[Federal Register Volume 64, Number 200 (Monday, October 18, 1999)]
[Rules and Regulations]
[Pages 56133-56135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27134]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997, 998, and 999

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule changes the outgoing quality control requirements 
currently prescribed under Marketing Agreement No. 146 (Agreement). The 
Agreement regulates the handling of peanuts grown in 16 States and is 
administered locally by the Peanut Administrative Committee 
(Committee). This rule relaxes the allowance for foreign material to 
.20 percent from .10 percent in the three ``with splits'' edible grade 
categories to make them consistent with the other seven edible grade 
categories, as unanimously recommended by the Committee. The same 
change applies to peanuts handled by handlers who have not signed the 
Agreement, and to imported peanuts.

DATES: Effective October 21, 1999; comments received by December 17, 
1999 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, PO Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-5698; or E-mail: [email protected]. All comments 
should reference the docket numbers and the date and page number of 
this issue of the Federal Register and will be made available for 
public inspection in the Office of the Docket Clerk during regular 
business hours.

FOR FURTHER INFORMATION CONTACT: Jim Wendland, Marketing Specialist, DC 
Marketing Field Office, or George Kelhart, Technical Advisor, both of 
the Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, PO Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone: (202) 720-2491, Fax: (202) 720-5698.
    Small businesses may request information on complying with this 
regulation from Jay Guerber, at the same address as above, or E-mail: 
Jay.G[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 146 (Agreement) (7 CFR part 998), regulating the handling 
of peanuts grown in 16 States. The Agreement is effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (Act) (7 
U.S.C. 601-674). Also, subparagraph (f)(2) of section 108B of the 
Agricultural Act of 1949 (7 U.S.C. 1445c3) and section 155 of the 
Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7271) 
provide that the Secretary of Agriculture shall require that all 
peanuts in the domestic and export markets fully comply with all 
quality requirements under the Agreement. This has been implemented 
through regulations governing peanuts handled by persons not subject to 
the Agreement (non-signers program) (7 CFR part 997) and regulations 
governing imports of peanuts (peanut import regulation) (7 CFR part 
999). Thus, the Agreement and the non-signers regulations regulate the 
quality of domestically produced peanuts and the peanut import 
regulations regulate the quality of imported peanuts.
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to

[[Page 56134]]

have retroactive effect. This rule will not preempt any State or local 
laws, regulations, or policies, unless they present an irreconcilable 
conflict with this rule. There are no administrative procedures which 
must be exhausted prior to any judicial challenge to the provisions of 
this rule.
    The outgoing quality requirements under the Agreement were changed 
in August 1998, as unanimously recommended by the Peanut Administrative 
Committee (Committee). The Committee is responsible for local 
administration of Marketing Agreement No. 146's quality assurance 
program in the 16-State peanut production area. The four basic 
varieties of peanuts produced domestically are: Runners, which account 
for about 75 percent of total U.S. production; Virginias, which have 
the largest kernels; Spanish, which have smaller kernels but higher oil 
content; and Valencias, which are very sweet and are grown mostly in 
New Mexico. Each of the grades may be certified ``with splits'' (where 
the two halves have come apart) provided all applicable quality 
requirements are met. A Sound Split and Broken Kernels tolerance of 15 
percent is allowed, of which not more than 3 percent will pass thru a 
prescribed screen.
    At its April 30, 1997, meeting the Committee unanimously 
recommended that for the 1997 and subsequent crop years the outgoing 
quality regulation and the terms and conditions of indemnification be 
amended to provide that all lots of edible quality peanuts be eligible 
for indemnification. This recommendation was adopted. Prior to 1997 
only edible quality peanuts meeting specifications applicable to 
indemnifiable grades were eligible for indemnification. Basically, this 
indemnification program insured that if a handler's milled peanuts had 
meet the Agreement's requirements when shipped but were later found to 
be out of compliance, the Committee would provide reimbursement to the 
handler for those peanuts if a valid claim was submitted.
    This modification to Sec. 998.200 (a) of the Agreement removed 
Table (2) INDEMNIFIABLE GRADES from the Agreement (63 FR 2846; January 
16, 1998). The modification inadvertently eliminated the specifications 
applicable to all nine of the INDEMNIFIABLE GRADE CATEGORIES. The 
Committee's intent was to cause all edible grade categories of peanuts 
to be eligible for indemnification benefits, not to eliminate any grade 
specifications. The Committee therefore unanimously recommended 
incorporating the last three categories of Table 2--Runner with splits, 
Virginia with splits, and Spanish and Valencia with splits--into Table 
1 which had been retained in Sec. 998.200. That recommendation was 
finalized and published in the August 23, 1998, issue of the Federal 
Register (63 FR 41323).
    However, at that time, the Committee inadvertently did not include 
a request for modification of the tolerance for foreign material in the 
three categories which were moved. The foreign material allowance in 
the three moved categories was .10 percent in the old Table 2. 
Therefore, these three moved categories where not consistent with the 
foreign material allowance of the other seven edible peanut categories 
already listed in the MAXIMUM LIMITATIONS table in Sec. 998.200 of the 
Agreement. Retaining different allowances would only cause confusion in 
the industry. Therefore, in order to eliminate any confusion and 
correct the situation, the Committee unanimously recommended at its 
March 18, 1999, public meeting to request an increase in the allowance 
for the three ``with splits'' categories to .20 percent. This would 
make all 10 edible peanut categories consistent. This rule implements 
that recommendation.
    The Agricultural Act of 1949 and the Federal Agriculture 
Improvement and Reform Act of 1996 provide that the Secretary of 
Agriculture shall require that all peanuts in the domestic and export 
markets fully comply with all quality requirements under the Agreement. 
Thus, this action applies to Agreement signer and non-signer handlers, 
and peanut importers for the remainder of the crop year ending June 30, 
2000, and subsequent crop years.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. There are approximately 
36 peanut handlers and 15 importers who are subject to regulation under 
the Agreement, the non-signers program, or the peanut import 
regulation, and approximately 23,000 commercial peanut producers in the 
16-State production area. Small agricultural service firms, which 
include handlers and importers, are defined by the Small Business 
Administration (13 CFR 121.601) as those having annual receipts of less 
than $5,000,000, and small agricultural producers are defined as those 
having annual receipts of less than $500,000. Approximately 25 percent 
of the signatory handlers, less than one-third of the importers, 
virtually all of the non-signer handlers, and most of the producers may 
be classified as small entities. In addition, based on the 1998 
marketing year average price received by farmers of 25.5 cents per 
pound times approximately 3.96 billion pounds production results in the 
value of domestic production totaled about $1.01 billion. Dividing this 
by approximately 23,000 producers results in an average annual producer 
revenue of approximately $44,000. Regarding peanut importers, 
approximately 15 business entities imported peanuts during the 1998 
import quota period beginning January 1, 1998, for Mexico, and April 1, 
1998, for Argentina and ``other countries'' and both ending 12 months 
later. They appear to cover a broad range of business entities, 
including fresh and processed food handlers, and both large and small 
commodity brokers who buy agricultural products on behalf of others. 
The majority of peanut importers are believed to be large business 
entities with annual receipts of over $5,000,000. AMS is not aware of 
any peanut producers (farmers) who imported peanuts during that quota 
period. In view of the foregoing, it can be concluded that the majority 
of peanut handlers, and producers may be classified as small entities, 
but not the importers.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    This rule changes the outgoing quality regulation by increasing the 
allowance for foreign material in the three edible categories of 
peanuts ``with splits'' to .20 percent from .10 percent, to make the 
allowance for all 10 edible grade categories consistent. The three 
edible categories are Runner with splits, Virginia with splits, and 
Spanish and Valencia with splits.
    The Agricultural Act of 1949 and the Federal Agriculture 
Improvement and Reform Act of 1996 provide that the Secretary of 
Agriculture shall require that all peanuts in the domestic and export 
markets fully comply with all quality requirements under the Agreement. 
Thus, this action applies to Agreement signer and non-signer handlers, 
and peanut importers for the

[[Page 56135]]

remainder of the crop year ending June 30, 2000, and subsequent crop 
years.
    The Committee discussed alternatives to this rule, including making 
no change, but unanimously concluded that such alternatives would not 
be in the best interests of the industry.
    This action relaxes the outgoing quality regulations imposed on all 
domestic peanut handlers and importers. It is applied uniformly on all 
peanut handlers and importers, and should tend to reduce their costs 
slightly since less lots will likely have to be remilled to meet 
outgoing quality requirements. Also, this relaxation may slightly 
reduce any reporting and recordkeeping burden on regulated persons. As 
with all Federal marketing agreement and order programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public sectors. In addition, the Department 
has not identified any Federal rules that duplicate, overlap or 
conflict with this rule.
    Further, the Committee's meetings were widely publicized throughout 
the peanut industry and all interested persons were invited to attend 
the meetings and participate in deliberations on all issues. Like all 
Committee meetings, the February 2, 1999, and March 18, 1999, meetings 
were public meetings and all entities, both large and small, were able 
to express views on this issue. The Committee itself consists of 18 
members of whom 9 represent handlers and 9 represent producers. 
Finally, interested persons are invited to submit information on the 
regulatory and informational impacts of this action on small 
businesses.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    This rule invites comments on a change to the outgoing quality 
control requirements currently prescribed under the Agreement, the Non-
signers Program and the Import Regulation. Any comments received will 
be considered prior to finalization of this rule.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this action until 30 days after publication in the Federal Register 
because: (1) This action relaxes the foreign material allowance for the 
three ``with splits'' categories of peanuts; (2) harvesting of the 
1999-2000 crop year domestic peanuts is already underway and the rule 
should cover as much of the remainder of the crop year ending June 30, 
2000, as possible; (3) all peanuts in the domestic and export markets 
must fully comply with all quality requirements under the Agreement; 
(4) the changes need to be effective before the 2000 Mexican peanut 
import quota opens January 3, 2000, so that all peanut importers are 
treated equally during 2000, as required by international trade 
agreements; (5) many signatory handlers, importers, and others in the 
industry are aware of this action, which was unanimously recommended by 
the Committee at a public meeting and interested parties had an 
opportunity to provide input; and (6) this interim final rule provides 
a 60-day comment period, and all written comments timely received will 
be considered prior to finalization of this rule.

List of Subjects

7 CFR Part 997

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

7 CFR Part 998

    Marketing agreements, Peanuts, Reporting and recordkeeping 
requirements.

7 CFR Part 999

    Dates, Food grades and standards, Hazelnuts, Imports, Nuts, 
Peanuts, Prunes, Raisins, Reporting and recordkeeping requirements, 
Walnuts.

    For the reasons set forth in the preamble, 7 CFR parts 997, 998, 
and 999 are amended as follows:
    1. The authority citation for 7 CFR parts 997, 998, and 999 
continues to read as follows:

    Authority: 7 U.S.C. 601-674, 7 U.S.C. 1445c-3, and 7 U.S.C. 
7271.

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY 
PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO MARKETING 
AGREEMENT NO. 146

    2. In Sec. 997.30, the ``MAXIMUM LIMITATIONS'' table is amended in 
the first column ``Type and grade category'', for the entries ``Runner 
with splits * * *'', ``Virginia with splits * * *'', and ``Spanish and 
Valencia with splits'' * * *, in the seventh column ``Foreign materials 
(percent)'', by removing the number ``.10'' and adding ``.20'' in its 
place.

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

    3. In Sec. 998.200, the ``MAXIMUM LIMITATIONS'' table is amended in 
the first column, ``Type and grade category'', for the entries ``Runner 
with splits * * *'', ``Virginia with splits * * *'', and ``Spanish and 
Valencia with splits'' * * *, in the seventh column ``Foreign materials 
(percent)'', by removing the number ``.10'' and adding ``.20'' in its 
place.

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

    4. In Sec. 999.600, the ``MINIMUM GRADE REQUIREMENTS--PEANUTS FOR 
HUMAN CONSUMPTION'' table is amended in the first column, ``Type and 
grade category'', for the entries ``Runner with splits * * *'', 
``Virginia with splits * * *'', and ``Spanish and Valencia with 
splits'' * * *, in the seventh column ``Foreign materials'' by removing 
the number ``.10%'' and adding ``.20%'' in its place.

    Dated: October 12, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-27134 Filed 10-15-99; 8:45 am]
BILLING CODE 3410-02-P