[Federal Register Volume 65, Number 6 (Monday, January 10, 2000)]
[Rules and Regulations]
[Pages 1302-1304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-506]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997, 998, and 999

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


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
changing 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 continues 
to relax 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 continues to 
apply to peanuts handled by handlers who have not signed the Agreement, 
and to imported peanuts.

EFFECTIVE DATE: February 9, 2000.

FOR FURTHER INFORMATION CONTACT: George Kelhart, Technical Advisor, of 
the Marketing Order Administration Branch, FVP, AMS, USDA, Room 2525-S, 
P.O. Box 96456, Washington, DC 20090-6456; telephone (202) 720-2491, 
Fax: (202) 720-5698; or Jim Wendland, Marketing Specialist, DCMFO, 
MOAB, FVP, AMS, USDA, 4700 River Road, Unit 155, Suite 5D03, Riverdale, 
MD 20737; phone (301) 734-5246, Fax (301) 734-5275 or E-mail: 
[email protected]. or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, at the first address 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.

[[Page 1303]]

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 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 met 
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 were 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 continues 
implementation of 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 continues to apply 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 final 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. Marketing agreements 
issued pursuant to the Act, and the rules issued thereunder, are unique 
in that they are brought about through group action of essentially 
small entities acting on their own behalf. Thus, these statutes have 
small entity orientation and compatibility. 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

[[Page 1304]]

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.
    This rule continues changes to the outgoing quality regulation of 
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 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 continues to relax 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, as noted in the initial regulatory flexibility analysis, 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.
    An interim final rule concerning this action was published in the 
Federal Register on October 18, 1999. Copies of the rule were mailed by 
the Peanut Administrative Committee staff to all Committee members and 
Agreement signer handlers. Also, the Department mailed approximately 
500 copies to importers, non-signer handlers, and other interested 
persons. In addition, the rule was made available through the Internet 
by the Office of the Federal Register. That rule provided for a 60-day 
comment period which ended December 17, 1999. No comments referencing 
that rule were received by the Docket Clerk.
    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.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee and other 
available information, it is found that finalizing the interim final 
rule, without change, as published in the Federal Register (64 FR 
56133, October 18, 1999) will tend to effectuate the declared policy of 
the Act.

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.

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

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

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

    Accordingly, the interim final rule amending 7 CFR parts 997, 998, 
and 999 which was published at 64 FR 56133 on October 18, 1999, is 
adopted as a final rule without change.

    Dated: January 4, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-506 Filed 1-7-00; 8:45 am]
BILLING CODE 3410-02-P