[Federal Register Volume 83, Number 115 (Thursday, June 14, 2018)]
[Rules and Regulations]
[Pages 27683-27686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12731]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1216

[Document Number AMS-SC-16-0115]


Peanut Promotion, Research, and Information Order; Change in 
Assessment Rate Computation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule changes the assessment rate computation under the 
Agricultural Marketing Service's (AMS) regulations regarding a national 
research and promotion program (program) for U.S. peanuts. This rule 
changes the basis for assessment under the regulations from value to 
volume (per ton). Two rates of assessment are established instead of 
using the formula currently specified in the regulations. This rule 
also updates the definition for ``fiscal year'' specified in the 
regulations to reflect current practices.

DATES: Effective Date: July 16, 2018.

FOR FURTHER INFORMATION CONTACT: Jeanette Palmer, Marketing Specialist, 
Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 
Stop 0244, 1400 Independence Avenue SW, Room 1406-S, Washington, DC 
20250-0244; telephone: (202) 720-9915; facsimile: (202) 205-2800; or 
electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: This final rule affecting the Peanut 
Promotion, Research, and Information Order (order) at 7 CFR part 1216 
is authorized under the Commodity Promotion, Research, and Information 
Act of 1996 (1996 Act)(7 U.S.C. 7411-7425).

Executive Orders 12866, 13563, and 13771

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules and promoting flexibility. 
This action falls within a category of regulatory actions that the 
Office of Management and Budget (OMB) exempted from Executive Order 
12866 review. Additionally, because this rule does not meet the 
definition of a significant regulatory action it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).

Executive Order 13175

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. The review reveals that this rule will 
not have substantial and direct effects on Tribal governments and will 
not have significant Tribal implications.

Executive Order 12988

    In addition, this final rule has been reviewed under Executive 
Order 12988, Civil Justice Reform. It is not intended to have 
retroactive effect. Section 524 of the 1996 Act (7 U.S.C. 7423) 
provides that it 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 1996 Act (7 U.S.C. 7418), a person subject 
to an order may file a written petition with USDA stating that an 
order, any provision of an order, or any obligation imposed in 
connection with an order, is not established in accordance with the 
law, and request a modification of an order or an exemption from an 
order. Any petition filed challenging an order, any provision of an 
order, or any obligation imposed in connection with an order, shall be 
filed within two years after the effective date of an order, provision, 
or obligation subject to challenge in the petition. The petitioner will 
have the opportunity for a hearing on the petition. Thereafter, USDA 
will issue a ruling on the petition. The 1996 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 USDA's final ruling.

Background

    This rule changes the assessment rate computation under the Peanut 
Promotion, Research, and Information Order. Part 1216 is administered 
by the Board with oversight by USDA. This rule changes the basis for 
assessment under the program from value to volume (per ton). Two rates 
of assessment are established instead of using the formula currently 
specified in this part. The assessment rates will be $3.55 per ton for 
Segregation 1 peanuts and $1.25 per ton for lower quality Segregation 2 
and 3 peanuts. This action was unanimously recommended by the National 
Peanut Board (Board) and will help facilitate program operations by 
providing a more predictable revenue stream for the Board. This rule 
also updates the definition for fiscal year specified in the part to 
reflect current practices.
    The Peanut Promotion, Research, and Information Order regulations 
took effect in 1999. Under the regulations, the Board administers a 
nationally-coordinated program of promotion, research, and information 
designed to strengthen the position of peanuts in the market place and 
to develop, maintain, and expand the demand for U.S. peanuts.
    Section 1216.48(m) provides authority for the Board to recommend to 
the Secretary amendments to the regulations as the Board considers 
appropriate.
    Section 1216.51 specifies that the funds necessary to pay for 
programs and other authorized costs shall be acquired by levying 
assessments upon producers in a manner prescribed by the Secretary. The 
assessments are collected by first handlers from producers and remitted 
to the Board no later than 60 days after the last day of the month in 
which the peanuts were marketed. Paragraph (c) of that section 
currently states that assessments shall be levied based on value at a 
rate of one percent of the price paid for all farmers stock peanuts 
sold. As defined in Sec.  1216.9, ``farmers stock peanuts'' means 
picked or threshed peanuts produced in the United States which have not 
been

[[Page 27684]]

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 before farmers stock peanuts are marketed.
    For producers who place their peanuts in a USDA loan program,\1\ 
assessments are levied at a rate of one percent of the loan value. The 
loan value is equivalent to the national loan rate for peanuts 
established by Congress and currently averages $355 per ton.\2\ The 
loan rate will vary depending upon the quality of the peanuts (e.g., 
Segregation 1, 2, and 3). For peanuts placed under loan, USDA deducts 
from the loan paid to the producer one percent of the loan value and 
remits this to the Board. This computes to an average assessment rate 
of $3.55 per ton.
---------------------------------------------------------------------------

    \1\ USDA's Farm Service Agency administers a marketing 
assistance program for peanuts on behalf of the Commodity Credit 
Corporation. Under this program, producers may apply for a loan 
which allows them to store their production and pledge the peanuts 
as collateral instead of selling them immediately after the fall 
harvest. https://www.fsa.usda.gov/programs-and-services/price-support/commodity-loans/non-recourse-loans/peanut-program/index.
    \2\ https://www.fsa.usda.gov/news-room/news-releases/2017/nr_20170707_rel_0074.
---------------------------------------------------------------------------

    Over the three year period (2014-2016), about $8.6 million in 
assessments has been collected under the program annually. Assessments 
collections totaled $7,284,050 \3\ in 2014, $8,811,444 \4\ in 2015, and 
$9,670,889 \5\ in 2016.
---------------------------------------------------------------------------

    \3\ National Peanut Board, Financial Statements with Independent 
Auditor's Report and Supplementary Information, October 31, 2014, 
Brooks, McGinnis & Company, LLC, p. 14.
    \4\ National Peanut Board, Financial Statements with Independent 
Auditor's Report and Supplementary Information, October 31, 2015, 
Brooks, McGinnis & Company, LLC, p. 12.
    \5\ National Peanut Board, Financial Statements with Independent 
Auditor's Report and Supplementary Information, October 31, 2016, 
Brooks, McGinnis & Company, LLC, p. 14.
---------------------------------------------------------------------------

    In recent years, the Board has discussed the merits of modifying 
the formula for calculating assessments in order to receive a more 
predictable revenue stream for the program. A reduction in value 
(producer price or the loan rate) could reduce Board revenue to the 
point where the Board would have to drastically curtail its promotional 
and research activities. Producer prices declined 24 percent from 2013-
2016 while production increased. According to USDA's National 
Agricultural Statistics Service (NASS), the producer price was $0.249 
per pound (or $498 per ton) in 2013 \6\ and $0.189 (or $378 per ton) in 
2016.\7\ Production in 2013 was 4.174 billion pounds \8\ and 5.685 
billion pounds in 2016.\9\ For 2017, production is estimated at 7.429 
billion pounds, up 31 percent from 2016.\10\
---------------------------------------------------------------------------

    \6\ USDA Crop Values Summary 2014, February 2015, p. 8; http://usda.mannlib.cornell.edu/usda/nass/CropValuSu//2010s/2015/CropValuSu-02-24-2015_correction.pdf.
    \7\ USDA, Crop Values Summary 2016, February 2017, p. 7; http://usda.mannlib.cornell.edu/usda/nass/CropValuSu//2010s/2017/CropValuSu-02-24-2017_revision.pdf.
    \8\ USDA, Crop Production Summary 2013, January 2014, p. 79; 
http://usda.mannlib.cornell.edu/usda/nass/CropProdSu//2010s/2014/CropProdSu-01-10-2014.pdf.
    \9\ USDA, Crop Production Summary 2016, February 2017, p. 101; 
http://usda.mannlib.cornell.edu/usda/current/CropProdSu/CropProdSu-01-12-2017.pdf.
    \10\ USDA Crop Production, August 10, 2017, p. 31; https://www.usda.gov/nass/PUBS/TODAYRPT/crop0817.pdf.
---------------------------------------------------------------------------

Board Recommendation

    The Board met on April 4, 2017, and unanimously recommended 
changing the basis for assessment under the order from value to volume 
(per ton). Two rates of assessments will be established for farmers 
stock peanuts, depending upon their quality as defined in the Minimum 
Quality and Handling Standards for Domestic and Imported Peanuts 
Marketed in the United States (Standards) codified in 7 CFR part 
996.\11\ Under the authority of section 517(d) of the 1996 Act, a board 
may recommend to the Secretary one or more rates of assessment under an 
order. The Board specifically recommended to set the assessment rates 
at $3.55 per ton for Segregation 1 peanuts and $1.25 per ton for lower 
quality Segregation 2 and 3 peanuts.
---------------------------------------------------------------------------

    \11\ 7 CFR part 996 took effect in 2002 and requires U.S. and 
imported peanuts to meet certain quality standards (67 FR 57129; 
September 9, 2002).
---------------------------------------------------------------------------

    Pursuant to Sec.  996.13(b) of the Standards, ``Segregation l 
peanuts'' means farmers stock peanuts with not more than 3.49 percent 
damaged kernels nor more than l.00 percent concealed damage caused by 
rancidity, mold, or decay and which are free from visible Aspergillus 
flavus. Pursuant to Sec.  996.13(c), ``Segregation 2 peanuts'' means 
farmers stock peanuts with more than 3.49 percent damaged kernels or 
more than l.00 percent concealed damage caused by rancidity, mold, or 
decay and which are free from visible Aspergillus flavus. Pursuant to 
Sec.  996.13(d), ``Segregation 3 peanuts'' means farmers stock peanuts 
with visible Aspergillus flavus.
    This action will help facilitate program operations by providing a 
more predictable revenue stream for the Board to carry out its mission. 
Section 1216.51 is revised accordingly.
    This rule references Sec. Sec.  996.13(b), 996.13(c) and 996.13(d) 
of the Standards which define the terms Segregation 1 peanuts, 
Segregation 2 peanuts, and Segregation 3 peanuts, respectively.
    Further, this rule revises Sec.  1216.11 regarding the term `fiscal 
year' from the 12-month period beginning August 1 of any year and 
ending July 31 of the following year to the 12-month period beginning 
November 1 of any year and ending October 31 of the following year to 
reflect current industry practices. That section also defines the term 
crop year to mean the same as fiscal year. The term crop year is not 
referenced elsewhere in part 1216 and is thus not necessary. This rule 
removes that term from Sec.  1216.11. Section 1216.11 is revised 
accordingly.

Final Regulatory Flexibility Act Analysis

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS is required to examine the impact of the final rule on 
small entities. Accordingly, AMS has considered the economic impact of 
this action on such 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 Small Business Administration (SBA) 
defines, in 13 CFR part 121, small agricultural producers as those 
having annual receipts of no more than $750,000 and small agricultural 
service firms (handlers) as those having annual receipts of no more 
than $7.5 million.
    According to the Board, there are approximately 7,600 producers and 
33 handlers of peanuts who are required to pay assessments under the 
program.
    Most producers would be classified as small businesses under the 
criteria established by the SBA. USDA's NASS reports that the farm 
value of the peanuts produced in the top 11 States in 2016 was $1.077 
billion.\12\ Dividing the 2016 crop value by 7,600 producers yields an 
average peanut sales per producer estimate of approximately $142,000. 
This is well below the threshold level of $750,000 in annual sales, 
indicating that most peanut producers would be classified by the SBA as 
small businesses.
---------------------------------------------------------------------------

    \12\ USDA, Crop Values Summary 2016, February 2017, p. 9; http://usda.mannlib.cornell.edu/usda/nass/CropValuSu//2010s/2017/CropValuSu-02-24-2017_revision.pdf.
---------------------------------------------------------------------------

    Dividing the 2016 crop value by 33 handlers yields an average 
peanut crop value per handler of about $33 million. This is many times 
larger than the $7.5

[[Page 27685]]

million SBA threshold and is thus an indication that most of the 
handlers would not be classified as small businesses.
    U.S. peanut production from the 11 major peanut-producing States in 
2016 was 5.685 billion pounds.\13\ Georgia was the largest producer (49 
percent of U.S. production), followed by Alabama (11 percent), Texas 
(10 percent), Florida (10 percent), South Carolina (6 percent), North 
Carolina (6 percent), Mississippi (3 percent), Arkansas (2 percent), 
Virginia (1 percent), Oklahoma (1 percent) and New Mexico (less than 1 
percent). According to the 2012 Census of Agriculture,\14\ small 
amounts of peanuts were also grown in seven other States.
---------------------------------------------------------------------------

    \13\ USDA Crop Production, August 10, 2017, p. 16; https://www.usda.gov/nass/PUBS/TODAYRPT/crop0817.pdf.
    \14\ USDA 2012 Census of Agriculture; p. 444; https://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/usv1.pdf.
---------------------------------------------------------------------------

    If the number of peanut producers (7,600) is divided into total 
2016 U.S. production (5.685 billion pounds), the resulting average 
peanut production per producer is approximately 748,000 pounds.
    This rule revises Sec.  1216.51 to change the basis for assessment 
from value to volume (per ton). The program is administered by the 
Board with oversight by USDA. Two rates of assessment will be 
established instead of using a formula currently specified in the 
regulations. The assessment rates will be $3.55 per ton for Segregation 
1 peanuts and $1.25 per ton for lower quality Segregation 2 and 3 
peanuts. This action was unanimously recommended by the Board and will 
help facilitate program operations by providing a more predictable 
revenue stream for the Board based only on volume for assessment. 
Authority for this action is provided in Sec.  1216.48(m) and section 
517 of the 1996 Act. This rule also updates the definition for fiscal 
year specified in Sec.  1216.11 to reflect current practices. That 
section provides authority for the Board, with approval of the 
Secretary, to change the fiscal year.
    Regarding the economic impact of this rule on affected entities, 
this action changes the basis of assessment from value to volume (per 
ton). The rates of assessment recommended by the Board are comparable 
to the rates that have been in effect since the inception of the 
program.\15\ While assessments impose additional costs on producers, 
the costs are minimal and uniform on all. The costs would also be 
offset by the benefits derived from the operation of the program. (The 
update to Sec.  1216.11 regarding the fiscal year is administrative in 
nature.)
---------------------------------------------------------------------------

    \15\ This action would not increase the assessment rate. 
Therefore, a referendum is not required (see Sec.  1216.51(j)).
---------------------------------------------------------------------------

    Regarding the impact of the peanut program on the industry, the 
program has been successful in helping to build demand and improve 
producer returns. A 2014 economic study shows that the program helped 
to increase demand by 15 percent from 2007-2013, and that each dollar 
invested in Board activities over the period returned $8.87 to the 
producer.\16\
---------------------------------------------------------------------------

    \16\ Kaiser, Harry, An Economic Analysis of the National Peanut 
Board, August 11, 2014, p. 1. The analysis is available from USDA or 
the Board.
---------------------------------------------------------------------------

    With regard to alternatives, the Board has been considering 
revising the assessment rate computation for a number of years. The 
Board considered revising the assessment rate to equal a weighted 
average of the value of Segregation 1, 2, and 3 peanuts as reported by 
the NASS for the prior year. However, this would still link the 
assessment rate to value. Another option would be to maintain the 
status quo. After review and deliberation, the Board unanimously 
recommended revising the basis for assessment under the program from 
value to volume as described herein.
    To calculate the percentage of producer revenue represented by the 
assessment rate, the proposed assessment rates are divided by the 
average producer price. The proposed assessment rates are $3.55 per ton 
($0.001775 per pound) for Segregation 1 peanuts and $1.25 per ton 
($0.000625 per pound) for Segregation 2 and 3 peanuts. According to 
NASS, the average producer price ranged from $0.193 per pound in 2015 
to $0.189 per pound in 2016.\17\ Thus, the proposed assessment rates as 
a percentage of producer price could range from 0.92 to 0.94 percent 
for Segregation 1 peanuts and from 0.32 to 0.33 percent for Segregation 
2 and 3 peanuts.
---------------------------------------------------------------------------

    \17\ USDA, Crop Values Summary 2016, February 2017, p. 27; 
http://usda.mannlib.cornell.edu/usda/nass/CropValuSu//2010s/2017/CropValuSu-02-24-2017_revision.pdf.
---------------------------------------------------------------------------

Reporting and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection and recordkeeping requirements 
that are imposed by the program have been approved previously under OMB 
control number 0581-0093. This final rule will not result in a change 
to the information collection and recordkeeping requirements previously 
approved and will impose no additional reporting and recordkeeping 
burden on peanut producers or first handlers.
    As with all Federal promotion programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies. Finally, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this final rule.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    In regard to outreach efforts, Board members have been conducting 
outreach to educate industry members about the need for changing the 
basis of assessment since January 2016. The issue has been discussed at 
Board meetings over the past few years. The Board has also conducted 
outreach to the major peanut associations and has received positive 
feedback. All of the Board's meetings are open to the public and 
interested persons are invited to participate and express their views.
    A proposed rule concerning this action was published in the Federal 
Register on March 30, 2018 (83 FR 13700). The Board sent the proposed 
rule directly to the peanut producer associations, Board members, and 
assessment payers. In addition, the Board disseminated the proposed 
rule via the internet by providing the links to the proposal in its 
industry newsletter and website. The proposal was also made available 
through the internet by USDA and the Office of the Federal Register. A 
30-day comment period ending April 30, 2018, was provided to allow 
interested persons to submit comments.

Analysis of Comments

    Thirteen comments were received in response to the proposed rule. 
Of those 13 comments, 12 comments were in favor of the proposed flat 
computation of the two assessment rates (one favorable comment was a 
duplicate and only counted once), and one comment was outside the scope 
of the review.
    Ten commenters stated the change in the assessment computation 
would allow for a more consistent revenue stream for the Board to carry 
out its mission. Of these commenters, one commenter stated the 
computation change is not an increase or decrease in producer 
assessments. It stated that this change is a proactive business move to 
create an assessment rate which will not fluctuate downward rapidly. 
The

[[Page 27686]]

proposed computation will allow the Board to plan long term without a 
disruption to its income flow. Another commenter in favor of the 
proposed change stated that it will be less confusing and easier for 
USDA to administer the assessment rate.
    After consideration of all relevant matters presented, including 
the information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, is consistent with and will effectuate the 
purposes of the 1996 Act.

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, 7 CFR part 1216 is 
amended as follows:

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

0
1. The authority citation for part 1216 continues to read as follows:

    Authority:  7 U.S.C. 7411-7425; 7 U.S.C. 7401.


0
2. Revise Sec.  1216.11 to read as follows:


Sec.  1216.11  Fiscal year.

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

0
 3. In Sec.  1216.51, revise paragraphs (c) and (d), remove paragraph 
(e), and redesignate paragraphs (f) through (j) as paragraphs (e) 
through (i) to read as follows:


Sec.  1216.51  Assessments.

* * * * *
    (c) Such assessments shall be levied on all farmers stock peanuts 
sold at a rate of $3.55 per ton for Segregation 1 peanuts and $1.25 per 
ton for Segregation 2 peanuts and 3 peanuts, as those terms are defined 
in Sec. Sec.  996.13(b)-(d) of this title.
    (d) For peanuts placed under a marketing assistance loan with the 
Department's Commodity Credit Corporation, the Commodity Credit 
Corporation, or any entity determined by the Commodity Credit 
Corporation shall deduct and remit to the Board, from the proceeds of 
the loan paid to the producer, the assessment per ton as specified in 
paragraph (c) of this section, no more than 60 days after the last day 
of the month in which the peanuts were placed under a marketing 
assistance loan.
* * * * *

    Dated: June 8, 2018.
Bruce Summers,
Administrator.
[FR Doc. 2018-12731 Filed 6-13-18; 8:45 am]
 BILLING CODE 3410-02-P