  Peanuts.
1216.19  Peanut producer organization.
1216.20  Person.
1216.21  Primary peanut-producing states.
1216.22  Producer.
1216.23  Promotion.
1216.24  Quota peanuts.
1216.25  Research.
1216.26  Secretary.
1216.27  Suspend.
1216.28  State.
1216.29  Terminate.
1216.30  United States.

National Peanut Board

1216.40  Establishment and membership.
1216.41  Nominations.
1216.42  Selection.
1216.43  Term of office.
1216.44  Vacancies.
1216.45  Alternate members.
1216.46  Procedure.
1216.47  Compensation and reimbursement.
1216.48  Powers and duties of the National Peanut Board.
1216.49  Prohibited activities.

Expenses and Assessments

1216.50  Budget and expenses.
1216.51  Assessments.
1216.52  Programs, plans, and projects.
1216.53  Independent evaluation.
1216.54  Operating reserve.
1216.55  Investment of funds.

Reports, Books, and Records

1216.60  Reports.
1216.61  Books and records.
1216.62  Confidential treatment.

Certification of Peanut Producer Organizations

1216.70  Certification.

Miscellaneous

1216.80  Right of the Secretary.
1216.81  Implementation of Order.
1216.82  Suspension and termination.
1216.83  Proceedings after termination.
1216.84  Effect of termination or amendment.
1216.85  Personal liability.
1216.86  Separability.
1216.87  Amendments.
1216.88  Patents, copyrights, trademarks, information, publications, 
and product formulations.

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

Definitions


Sec. 1216.01  Act.

    Act means the Commodity Promotion, Research, and Information Act of 
1996 (7 U.S.C. 7401-7425; Public Law 104-127, 110 Stat. 1029), or any 
amendments thereto.


Sec. 1216.02  Additional peanuts.

    Additional peanuts means peanuts which are marketed from a farm 
other than peanuts marketed or considered marketed as quota peanuts.


Sec. 1216.03  Area marketing association.

    Area marketing association means an association selected and 
approved by the Secretary to conduct activities under regulations of 
the Department's Farm Service Agency. Under an inter agency agreement, 
area marketing associations may assist in the collection of assessments 
under this subpart. The approved area marketing associations and the 
areas served by such associations are as follows:
    (a) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves 
the southeastern area consisting of Puerto Rico, the U.S. Virgin 
Islands, and the states of Alabama, Florida, Georgia,

[[Page 20117]]

Mississippi, and that part of South Carolina south and west of the 
Santee-Congaree-Broad Rivers;
    (b) Peanut Growers Cooperative Marketing Association of Franklin, 
Virginia (PGCMA). PGCMA serves the Virginia-Carolina area consisting of 
the District of Columbia, and the states of Connecticut, Delaware, 
Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, 
Virginia, West Virginia, Wisconsin, and that part of South Carolina 
north and east of the Santee-Congaree-Broad Rivers; and
    (c) Southwestern Peanut Growers Association of Gorman, Texas 
(SWPGA). SWPGA serves the southwestern area consisting of the states of 
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, 
Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming, 
and all other territories of the United States not listed in paragraph 
(a) or (b) of this section.


Sec. 1216.04  Board.

    Board means the administrative body referred to as the National 
Peanut Board established pursuant to Sec. 1216.40.


Sec. 1216.05  Conflict of interest.

    Conflict of interest means a situation in which a member or 
employee of the Board has a direct or indirect financial interest in a 
person who performs a service for, or enters into a contract with, the 
Board for anything of economic value.


Sec. 1216.06  Contract export additional peanuts.

    Contract export additional peanuts are additional peanuts for 
exportation, including peanuts for crushing for exportation, for which 
a contract has been entered into between a first handler and a 
producer.


Sec. 1216.07  Department.

    Department means the U.S. Department of Agriculture.


Sec. 1216.08  Farm Service Agency.

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


Sec. 1216.09  Farmers stock peanuts.

    Farmers stock peanuts means picked or threshed peanuts produced in 
the United States which have not been changed (except for removal of 
foreign material, loose shelled kernels and excess moisture) from the 
condition in which picked or threshed peanuts are customarily marketed 
by producers, plus any loose shelled kernels that are removed from 
farmers stock peanuts before such farmers stock peanuts are marketed.


Sec. 1216.10  First handler.

    First handler means any person who handles peanuts in a capacity 
other than that of a custom cleaner or dryer, an assembler, a 
warehouseman, or other intermediary between the producer and the person 
handling.


Sec. 1216.11  Fiscal year.

    Fiscal year is synonymous with crop year and means the 12-month 
period beginning with August 1 of any year and ending with July 31 of 
the following year, or such other period as determined by the Board and 
approved by the Secretary.


Sec. 1216.12  Handle.

    Handle means to engage in the receiving or acquiring, cleaning and 
shelling, cleaning in-shell, or crushing of peanuts and in the shipment 
(except as a common or contract carrier of peanuts owned by another) or 
sale of cleaned in-shell or shelled peanuts, or other activity causing 
peanuts to enter the current of commerce: Provided, that this term does 
not include sales or deliveries of peanuts by a producer to a handler 
or to an intermediary person engaged in delivering peanuts to 
handler(s) and Provided further, that this term does not include sales 
or deliveries of peanuts by such intermediary person(s) to a handler.


Sec. 1216.13  Information.

    Information means information and programs that are designed to 
increase efficiency in processing and to develop new markets, marketing 
strategies, increased market efficiency, and activities that are 
designed to enhance the image of peanuts on a national or international 
basis. These include:
    (a) Consumer information, which means any action taken to provide 
information to, and broaden the understanding of, the general public 
regarding the consumption, use, nutritional attributes, and care of 
peanuts; and
    (b) Producer information, which means information and programs that 
will lead to the development of new markets, new marketing strategies, 
or increased efficiency for the peanut industry, and activities to 
enhance the image of the peanut industry.


Sec. 1216.14  Market.

    Market means to sell or otherwise dispose of peanuts into 
interstate, foreign, or intrastate commerce by buying, marketing, 
distributing, or otherwise placing peanuts into commerce.


Sec. 1216.15  Minor peanut-producing states.

    Minor peanut-producing states means all peanut-producing states 
with the exception of Alabama, Florida, Georgia, New Mexico, North 
Carolina, Oklahoma, South Carolina, Texas, and Virginia.


Sec. 1216.16  Order.

    Order means an Order issued by the Secretary under section 514 of 
the Act that provides for a program of generic promotion, research, and 
information regarding agricultural commodities authorized under the 
Act.


Sec. 1216.17  Part and subpart.

    Part means the Peanut Promotion, Research, and Information Order 
and all rules, regulations, and supplemental Orders issued pursuant to 
the Act and the Order. The Order shall be a ``subpart'' of such part.


Sec. 1216.18  Peanuts.

    Peanuts means the seeds of the legume arachis hypogaea and includes 
both in-shell and shelled peanuts other than those marketed by the 
producer in green form for consumption as boiled peanuts.


Sec. 1216.19  Peanut producer organization.

    Peanut producer organization means a state-legislated peanut 
promotion, research, and education commission or organization. For 
states without a state-legislated peanut promotion, research, and 
education commission or organization, ``peanut producer organization'' 
means any organization which has the primary purpose of representing 
peanut producers and has peanut producers as members.


Sec. 1216.20  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.


Sec. 1216.21  Primary peanut-producing states.

    Primary peanut-producing states means Alabama, Florida, Georgia, 
New Mexico, North Carolina, Oklahoma, South Carolina, Texas, and 
Virginia, Provided, these states maintain three-year average production 
of at least 10,000 tons of peanuts.

[[Page 20118]]

Sec. 1216.22  Producer.

    Producer means any person engaged in the production and sale of 
peanuts and who owns, or shares the ownership and risk of loss of the 
crop. This does not include quota holders who do not share in the risk 
of loss of the crop.


Sec. 1216.23  Promotion.

    Promotion means any action taken by the National Peanut Board under 
this Order, including paid advertising, to present a favorable image of 
peanuts to the public to improve the competitive position of peanuts in 
the marketplace, including domestic and international markets, and to 
stimulate sales of peanuts.


Sec. 1216.24  Quota peanuts.

    Quota peanuts means peanuts which are:
    (a) Eligible for domestic edible uses; and
    (b) Marketed or considered marketed from a farm as quota peanuts 
pursuant to the provisions of 7 CFR Part 729 and are not in excess of 
the effective farm poundage quota established for the farm on which 
such peanuts were produced.


Sec. 1216.25  Research.

    Research means any type of test, study, or analysis designed to 
advance the image, desirability, use, marketability, production, 
product development, or quality of peanuts, including research relating 
to nutritional value and cost of production.


Sec. 1216.26  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the U.S. Department of Agriculture to 
whom authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in the Secretary's stead.


Sec. 1216.27  Suspend.

    Suspend means to issue a rule under section 553 of title 5, United 
States Code, to temporarily prevent the operation of an Order during a 
particular period of time specified in the rule.


Sec. 1216.28  State.

    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, or any territory or possession of the 
United States.


Sec. 1216.29  Terminate.

    Terminate means to issue a rule under section 553 of title 5, 
United States Code, to cancel permanently the operation of an Order 
beginning on a date certain specified in the rule.


Sec. 1216.30  United States.

    United States means collectively the 50 states, the District of 
Columbia, the Commonwealth of Puerto Rico, and the territories and 
possessions of the United States.

National Peanut Board


Sec. 1216.40  Establishment and membership.

    (a) Establishment of a National Peanut Board. There is hereby 
established a National Peanut Board, hereinafter called the Board, 
composed of no more than 10 peanut producers and alternates, appointed 
by the Secretary from nominations as follows:
    (1) Nine members and alternates. One member and one alternate shall 
be appointed from each primary peanut-producing state, who are 
producers and whose nominations have been submitted by certified peanut 
producer organizations within a primary peanut-producing state.
    (2) The minor peanut-producing states shall collectively have one 
at-large member and one alternate, who are producers, to be appointed 
by the Secretary from nominations submitted by certified peanut 
producer organizations within minor peanut-producing states or from 
other certified farm organizations that include peanut producers as 
part of their membership.
    (b) Adjustment of membership. At least once in each five-year 
period, but not more frequently than once in each three-year period, 
the Board, or a person or agency designated by the Board, shall review 
the geographical distribution of peanuts in the United States and make 
recommendation(s) to the Secretary to continue without change, or 
whether changes should be made in the number of representatives on the 
Board to reflect changes in the geographical distribution of the 
production of peanuts.


Sec. 1216.41  Nominations.

    (a) All nominations authorized under Sec. 1216.40 shall be made 
within such a period of time as the Secretary shall prescribe. Eligible 
peanut producer organizations within each state as certified pursuant 
to Sec. 1216.70 shall nominate two qualified persons for each member 
and each alternate member. The nominees shall be elected at an open 
meeting among peanut producers eligible to serve on the Board. Any 
certified peanut producer organization representing a minor peanut-
producing state may nominate two eligible persons for each member and 
two eligible persons for each alternate member.
    (b) As soon as practicable after this subpart becomes effective, 
the Secretary shall obtain nominations for appointment to the initial 
promotion Board from certified nominating organizations. In any 
subsequent year in which an appointment to the Board is to be made, 
nominations for positions whose terms will expire shall be obtained 
from certified nominating organizations by the Board's staff and 
submitted to the Secretary by May 1 of such year, or other such date as 
approved by the Secretary.
    (c) Except for initial Board members, whose nomination process will 
be initiated by the Secretary, the Board shall issue the call for 
nominations by March 1 of each year.
    (d) The nomination meeting shall be announced 30 days in advance:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as deemed advisable.
    (e) At nominations meetings, Department personnel will be present 
to oversee and to verify eligibility and count ballots.


Sec. 1216.42  Selection.

    From the nominations, the Secretary shall select the members of the 
Board and alternates for each primary peanut-producing state. The 
Secretary shall select one member and one alternate from all 
nominations submitted by certified peanut producer organizations 
representing minor peanut-producing states.


Sec. 1216.43  Term of office.

    All members and alternates of the Board shall each serve for terms 
of three years, except that the members and alternates appointed to the 
initial Board shall serve proportionately for two-, three-, and four-
year terms, with the length of the terms determined at random. No 
member or alternate may serve more than two consecutive three-year 
terms. An alternate, after serving two consecutive three-year terms, 
may serve as a member for an additional two consecutive three-year 
terms. A member, after serving two consecutive three-year terms, may 
serve as an alternate for an additional two consecutive three-year 
terms. Each member and alternate shall continue to serve until a 
successor is selected and has qualified.
    (a) Those members serving initial terms of two or four years may 
serve one successive three-year term.

[[Page 20119]]

    (b) Any successor serving one year or less may serve two 
consecutive three-year terms.


Sec. 1216.44  Vacancies.

    To fill any vacancy resulting from the failure to qualify of any 
person selected as a member or as an alternate member of the Board, or 
in the event of death, removal, resignation, or disqualification of any 
member or alternate member of the Board, a successor for the unexpired 
term of such member or alternate member of the Board shall be nominated 
and selected in the manner specified in Sec. 1216.40.


Sec. 1216.45  Alternate members.

    An alternate member of the Board, during the absence of the member 
for the primary peanut-producing state or at-large member for whom the 
person is the alternate, shall act in the place and stead of such 
member and perform such duties as assigned. In the event of death, 
removal, resignation, or disqualification of any member, the alternate 
for that state or at-large member shall act for the member until a 
successor for such member is selected and qualified. In the event that 
both a producer member of the Board and the alternate are unable to 
attend a meeting, the Board may not designate any other alternate to 
serve in such member's or alternate's place and stead for such a 
meeting.


Sec. 1216.46  Procedure.

    (a) A majority of the members of the Board, including alternate 
members acting for members, shall constitute a quorum.
    (b) At assembled meetings, all votes shall be cast in person. Board 
actions shall be weighted by value of production as determined by a 
primary peanut-producing state's three-year running average of total 
gross farm income derived from all peanut sales. The at-large Board 
member's vote shall be weighted by the collective value of production 
from all minor peanut-producing states' three-year running average of 
total gross farm income derived from all peanut sales. Any Board action 
shall require the concurring votes of members or alternates from states 
representing more than 50 percent of total U.S. gross farm income 
derived from all peanut sales, plus an additional two votes from any 
other Board members, provided a minimum of five votes concur.
    (c) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and in matters of an emergency 
nature when there is not time to call an assembled meeting of the 
Board, the Board may also take action as prescribed in this section by 
mail, facsimile, telephone, or any telecommunication method appropriate 
for the conduct of business, but any such action shall be confirmed in 
writing within 30 days.
    (d) There shall be no voting by proxy.
    (e) The chairperson shall be a voting member.


Sec. 1216.47  Compensation and reimbursement.

    The members of the Board, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for reasonable 
travel expenses, as approved by the Board, incurred by them in the 
performance of their duties as Board members.


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

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines to be appropriate;
    (d) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs and projects, and enter into contracts or 
agreements, which must be approved by the Secretary before becoming 
effective, for the development and carrying out of programs or projects 
of research, information, or promotion, and the payment of costs 
thereof with funds collected pursuant to this subpart. Each contract or 
agreement shall provide that any person who enters into a contract or 
agreement with the Board shall develop and submit to the Board a 
proposed activity; keep accurate records of all of its transactions 
relating to the contract or agreement; account for funds received and 
expended in connection with the contract or agreement; make periodic 
reports to the Board of activities conducted under the contract or 
agreement; and make such other reports available as the Board or the 
Secretary considers relevant. Any contract or agreement shall provide 
that:
    (1) The contractor or agreeing party shall develop and submit to 
the Board a program, plan, or project together with a budget or budgets 
that show the estimated cost to be incurred for such program, plan, or 
project;
    (2) The contractor or agreeing party shall keep accurate records of 
all its transactions and make periodic reports to the Board of 
activities conducted, submit accounting for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require;
    (3) The Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor;
    (f) To prepare and submit for approval of the Secretary fiscal year 
budgets in accordance with Sec. 1216.50;
    (g) To maintain such records and books and prepare and submit such 
reports and records from time to time to the Secretary as the Secretary 
may prescribe; to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it; and to keep 
records that accurately reflect the actions and transactions of the 
Board;
    (h) To cause its books to be audited by a competent auditor at the 
end of each fiscal year and at such other times as the Secretary may 
request, and to submit a report of the audit directly to the Secretary;
    (i) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary's representative(s) 
may attend such meetings, and to keep and report minutes of each 
meeting of the Board to the Secretary;
    (j) To act as intermediary between the Secretary and any producer 
or first handler;
    (k) To furnish to the Secretary any information or records that the 
Secretary may request;
    (l) To receive, investigate, and report to the Secretary complaints 
of violations of the Order;
    (m) To recommend to the Secretary such amendments to the Order as 
the Board considers appropriate; and
    (n) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, evaluation, and 
industry information designed to strengthen the peanut industry's 
position in the marketplace; maintain and expand existing markets and 
uses for peanuts; and to carry out programs, plans, and

[[Page 20120]]

projects designed to provide maximum benefits to the peanut industry.


Sec. 1216.49  Prohibited activities.

    The Board may not engage in, and shall prohibit the employees and 
agents of the Board from engaging in:
    (a) Any action that would be a conflict of interest;
    (b) Using funds collected by the Board under the Order to undertake 
any action for the purpose of influencing legislation or governmental 
action or policy, including local, state, national, and international, 
other than recommending to the Secretary amendments to the Order; and
    (c) Any advertising, including promotion, research, and information 
activities authorized to be carried out under the Order, that is false 
or misleading or disparaging to another agricultural commodity.

Expenses and Assessments


Sec. 1216.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, 
and as may be necessary thereafter, the Board shall prepare and submit 
to the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart. Each such 
budget shall include:
    (1) A statement of objectives and strategy for each program, plan, 
or project;
    (2) A summary of anticipated revenue, with comparative data for at 
least one preceding year (except for the initial budget);
    (3) A summary of proposed expenditures for each program, plan, or 
project; and
    (4) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year (except for the initial budget).
    (b) Each budget shall provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in this subpart.
    (c) Subject to this section, any amendment or addition to an 
approved budget must be approved by the Secretary, including shifting 
funds from one program, plan, or project to another. Shifts of funds 
which do not cause an increase in the Board's approved budget and which 
are consistent with governing bylaws need not have prior approval by 
the Secretary.
    (d) The Board is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform 
its duties in accordance with the provisions of this subpart. Such 
expenses shall be paid from funds received by the Board.
    (e) With approval of the Secretary, the Board may borrow money for 
the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board. Any funds 
borrowed by the Board shall be expended only for startup costs and 
capital outlays and are limited to the first year of operation of the 
Board.
    (f) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, 
plans, and projects. Such contributions shall be free from any 
encumbrance by the donor and the Board shall retain complete control of 
their use.
    (g) The Board shall reimburse the Secretary for all expenses 
incurred by the Secretary in the implementation, administration, and 
supervision of the Order, including all referendum costs in connection 
with the Order.
    (h) The Board may not expend for administration, maintenance, and 
functioning of the Board in any fiscal year an amount that exceeds 10 
percent of the assessments and other income received by the Board for 
that fiscal year. Reimbursements to the Secretary required under 
paragraph (g) of this section are excluded from this limitation on 
spending.
    (i) The Board shall allocate, to the extent practicable, no less 
than 80 percent of the assessments collected on all peanuts available 
for any fiscal year on national and regional promotion, research, and 
information activities. The Board shall allocate, to the extent 
practicable, no more than 20 percent of assessments collected on all 
peanuts available for any fiscal year for use in state or regional 
research programs. Specific percentages and amounts shall be determined 
annually by the Board, with the approval of the Secretary.
    (j) Certified peanut producer organizations may submit requests for 
funding for research and/or generic promotion projects. Amounts 
approved for each state shall not exceed the pro rata share of funds 
available for that state as determined by the Board and approved by the 
Secretary. Amounts allocated by the Board for state research or 
promotion activities will be based on requests submitted to the Board 
when it is determined that they meet the goals and objectives stated in 
the Order.
    (k) Assessments collected, less pro rata administrative expenses, 
from the gross sales of contract export additional peanuts shall be 
allocated by the Board for the promotion and related research of export 
peanuts.
    (l) The Board shall determine annually how total funds shall be 
allocated pursuant to paragraphs (i), (j), and (k) of this section, 
with the approval of the Secretary.


Sec. 1216.51  Assessments.

    (a) The funds to cover the Board's expenses shall be acquired by 
the levying of assessments upon producers in a manner prescribed by the 
Secretary.
    (b) Each first handler, at such times and in such manner as 
prescribed by the Secretary, shall collect from each producer and pay 
assessments to the Board on all peanuts handled, including peanuts 
produced by the first handler, no later than 60 days after the last day 
of the month in which the peanuts were marketed.
    (c) Such assessments shall be levied at a rate of 1 percent of the 
price paid for all farmers stock peanuts sold. Price paid is the value 
of segment entry on the FSA 1007 form.
    (d) For peanuts placed under loan with the Department's Commodity 
Credit Corporation, each area marketing association shall remit to the 
Board the following:
    (1) One (1) percent of the initial price paid for either quota or 
additional peanuts no more than 60 days after the last day of the month 
in which the peanuts were placed under loan; and
    (2) One (1) percent of the profit from the sale of the peanuts 
within 60 days after the final day of the area association's fiscal 
year.
    (e) All assessments collected under this section are to be used for 
expenses and expenditures pursuant to this Order and for the 
establishment of an operating reserve as prescribed in the Order.
    (f) The Board shall impose a late payment charge on any person who 
fails to remit to the Board the total amount for which the person is 
liable on or before the payment due date established under this 
section. The late payment charge will be in the form of interest on the 
outstanding portion of any amount for which the person is liable. The 
rate of interest shall be prescribed in regulations issued by the 
Secretary.
    (g) Persons failing to remit total assessments due in a timely 
manner may also be subject to actions under federal debt collection 
procedures.
    (h) The Board may authorize other organizations to collect 
assessments on its behalf with the approval of the Secretary.
    (i) The assessment rate may not be increased unless the new rate is

[[Page 20121]]

approved by a referendum among eligible producers.


Sec. 1216.52  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or 
projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration 
of appropriate programs for promotion, research, and information, 
including producer and consumer information, with respect to peanuts; 
and
    (2) The establishment and conduct of research with respect to the 
use, nutritional value, sale, distribution, and marketing of peanuts 
and peanut products, and the creation of new products thereof, to the 
end that marketing and use of peanuts may be encouraged, expanded, 
improved, or made more acceptable and to advance the image, 
desirability, or quality of peanuts.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board shall take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, or 
consumer information. If it is found by the Board that any such 
program, plan, or project does not contribute to an effective program 
of promotion, research, or consumer information, then the Board shall 
terminate such program, plan, or project.
    (d) No program, plan, or project shall make any false claims on 
behalf of peanuts or use unfair or deceptive acts or practices with 
respect to the quality, value, or use of any competing product. Peanuts 
of all domestic origins shall be treated equally.


Sec. 1216.53  Independent evaluation.

    The Board shall, not less often than every five years, authorize 
and fund, from funds otherwise available to the Board, an independent 
evaluation of the effectiveness of the Order and other programs 
conducted by the Board pursuant to the Act. The Board shall submit to 
the Secretary, and make available to the public, the results of each 
periodic independent evaluation conducted under this section.


Sec. 1216.54  Operating reserve.

    The Board shall establish an operating monetary reserve and may 
carry over to subsequent fiscal years excess funds in a reserve so 
established; Provided, that funds in the reserve shall not exceed any 
fiscal year's anticipated expenses.


Sec. 1216.55  Investment of funds.

    The Board may invest, pending disbursement, funds it receives under 
this subpart, only in obligations of the United States or any agency of 
the United States; general obligations of any state or any political 
subdivision of a state; interest bearing accounts or certificates of 
deposit of financial institutions that are members of the Federal 
Reserve system; or obligations that are fully guaranteed as to 
principal and interest by the United States.

Reports, Books, and Records


Sec. 1216.60  Reports.

    (a) Each producer and first handler subject to this part shall be 
required to report to the employees of the Board, at such times and in 
such manner as it may prescribe, such information as may be necessary 
for the Board to perform its duties. Such reports shall include, but 
shall not be limited to the following:
    (1) Number of pounds of peanuts produced or handled;
    (2) Price paid to producers (entry in value of segment section on 
the FSA 1007 form); and
    (3) Total assessments collected.
    (b) First Handlers shall submit monthly reports to the Board. These 
reports shall accompany the payment of the collected assessments and 
shall be due 60 days after the last day of the month in which the 
peanuts were marketed.


Sec. 1216.61  Books and records.

    Each first handler and producer subject to this subpart shall 
maintain and make available for inspection by the Secretary and 
employees and agents of the Board such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued thereunder, including such records as are necessary 
to verify any reports required. Such records shall include but are not 
limited to the following: copies of FSA 1007 forms, the names and 
address of producers, and the date the assessments were collected. Such 
records shall be retained for at least two years beyond the marketing 
year of their applicability.


Sec. 1216.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the regulations issued thereunder shall be kept 
confidential by all persons, including all employees and former 
employees of the Board, all officers and employees and former officers 
and employees of contracting and subcontracting agencies or agreeing 
parties having access to such information. Such information shall not 
be available to Board members, producers, importers, exporters, or 
handlers. Only those persons having a specific need for such 
information to effectively administer the provisions of this subpart 
shall have access to such information. Only such information so 
obtained as the Secretary deems relevant shall be disclosed by them, 
and then only in a judicial proceeding or administrative hearing 
brought at the direction, or on the request, of the Secretary, or to 
which the Secretary or any officer of the United States is a party, and 
involving this subpart. Nothing in this section shall be deemed to 
prohibit:
    (a) The issuance of general statements based upon the reports of 
the number of persons subject to this subpart or statistical data 
collected therefrom, which statements do not identify the information 
furnished by any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, 
together with a statement of the particular provisions of this subpart 
violated by such person.

Certification of Peanut Producer Organizations


Sec. 1216.70  Certification.

    (a) Organizations receiving certification from the Secretary will 
be entitled to submit nominations for Board membership to the Secretary 
for appointment and to submit requests for funding to the Board.
    (b) For major peanut-producing states, state-legislated peanut 
promotion, research, and information organizations may request 
certification, provided the state-legislated promotion program submits 
a factual report that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination 
pursuant to paragraph (e) of this section.
    (c) If a state-legislated peanut promotion, research and 
information organization in a major peanut-producing state does not 
elect to seek certification from the Secretary within a specified time 
period as determined by the Secretary, or does not meet eligibility 
requirements as specified by the Secretary, then any peanut producer 
organization whose primary purpose is to represent peanut producers 
within a primary peanut-producing state, or any other organization 
which has peanut

[[Page 20122]]

producers as part of its membership, may request certification. 
Certification shall be based, in addition to other available 
information, upon a factual report submitted by the organization that 
shall contain information deemed relevant and specified by the 
Secretary for the making of such determination pursuant to paragraph 
(e) of this section.
    (d) For minor peanut-producing states, any organization that has 
peanut producers as part of its membership may request certification.
    (e) The information required for certification by the Secretary may 
include, but is not limited to, the following:
    (1) The geographic distribution within the state covered by the 
organization's active membership;
    (2) The nature and size of the organization's active membership in 
the state, proportion of total such active membership accounted for by 
producers, a map showing the peanut-producing counties in such state in 
which the organization has members, the volume of peanuts produced in 
each such county, the number of peanut producers in each such county, 
and the size of the organization's active peanut producer membership in 
each such county;
    (3) The extent to which the peanut producer membership of such 
organization is represented in setting the organization's policies;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organization's operating funds are 
derived;
    (6) Functions of the organization;
    (7) The organization's ability and willingness to further the aims 
and objectives of the Act and Order; and,
    (8) Demonstrated experience administering generic state promotion 
and research programs.
    (f) The Secretary's determination as to eligibility or 
certification of an organization shall be final.

Miscellaneous


Sec. 1216.80  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and 
prepared by the Board shall be submitted to the Secretary for approval.


Sec. 1216.81  Implementation of the Order.

    The Order shall not become effective unless:
    (a) The Secretary determines that the Order is consistent with and 
will effectuate the purposes of the Act; and
    (b) The Order is approved by a simple majority of the peanut 
producers as defined in Sec. 1216.21 voting in a referendum who, during 
a representative period determined by the Secretary, have been engaged 
in the production of peanuts.


Sec. 1216.82  Suspension and termination.

    (a) The Secretary shall suspend or terminate this subpart or a 
provision thereof if the Secretary finds that this subpart or a 
provision thereof obstructs or does not tend to effectuate the purposes 
of the Act, or if the Secretary determines that this subpart or a 
provision thereof is not favored by persons voting in a referendum 
conducted pursuant to the Act.
    (b) Every five years, the Secretary shall hold a referendum to 
determine whether peanut producers favor the continuation of the Order. 
The Secretary will also conduct a referendum if 10 percent or more of 
all eligible peanut producers request the Secretary to hold a 
referendum. In addition, the Secretary may hold a referendum at any 
time.
    (c) The Secretary shall suspend or terminate this subpart at the 
end of the marketing year whenever the Secretary determines that its 
suspension or termination is approved or favored by a simple majority 
of the producers voting in a referendum who, during a representative 
period determined by the Secretary, have been engaged in the production 
of peanuts.
    (d) If, as a result of the referendum conducted under paragraph (b) 
of this section, the Secretary determines that this subpart is not 
approved, the Secretary shall:
    (1) Not later than 180 days after making the determination, suspend 
or terminate, as the case may be, collection of assessments under this 
subpart; and
    (2) As soon as practical, suspend or terminate, as the case may be, 
activities under this subpart in an orderly manner.


Sec. 1216.83  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than three of its members to the Secretary to serve as 
trustees for the purpose of liquidating the affairs of the Board. Such 
persons, upon designation by the Secretary, shall become trustees of 
all the funds and property then in the possession or under control of 
the Board, including claims for any funds unpaid or property not 
delivered, or any other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into pursuant to the Order;
    (3) From time to time, account for all receipts and disbursements 
and deliver all property on hand, together with all books and records 
of the Board and the trustees, to such person or persons as the 
Secretary may direct; and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary and appropriate to vest in such persons title and 
right to all funds, property and claims vested in the Board or the 
trustees pursuant to the Order.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to the Order shall be subject to the 
same obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary 
expenses of liquidation shall be turned over to the Secretary to be 
disposed of, to the extent practical, to the peanut producer 
organizations, certified pursuant to Sec. 1216.70, in the interest of 
continuing peanut promotion, research, and information programs.


Sec. 1216.84  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder; or
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
or of the Secretary or of any other persons, with respect to any such 
violation.


Sec. 1216.85  Personal liability.

    No member or alternate member of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or alternate, 
except for acts of dishonesty or willful misconduct.


Sec. 1216.86  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the

[[Page 20123]]

applicability thereof to other persons or circumstances shall not be 
affected thereby.


Sec. 1216.87  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested person affected by the provisions of the 
Act, including the Secretary.


Sec. 1216.88  Patents, copyrights, trademarks, information, 
publications, and product formulations.

    Patents, copyrights, trademarks, information, publications, and 
product formulations developed through the use of funds received by the 
Board under this subpart shall be the property of the U.S. Government 
as represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sales, leasing, 
franchising, or other uses of such patents, copyrights, trademarks, 
information, publications, or product formulations, inure to the 
benefit of the Board; shall be considered income subject to the same 
fiscal, budget, and audit controls as other funds of the Board; and may 
be licensed subject to approval by the Secretary. Upon termination of 
this subpart, Sec. 1216.82 shall apply to determine disposition of all 
such property.

    Dated: April 19, 1999.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
[FR Doc. 99-10134 Filed 4-22-99; 8:45 am]
BILLING CODE 3410-02-P