[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Rules and Regulations]
[Pages 41252-41263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19461]



[[Page 41251]]

_______________________________________________________________________

Part IV





Department of Agriculture





_______________________________________________________________________



Agricultural Marketing Service



_______________________________________________________________________



7 CFR Part 1216



Peanut Promotion, Research, and Information Order; Final Rule

  Federal Register / Vol. 64, No. 145 / Thursday, July 29, 1999/ Rules 
and Regulations  

[[Page 41252]]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1216

[FV-98-702-FR]


Peanut Promotion, Research, and Information Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule establishes a Peanut Promotion, Research, and 
Consumer Information Order (Order) under the Commodity Promotion, 
Research, and Information Act of 1996. Under the order, producers will 
pay an assessment of 1 percent of the price of farmers stock peanuts 
sold to first handlers. First handlers and marketing associations will 
remit the assessments to the National Peanut Board (Board). The Board 
will use the funds collected to conduct a generic program of promotion, 
research, consumer information, and industry information to maintain 
and expand markets for peanuts. The U.S. Department of Agriculture 
(USDA or the Department) conducted a referendum among eligible peanut 
producers to determine whether they favor the implementation of the 
Order. The order was approved by a majority of those voting in the 
referendum.

DATES: July 30, 1999.

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

SUPPLEMENTARY INFORMATION: This Order is issued pursuant to the 
Commodity Promotion, Research, and Information Act of 1996, 7 U.S.C. 
7401-7425; Public Law 104-127, enacted April 4, 1996, hereinafter 
referred to as the Act.
    Previous documents in this proceeding: Proposed Rule Number 1 
(November 1998 proposed rule) on the Order published in the November 6, 
1998, issue of the Federal Register [63 FR 59893]; a proposed rule on 
referendum procedures published in the November 6, 1998, issue of the 
Federal Register [63 FR 59907]; Proposed Rule Number 2 (April 1999 
proposed rule) on the Order, which included a Referendum Order, 
published in the April 23, 1999, issue of the Federal Register [64 FR 
20107]; a final rule on referendum procedures published in the April 
23, 1999, issue of the Federal Register [64 FR 20102 ]; and an 
amendment to the Referendum Order published in the June 14, 1999, issue 
of the Federal Register [64 FR 31736].

Executive Order 12988

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

Executive Order 12866

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

Regulatory Flexibility Act

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

[[Page 41253]]

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

[[Page 41254]]

1 percent of the price paid for all farmers stock peanuts, regardless 
of whether the peanuts are sold commercially or placed under loan with 
CCC in the price support program administered for CCC by FSA.
    Section 516(a)(1) of the Act provides authority to the Secretary to 
exempt from the Order any de minimis quantity of an agricultural 
commodity otherwise covered by the Order. At the recommendation of the 
proponent, this program does not include a de minimis exemption.
    At the assessment rate of 1 percent of farm value, the Board is 
expected to collect approximately $10 million annually, assuming 1 
billion pounds of peanuts are produced. It is anticipated that the 1 
percent rate of assessment will represent approximately 1 percent of 
producers' average return. During the 1995-96 crop year, the average 
price for peanuts was $0.293 per pound.
    Each primary producing state will have one member on the Board, and 
the minor peanut-producing states will be represented collectively by 
one member on the Board. Each member will have an alternate. Therefore, 
the Board will have 10 members and 10 alternates.
    Primary peanut-producing states are defined in the Order as 
Alabama, Florida, Georgia, New Mexico, North Carolina, Oklahoma, South 
Carolina, Texas, and Virginia, provided that these states maintain 3-
year average production of at least 10,000 tons of peanuts each. Minor 
peanut-producing states are defined in the Order as all peanut-
producing states other than the primary peanut-producing states. 
Currently, the following states are considered minor states: Arizona, 
California, Louisiana, Mississippi, and Tennessee.
    Peanut producers or producer organizations will nominate producers 
to serve as members on the Board. USDA will ensure that the nominees 
represent the peanut industry in accordance with the Order and the Act.
    After the Board is appointed by the Secretary, the Board will 
recommend programs and projects, a budget, and any rules and 
regulations that might be necessary for the administration of the 
program.
    The recordkeeping and reporting requirements for the Order are 
designed to minimize the burden on first handlers. They are designed to 
collect as much of the necessary information as possible from forms 
already submitted to another USDA agency. In addition, any information 
collection that cannot occur through forms already in use will pose a 
minimal additional burden.
    The estimated annual cost of providing the information to the Board 
by an estimated 98 respondents (21 producers, 57 first handlers, and 20 
producer organizations) is $4,059.85, which represents $5.00 per 
producer, $66.05 per first handler, and $9.50 per producer 
organization.
    With regard to alternatives to this rule, the Act itself provides 
authority to tailor a program according to the individual needs of an 
industry. Provision is made for permissive terms in an Order in Section 
516 of the Act, and other sections provide for alternatives. For 
example, Section 514 of the Act provides for programs applicable to: 
(1) Producers; (2) first handlers and other persons in the marketing 
chain as appropriate; and (3) importers (if imports are subject to 
assessment). Section 516 authorizes a program to provide for: the 
exemption of de minimis quantities of an agricultural commodity; 
different payment and reporting schedules; types of research, 
promotion, and information activities in both domestic and foreign 
markets; reserve funds; credits for generic and branded activities; and 
the assessment of imports. In addition, Section 518 of the Act provides 
for referenda to ascertain approval of program to be conducted either 
prior to its going into effect or within three years after assessments 
first begin under the program. A program also may provide for its 
approval in a referendum to be based upon: (1) A majority of those 
persons voting; (2) persons voting for approval who represent a 
majority of the volume of the agricultural commodity; or (3) a majority 
of those persons voting for approval who also represent a majority of 
the volume of the agricultural commodity. Section 515 of the Act 
provides for the establishment of a board from among producers, first 
handlers and others in the marketing chain as appropriate, and 
importers, if importers are subject to assessment.
    The proponent's proposal included provisions for both domestic and 
foreign market expansion and improvement; reserve funds; and an initial 
referendum to be conducted prior to the Order going into effect, with 
approval based upon a majority of those persons voting in a referendum.
    In order to conduct the Regulatory Flexibility Analysis regarding 
the impact of the Order on small entities, the November 1998 proposed 
rule invited comments concerning the potential effects of the Order. 
One comment was received concerning the paperwork burden on first 
handlers. As a result of the comment, changes were made in the order, 
as discussed in the April 1999 proposed rule.

Paperwork Reduction Act

    In accordance with the Office of Management and Budget (OMB) 
regulation (5 CFR part 1320) which implements the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 35), the information collection and 
recordkeeping requirements that are imposed by this Order were 
submitted to OMB for approval and were approved under OMB control 
number 0581-0093.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    OMB No. for background form (number 1 below): 0505-0001.
    Expiration date of approval: November 30, 1999.
    OMB No. for other information collections: 0581-0093.
    Expiration date of approval: November 30, 2000.
    Type of request: Revision of currently approved information 
collections for advisory committees and boards and for research and 
promotion programs.
    Abstract: The information collection requirements in the request 
are essential to carry out the intent of the Order and the Act.
    In addition, there will be the additional burden on the producers 
who vote in referenda. The referendum ballot, which represents the 
information collection requirement relating to referenda, was addressed 
in the final rule on referendum procedures.
    Under this program, first handlers are required to collect 
assessments from producers and file reports with and submit assessments 
to the Board. While the Order imposes certain recordkeeping 
requirements on first handlers, information required under the Order 
can be compiled from records currently maintained. Such records shall 
be retained for at least two years beyond the marketing year of their 
applicability. The estimated annual cost of providing the information 
to the Board by an estimated 98 respondents (21 producers, 57 first 
handlers, and 20 producer organizations) is $4,059.85, which represents 
$5.00 per producer, $66.05 per first handler, and $9.50 per producer 
organization.
    The Order's provisions have been carefully reviewed, and every 
effort has been made to minimize any unnecessary recordkeeping costs or 
requirements, including efforts to utilize information already 
submitted under other peanut programs administered by the Department.
    Most of the forms require the minimum information necessary to 
effectively carry out the requirements of

[[Page 41255]]

the program, and their use is necessary to fulfill the intent of the 
Order and the Act. Much information can be supplied from the FSA Form 
1007 without data processing equipment or outside technical expertise. 
FSA Form 1007 Inspection Certificate and Sales Memorandum is a standard 
form used within the peanut industry to collect peanut crop 
characteristics and value of the load from the producer to the first 
handler. This form contains the information that is needed in order to 
complete the first handlers form for the Board. In addition, there are 
no additional training requirements for individuals filling out reports 
and remitting assessments to the Board. The forms will be simple, easy 
to understand, and place as small a burden as possible on the person 
required to file the information.
    Collecting information monthly coincides with normal industry 
business practices. Reporting other than monthly will impose an 
additional and unnecessary recordkeeping burden on first handlers. The 
timing and frequency of collecting information is intended to meet the 
needs of the industry while minimizing the amount of work necessary to 
fill out the required reports.
    As discussed in the RFA section of this rule and in the April 1999 
proposed rule, the paperwork burdens on first handlers were modified as 
a result of a comment received in response to the November 1998 
proposed rule.
    Information collection requirements that are included in this rule 
include:
    (1) A background information form to be completed by candidates 
nominated by certified producer organizations for appointment to the 
Board.
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
producer.
    Respondents: Producers.
    Estimated Number of Respondents: 21 (average of 40 for the initial 
nominations to the Board and approximately 12 respondents annually 
thereafter for each 3-year period).
    Estimated Number of Responses per Respondent: 1 every 3 years.
    Total Estimated Annual Burden on Respondents: 20 hours for the 
initial nominations to the Board and 6 hours annually thereafter.
    (2) A monthly report by each first handler of peanuts.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per each first handler 
reporting on peanuts handled.
    Respondents: First handlers.
    Estimated Number of Respondents: 57.
    Estimated Number of Responses per Respondent: 12.
    Estimated Total Annual Burden on Respondents: 342 hours.
    (3) Nomination information by which certified producer 
organizations will nominate producers for membership on the Board.
    Estimate of Burden: Public reporting burden for this collecting of 
information is estimated to average 0.5 hours per response.
    Respondents: Certified producer organizations.
    Estimated Number of Respondents: 20.
    Estimated Number of Responses per Respondent: 1 per year.
    Estimated Total Annual Burden on Respondents: 10 hours.
    (4) An application for peanut producer organizations for 
certification of eligibility to nominate Board members. 
    Estimate of Burden: Public reporting for this collection of 
information is estimated to average 0.5 hours per response for each 
organization.
    Respondents: Peanut producer organizations.
    Estimated Number of Respondents: 9.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 9 hours.
    (5) A requirement to maintain records sufficient to verify reports 
submitted under the Order. 
    Estimate of Burden: Public recordkeeping burden for keeping this 
information is estimated to average 0.5 hours per recordkeeper 
maintaining such records.
    Recordkeepers: First handlers.
    Estimated Number of Recordkeepers: 57.
    Estimated Total Recordkeeping Hours: 28.5 hours.

Background

    The Act authorizes the Secretary, under a generic authority, to 
establish agricultural commodity research and promotion programs. 
Section 516 of the Act provides permissive terms for programs, and 
other sections provide alternatives. For example, Section 514 of the 
Act provides for orders applicable to: (1) Producers, (2) first 
handlers and others in the marketing chain as appropriate; and (3) 
importers (if importers are subject to assessment). Section 516 
authorizes an order to provide for: the exemption of de minimis 
quantities of an agricultural commodity; different payment and 
reporting schedules; different types of research, promotion, and 
information activities in domestic and foreign markets; reserve funds; 
credits for generic and branded activities; and the assessment of 
imports. In addition, Section 518 of the Act provides for referenda to 
ascertain approval of a program to be conducted either prior to its 
going into effect or within three years after assessments first begin 
under the program. A program also may provide for its approval in a 
referendum based upon different voting patterns. Section 515 provides 
for establishment of a board from among producers, first handlers and 
others in the marketing chain as appropriate, and importers, if imports 
are subject to assessment.
    On June 15, 1998, the proponent, working in cooperation with 20 
state and regional peanut industry organizations representing the nine 
primary peanut-producing states, submitted a proposal for a national 
peanut promotion, research, and information Order pursuant to the Act.
    The Department published the proponent's proposal, with 
modifications, for public comment in the November 1998 proposed rule. 
Fourteen comments were received by the January 5, 1999, deadline. These 
comments, and related changes to the Order, were discussed in the April 
1999 proposed rule, which included a Referendum Order.
    The Order is summarized as follows: Sections 1216.01 through 
1216.29 of the Order define certain terms, such as peanuts, minor 
peanut-producing states, primary peanut-producing states, producer, and 
quota peanuts, which are used in the Order.
    Sections 1216.40 through 1216.49 include provisions relating to the 
Board establishment and membership, nominations, selections and 
acceptance, term of office, vacancies, alternate members, and 
compensation and reimbursement; procedures for conducting Board 
business; and powers and duties of the Board, which is the governing 
body authorized to administer the Order through the implementation of 
programs, plans, projects, budgets, and contracts to promote and 
disseminate information about peanuts, subject to oversight by the 
Secretary. These sections also include maintenance of books and records 
by the Board and prohibited activities of the Board, its employees, and 
agents.
    In order to ensure support throughout the production area for all 
Board votes, Sec. 1216.46 (b) provides that all Board members' votes 
will be weighted by the value of production represented by each member. 
The votes of members from

[[Page 41256]]

primary peanut-producing states will represent their respective states' 
three-year running average of total gross farm income derived from all 
peanut sales. The votes of the at-large Board member will equal the 
collective value of production from all minor peanut-producing states' 
three-year running average of total gross farm income from all peanut 
sales. Any Board action will require the concurring votes of members 
collectively representing more than 50 percent of the total U.S. gross 
farm income derived from all peanut sales plus an additional two votes 
from other Board members, provided a minimum of five members concur. 
Therefore, regardless of the volume voted by the members, no Board 
action will be approved unless at least five members vote in favor of 
it. Similarly, if five members vote in favor of a motion and those five 
members do not represent more than 50 percent of the total U.S. gross 
farm income derived from all peanut sales, the motion will not be 
approved.
    Sections 1216.50 through 1216.55 cover budget review and approval; 
authorize the collection of assessments; use of assessments, including 
reimbursement of necessary expenses incurred by the Board for the 
performance of its duties, including expenses incurred for the 
Department's oversight responsibilities; specify who pays the 
assessment and how; authorize the imposition of a late-payment charge 
on past-due assessments; address programs, plans, and projects; require 
the Board to conduct periodically an independent review of its overall 
program; specify a program operating reserve; and cover the investment 
of assessment funds.
    There will be an assessment rate of 1 percent of the price paid for 
all farmers stock peanuts sold. Peanut producers may sell their peanuts 
commercially or put them in a government loan program. For peanuts sold 
commercially, the first handler will remit the assessment to the Board. 
The assessment will be 1 percent of the price paid for the peanuts. 
Under a loan program administered by FSA, a peanut producer also has 
the option of delivering the peanuts to an area marketing association 
and receiving payment for the peanuts from CCC. The area association 
will deduct 1 percent of the payment from the producer's proceeds and 
remit that amount to the Board as the producer's initial assessment 
payment on the peanuts. After the association sells the peanuts, the 
area association reimburses CCC the amount of the payment to the 
producer and deducts its expenses from the selling price. If there is 
any profit from the sale of the peanuts, the association will deduct 1 
percent of the profit, remit that amount to the Board to pay the 
producer's assessment, and pay the balance to the producer.
    The Board may raise or lower the rate of assessment with the 
approval of the Secretary and a producer referendum.
    The federal debt collection procedures referenced in Sec. 1216.51 
(g) include those set forth in 7 CFR 3.1 through 3.36 for all research 
and promotion programs administered by AMS (60 FR 12533, March 7, 
1995).
    Sections 1216.60 through 1206.62 concern reporting and 
recordkeeping requirements for persons subject to the Order and protect 
the confidentiality of information from such books, records, or 
reports.
    Section 1216.70 describes the certification requirements for 
peanut-producer organizations to be eligible to nominate Board members 
and submit requests for funds from the Board.
    Sections 1216.80 through 1216.88 describe the rights of the 
Secretary; authorize the Secretary to suspend or terminate the Order 
when deemed appropriate; prescribe proceedings after suspension or 
termination; address personal liability, separability, and amendments; 
and address patents, copyrights, trademarks, information, publications, 
and product formulations developed through the use of assessment funds.
    In preparing this rule, AMS made editorial changes to three 
sections. First, AMS revised the definitions of ``suspend'' 
(Sec. 1216.27) and ``terminate'' (Sec. 1216.29) to cover any part of 
the Order, in addition to the entire Order. This is consistent with 
other national programs. The third section which was modified slightly 
was Sec. 1216.70(e)(2), in keeping with the government's policy of 
plain language in regulations. The phrase ``proportion of total such 
active membership accounted for by producers'' was changed to 
``proportion of the organization's active membership accounted for by 
producers.'' In addition, in the same section, the word ``such'' was 
removed.

General Findings

    The Department conducted a referendum among peanut producers from 
May 14 through July 2, 1999, to determine whether the Order would 
become effective. The representative period for establishing voter 
eligibility was from August 1, 1997, through July 31, 1998 (1997 crop 
year). All peanut producers who produced peanuts during the 1997 crop 
year and at the time of the referendum (1998 crop year) were eligible 
to vote.
    It is determined that a majority of the eligible peanut producers 
voting favored implementation of the Order. After consideration of all 
relevant material presented, including the initial proposal, comments 
received, and the referendum results, it is found that the Order is 
consistent with and effectuate the declared policy and purpose of the 
Act.
    Pursuant to the provisions in 5 U.S.C. 553, it is found and 
determined that good cause exists for not postponing the effective date 
of this action until 30 days after publication in the Federal Register 
because: (1) This action implements a program requested by the nation's 
peanut producers to begin with the 1999 crop year; (2) interested 
parties were allowed 60 days to comment on the program and a referendum 
was held among peanut producers--who will bear the cost of this 
program; (3) in the referendum a majority of the eligible peanut 
producers who voted favored implementation of the program; (4) the 1999 
crop year begins on August 1, 1999; (5) domestic peanuts are marketed 
mainly between August 1 and December 31 of each year; (6) it is 
important that the 1999 crop be covered by the program; and (3) no 
useful purpose would be served by a delay of the effective date.

List of Subjects in 7 CFR Part 1216

    Administrative practice and procedure, Advertising, Consumer 
Information, Marketing agreements, Peanut promotion, Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, Title 7 of Chapter XI of 
the Code of Federal Regulations is amended as follows:

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

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

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

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

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

Definitions

Sec.
1216.1  Act.
1216.2  Additional peanuts.
1216.3  Area marketing association.
1216.4  Board.
1216.5  Conflict of interest.
1216.6  Contract export additional peanuts.
1216.7  Department.
1216.8  Farm Service Agency.
1216.9  Farmers stock peanuts.
1216.10  First handler.

[[Page 41257]]

1216.11  Fiscal year.
1216.12  Handle.
1216.13  Information.
1216.14  Market.
1216.15  Minor peanut-producing states.
1216.16  Order.
1216.17  Part and subpart.
1216.18  Peanuts.
1216.19  Peanut producer organization.
1216.20  Person.
1216.21  Primary peanut-producing states.
1216.22  Producer.
1216.23  Promotion.
1216.24  Quota peanuts.
1216.25  Research.
1216.26  Secretary.
1216.27  Suspend.
1216.28  State.
1216.29  Terminate.
1216.30  United States.

National Peanut Board

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

Expenses and Assessments

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

Reports, Books, and Records

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

Certification of Peanut Producer Organizations

1216.70  Certification.

Miscellaneous

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

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

Definitions


Sec. 1216.1  Act.

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


Sec. 1216.2  Additional peanuts.

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


Sec. 1216.3  Area marketing association.

    Area marketing association means an association selected and 
approved by the Secretary to conduct activities under regulations of 
the Department's Farm Service Agency. Under an interagency agreement, 
area marketing associations may assist in the collection of assessments 
under this subpart. The approved area marketing associations and the 
areas served by such associations are as follows:
    (a) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves 
the southeastern area consisting of Puerto Rico, the U.S. Virgin 
Islands, and the states of Alabama, Florida, Georgia, Mississippi, and 
that part of South Carolina south and west of the Santee-Congaree-Broad 
Rivers;
    (b) Peanut Growers Cooperative Marketing Association of Franklin, 
Virginia (PGCMA). PGCMA serves the Virginia-Carolina area consisting of 
the District of Columbia, and the states of Connecticut, Delaware, 
Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, 
Virginia, West Virginia, Wisconsin, and that part of South Carolina 
north and east of the Santee-Congaree-Broad Rivers; and
    (c) Southwestern Peanut Growers Association of Gorman, Texas 
(SWPGA). SWPGA serves the southwestern area consisting of the states of 
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, 
Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming, 
and all other territories of the United States not listed in paragraph 
(a) or (b) of this section.


Sec. 1216.4  Board.

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


Sec. 1216.5  Conflict of interest.

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


Sec. 1216.6  Contract export additional peanuts.

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


Sec. 1216.7  Department.

    Department means the U.S. Department of Agriculture.


Sec. 1216.8  Farm Service Agency.

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


Sec. 1216.9  Farmers stock peanuts.

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


Sec. 1216.10  First handler.

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


Sec. 1216.11  Fiscal year.

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


Sec. 1216.12  Handle.

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

[[Page 41258]]

Sec. 1216.13  Information.

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


Sec. 1216.14  Market.

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


Sec. 1216.15  Minor peanut-producing states.

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


Sec. 1216.16  Order.

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


Sec. 1216.17  Part and subpart.

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


Sec. 1216.18  Peanuts.

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


Sec. 1216.19  Peanut producer organization.

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


Sec. 1216.20  Person.

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


Sec. 1216.21  Primary peanut-producing states.

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


Sec. 1216.22  Producer.

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


Sec. 1216.23  Promotion.

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


Sec. 1216.24  Quota peanuts.

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


Sec. 1216.25  Research.

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


Sec. 1216.26  Secretary.

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


Sec. 1216.27  Suspend.

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


Sec. 1216.28  State.

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


Sec. 1216.29  Terminate.

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


Sec. 1216.30  United States.

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

National Peanut Board


Sec. 1216.40  Establishment and membership.

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

[[Page 41259]]

changes in the geographical distribution of the production of peanuts.


Sec. 1216.41  Nominations.

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


Sec. 1216.42  Selection.

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


Sec. 1216.43  Term of office.

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


Sec. 1216.44  Vacancies.

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


Sec. 1216.45  Alternate members.

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


Sec. 1216.46  Procedure.

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


Sec. 1216.47  Compensation and reimbursement.

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


Sec. 1216.48  Powers and duties.

    The Board shall have the following powers and duties:
    (a) To administer the Order in accordance with its terms and 
conditions and to collect assessments;
    (b) To develop and recommend to the Secretary for approval such 
bylaws as may be necessary for the functioning of the Board, and such 
rules as may be necessary to administer the Order, including activities 
authorized to be carried out under the Order;
    (c) To meet, organize, and select from among the members of the 
Board a chairperson, other officers, committees, and subcommittees, as 
the Board determines to be appropriate;
    (d) To employ persons, other than the members, as the Board 
considers necessary to assist the Board in carrying out its duties and 
to determine the compensation and specify the duties of such persons;
    (e) To develop programs and projects, and enter into contracts or 
agreements, which must be approved by the Secretary before becoming 
effective, for

[[Page 41260]]

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


Sec. 1216.49  Prohibited activities.

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

Expenses and Assessments


Sec. 1216.50  Budget and expenses.

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

[[Page 41261]]

state or regional research programs. Specific percentages and amounts 
shall be determined annually by the Board, with the approval of the 
Secretary.
    (j) Certified peanut producer organizations may submit requests for 
funding for research and/or generic promotion projects. Amounts 
approved for each state shall not exceed the pro rata Share of funds 
available for that State as determined by the Board and approved by the 
Secretary. Amounts allocated by the Board for state research or 
promotion activities will be based on requests submitted to the Board 
when it is determined that they meet the goals and objectives stated in 
the Order.
    (k) Assessments collected, less pro rata administrative expenses, 
from the gross sales of contract export additional peanuts shall be 
allocated by the Board for the promotion and related research of export 
peanuts.
    (l) The Board shall determine annually how total funds shall be 
allocated pursuant to paragraphs (i), (j), and (k) of this section, 
with the approval of the Secretary.


Sec. 1216.51  Assessments.

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


Sec. 1216.52  Programs, plans, and projects.

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


Sec. 1216.53  Independent evaluation.

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


Sec. 1216.54  Operating reserve.

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


Sec. 1216.55  Investment of funds.

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

Reports, Books, and Records


Sec. 1216.60  Reports.

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


Sec. 1216.61  Books and records.

    Each first handler and producer subject to this subpart shall 
maintain and make available for inspection by the

[[Page 41262]]

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


Sec. 1216.62  Confidential treatment.

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

Certification of Peanut Producer Organizations


Sec. 1216.70  Certification.

    (a) Organizations receiving certification from the Secretary will 
be entitled to submit nominations for Board membership to the Secretary 
for appointment and to submit requests for funding to the Board.
    (b) For major peanut-producing states, state-legislated peanut 
promotion, research, and information organizations may request 
certification, provided the state-legislated promotion program submits 
a factual report that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination 
pursuant to paragraph (e) of this section.
    (c) If a state-legislated peanut promotion, research and 
information organization in a major peanut-producing state does not 
elect to seek certification from the Secretary within a specified time 
period as determined by the Secretary, or does not meet eligibility 
requirements as specified by the Secretary, then any peanut producer 
organization whose primary purpose is to represent peanut producers 
within a primary peanut-producing state, or any other organization 
which has peanut producers as part of its membership, may request 
certification. Certification shall be based, in addition to other 
available information, upon a factual report submitted by the 
organization that shall contain information deemed relevant and 
specified by the Secretary for the making of such determination 
pursuant to paragraph (e) of this section.
    (d) For minor peanut-producing states, any organization that has 
peanut producers as part of its membership may request certification.
    (e) The information required for certification by the Secretary may 
include, but is not limited to, the following:
    (1) The geographic distribution within the state covered by the 
organization's active membership;
    (2) The nature and size of the organization's active membership in 
the state, proportion of the organization's active membership accounted 
for by producers, a map showing the peanut-producing counties in the 
state in which the organization has members, the volume of peanuts 
produced in each county, the number of peanut producers in each county, 
and the size of the organization's active peanut producer membership in 
each county;
    (3) The extent to which the peanut producer membership of such 
organization is represented in setting the organization's policies;
    (4) Evidence of stability and permanency of the organization;
    (5) Sources from which the organization's operating funds are 
derived;
    (6) Functions of the organization;
    (7) The organization's ability and willingness to further the aims 
and objectives of the Act and Order; and,
    (8) Demonstrated experience administering generic state promotion 
and research programs.
    (f) The Secretary's determination as to eligibility or 
certification of an organization shall be final.

Miscellaneous


Sec. 1216.80  Right of the Secretary.

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


Sec. 1216.81  Implementation of the Order.

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


Sec. 1216.82  Suspension and termination.

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

[[Page 41263]]

Sec. 1216.83  Proceedings after termination.

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


Sec. 1216.84  Effect of termination or amendment.

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


Sec. 1216.85  Personal liability.

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


Sec. 1216.86  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected 
thereby.


Sec. 1216.87  Amendments.

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


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

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

    Dated: July 26, 1999.
Barbara C. Robinson,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 99-19461 Filed 7-28-99; 8:45 am]
BILLING CODE 3410-02-P