[Federal Register Volume 60, Number 174 (Friday, September 8, 1995)]
[Rules and Regulations]
[Pages 46750-46753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22283]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 998
[Docket No. FV95-998-2FIR]
Amendment of Requirements Established Under Marketing Agreement
No. 146 Regulating the Quality of Domestically Produced Peanuts for
1995 and Subsequent Crop Years
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting as a
final rule, with one minor correction, the provisions of an interim
final rule that amends for the 1995 peanut crop and subsequent crop
years several provisions of the incoming, outgoing, and indemnification
regulations established under Marketing Agreement No. 146. The changes
recognize industry operating practices and reduce the burden on
handlers without compromising the agreement's objective. The objective
of the agreement is to ensure that only wholesome peanuts enter edible
market channels. This final rule was unanimously recommended by the
Peanut Administrative Committee (Committee), the administrative agency
for this wholesomeness assurance program.
EFFECTIVE DATE: September 8, 1995.
FOR FURTHER INFORMATION CONTACT: William G. Pimental, Marketing
Specialist, Southeast Marketing Field Office, Fruit and Vegetable
Division, AMS, USDA, P.O. Box 2276, Winter Haven, Florida 33883-2276;
telephone: (941) 299-4770, or FAX: (941) 299-5169; or Jim Wendland,
Marketing Specialist, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington,
D.C. 20090-6456; telephone: (202) 720-2170, or FAX: (202) 720-5698.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Agreement No. 146 (7 CFR part 998) regulating the quality of
domestically produced peanuts, hereinafter referred to as the
agreement. This agreement is effective under the Agricultural Marketing
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter
referred to as the ``Act.''
The Department is issuing this rule in conformance with Executive
Order 12866.
This rule has been reviewed under Executive Order 12778, 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.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Administrator of the Agricultural Marketing
Service (AMS) has considered the economic impact of this action on
small entities.
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 about 75 handlers of peanuts subject to regulation under
the agreement, and about 47,000 peanut producers in the 16 States
covered under the program. Small agricultural service firms 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 have been defined as those having annual receipts of less
than $500,000. Some of the handlers signatory to the agreement are
small entities, and a majority of the
[[Page 46751]]
producers may be classified as small entities.
In 1994, the reported U.S. production, mostly covered under the
agreement, was approximately 4.25 billion pounds of peanuts, a 25
percent increase from the short 1993 crop. The preliminary 1994 peanut
crop value is $1.23 billion, up 19 percent from the 1993 crop value.
The objective of the agreement, in place since 1965, is to ensure
that only wholesome peanuts enter edible market channels. About 70
percent of U.S. shellers (handlers), handling approximately 95 percent
of the crop, have voluntarily signed the agreement. Under the
agreement, farmers' stock peanuts with visible Aspergillus flavus mold
(the principal source of aflatoxin) are required to be diverted to non-
edible uses. Each lot of milled peanuts must be sampled and the samples
chemically analyzed for aflatoxin contamination. Signatory handlers who
comply with these requirements may be eligible for indemnification of
losses for individual lots of their peanuts which test positive to
aflatoxin. Indemnification and administrative costs are paid by
assessments levied on handlers signatory to the agreement.
The Committee, which is composed of producers and handlers of
peanuts, meets to review the rules and regulations effective on a
continuous basis for peanuts regulated under the agreement. Committee
meetings are open to the public, and interested persons may express
their views at these meetings. The Department reviews Committee
recommendations and information, as well as information from other
sources, and determines whether modification, suspension, or
termination of the rules and regulations would tend to effectuate the
declared policy of the Act.
The Committee met on March 22 and 23, 1995, and unanimously
recommended several changes to incoming, outgoing, and indemnification
regulations for 1995 and subsequent crop peanuts.
The Committee recommended amending Sec. 998.100 Incoming quality
regulation by revising paragraph (c) to provide that commercially
acquired lots be designated as Segregation 2 peanuts (rather than
Segregation 1) by the Federal or Federal-State Inspection Service
(Inspection Service) when exceeding .50 percent freeze damage and/or
14.49 percent loose shelled kernels (LSK's) when the Inspection Service
is notified that a contract between the producer and the handler
specifies these more restrictive tolerances.
Currently, Sec. 998.100 (b) defines Segregation 1 peanuts as
farmers' stock peanuts with not more than 2 percent damaged kernels nor
more than 1.00 percent concealed damage caused by rancidity, mold, or
decay and which are free from visible Aspergillus flavus. Section
998.100 (c) defines Segregation 2 peanuts as farmers' stock peanuts
with more than 2 percent damaged kernels or more than 1.00 percent
concealed damage caused by rancidity, mold, or decay and which are free
from visible Aspergillus flavus.
The recommendation was not adopted by the Department. The current
standards are rules of general applicability which apply to all peanuts
without regard to any contractual agreements between individuals.
Buyers and sellers are free to agree to a variety of contractual terms.
However, such agreements should not have the effect of determining
whether peanuts are Segregation 1 or 2 as those terms are defined in
the regulations.
Previously, Sec. 998.100(i) Shelled peanuts read ``Handlers may
acquire from other handlers, for remilling and subsequent disposition
to human consumption outlets, shelled peanuts (which originated from
``Segregation 1 peanuts'') that fail to meet the requirements specified
for human consumption in paragraph (a) of the Outgoing Quality
Regulation (Sec. 998.200). Any lot of such peanuts must be accompanied
by a valid inspection certificate for the grade factors and must be
positive lot identified. * * * Peanuts acquired pursuant to this
paragraph shall be held and milled separate and apart from other
receipts or acquisitions of the receiving handler, and further
disposition shall be regulated by paragraph (h)(1) of the Outgoing
Quality Regulation (Sec. 998.200)''.
This rule continues in effect the revision made in paragraph (i) of
Sec. 998.100 to allow movement of shelled peanuts, which originated
from Segregation 1 peanuts, without inspection and positive lot
identification (PLI), from one handler to another and does not require
the receiving handler to hold and mill such peanuts separate from other
receipts and acquisitions. The high degree of control that had been in
place for such transactions is no longer needed because the peanut
industry has changed from small locally owned plants to large
corporations with strict quality control procedures. The Committee
believes that relaxing the requirements will enable handlers to reduce
processing and storage costs and increase movement of peanuts without
jeopardizing the agreement's quality control and lot identification
objectives.
Section 998.200 Outgoing quality regulation was amended by revising
paragraphs (f) and (h)(1) to allow handlers to transfer peanuts to any
handler or to domestic commercial storage without PLI and certification
of meeting quality requirements when it leaves the first facility.
Previously, Sec. 998.200(f) Inter-plant transfer read ``Any handler may
transfer peanuts from one plant owned by him to another of his plants
or to commercial storage, without having such peanuts positive lot
identified and certified as meeting quality requirements, but such
transfer shall be only to points within the same production area and
ownership shall have been retained by the handler. Upon any transferred
peanuts being disposed of for human consumption, they shall meet all
the requirements applicable to such peanuts''.
Prior to the issuance of the interim final rule, Sec. 998.200(h)
Peanuts failing quality requirements read ``(1) Handlers may sell to or
contract with other handlers, for further handling, shelled peanuts
(which originated from Segregation 1 peanuts) that fail to meet the
requirements for disposition to human consumption outlets heretofore
specified in paragraph (a) of this section. Lots of peanuts disposed of
in this manner must be accompanied by a valid grade inspection
certificate, and must be positive lot identified. Transactions made in
this manner shall be reported to the Committee by both the seller and
the buyer on a form provided by the Committee. Any such peanuts
acquired by handlers pursuant to paragraph (i) of the Incoming Quality
Regulation (Sec. 998.100) shall be held and milled separate and apart
from other receipts or acquisitions of the receiving handler and
further disposition shall be regulated by the requirements specified
heretofore or pursuant to paragraph (h)(3) hereinafter''.
This high degree of control is no longer needed. As stated earlier,
the peanut industry has changed dramatically from many small locally
owned and operated plants to large or multinational corporations with
strict quality control procedures located throughout the different
production areas in the United States. Relaxing the regulation allows
freer movement of peanuts, more efficient use of facilities, and
reduced numbers of inspections, resulting in lower costs and a more
competitive industry, without compromising the program's quality
control objective.
Under paragraph (h) of Sec. 998.200, peanuts failing quality
requirements for
[[Page 46752]]
disposition to human consumption outlets can be sent to blanchers for
reconditioning, to domestic crushers, or exported (when peanuts meet
fragmented requirements). In Sec. 998.200 paragraph (h)(2) previously
read ``Handlers may blanch or cause to have blanched positive lot
identified shelled peanuts (which originated from Segregation 1
peanuts) that fail to meet the requirements of paragraph (a) of this
section because of excessive damage, minor defects, moisture, or
foreign material or are positive as to aflatoxin: Provided, That such
lots of peanuts contain not in excess of 8 percent damage and minor
defects combined or 2 percent foreign material. Prior to movement of
such peanuts to a blancher, handlers shall report to the Committee, on
a form furnished by the Committee, and receive authorization from the
Committee for movement and blanching of each such lot. Lots of peanuts
which are moved under these provisions must be accompanied by a valid
grade inspection certificate and the title shall be retained by the
handler until the peanuts are blanched and certified by an inspector of
the Federal or Federal-State Inspection Service as meeting the
requirements for disposal into human consumption outlets. To be
eligible for disposal into human consumption outlets, such peanuts
after blanching, must meet specifications for unshelled peanuts,
damaged kernels, minor defects, moisture, and foreign material as
listed in paragraph (a) of this section and be accompanied by an
aflatoxin certificate determined to be negative by the Committee * *
*.''
Paragraph (h)(4) of Sec. 998.200 previously read ``Handlers may
contract with Committee approved remillers for remilling shelled
peanuts (which originated from Segregation 1 peanuts) that fail to meet
the requirements for disposition to human consumption outlets
heretofore specified in paragraph (a) of the Outgoing Quality
Regulation: Provided, That such lot of peanuts contain not in excess of
8 percent damage and minor defects combined or 10 percent fall through
or 2 percent foreign material. Prior to movement of such peanuts under
these provisions to a Committee approved remiller, handlers shall
report to the Committee, on a form furnished by the Committee, and
receive authorization from the Committee for movement and remilling of
each such lot. Lots of peanuts moved under these provisions must be
accompanied by a valid grade inspection certificate and must be
positive lot identified and the title of such peanuts shall be retained
by the handler until the peanuts have been remilled and certified by
the Federal or Federal-State Inspection Service as meeting the
requirements for disposition to human consumption outlets specified in
paragraph (a), and be accompanied by an aflatoxin certificate
determined to be negative by the Committee. Remilling under these
provisions may include composite remilling of more than one such lot of
peanuts owned by the same handler. However, such peanuts owned by one
handler shall be held and remilled separate and apart from all other
peanuts * * *''
Paragraph (h)(2) of Sec. 998.200 was relaxed by the interim final
rule to allow individual handlers to move failing peanuts containing
not in excess of 10 percent total unshelled peanuts and damaged kernels
or 10 percent foreign material to Committee approved blanchers, rather
than reworking (blanching) at their own facilities. Also, paragraph
(h)(4) of Sec. 998.200 was similarly relaxed to allow individual
handlers to move failing peanuts to Committee approved remillers for
remilling shelled peanuts containing not in excess of 10 percent total
unshelled peanuts and damaged kernels or 10 percent fall through or 10
percent foreign material.
However, before such peanuts go to human consumption outlets, the
peanuts have to be certified as meeting human consumption outlet
requirements (must at least meet minimum requirements specified in
``OTHER EDIBLE QUALITY'' (NON-INDEMNIFIABLE) GRADES--WHOLE KERNELS AND
SPLITS table of Sec. 998.200(a) and must also be certified ``negative''
(not more than 15 parts per billion) as to aflatoxin).
These changes recognize the current generally more efficient,
higher technology processing capabilities of blanchers' and remillers'
facilities and practices compared with the typical handler's facility
and are intended to provide handlers more reconditioning flexibility.
These changes tend to reduce limitations on handlers by allowing them
to use blanchers' and remillers' generally more efficient grading and
milling facilities to rework such peanuts, improve handlers'
competitive position, especially with regards to imported peanuts, by
better utilizing peanut supplies and existing facilities and increase
peanut movement to higher value markets.
This action also continues in effect the revisions made to
paragraph (j) of Sec. 998.200 to exempt certain peanuts, including
those of a lower quality than Segregation 1 for domestic crushing, from
being assessed to lower the handlers' costs for these lower value
peanuts, as authorized by Secs. 998.48 Assessments and 998.31 Incoming
regulation of the agreement.
The Committee also recommended that this exemption apply to
Segregation 1 peanuts for crushing. However, the recommendation was not
adopted by the Department because the agreement provides no authority
for such an exemption and it would require an amendment to the
agreement through formal rulemaking procedures to add such authority.
Segregation 1 peanuts are sometimes commingled with Segregation 2 or 3
peanuts. In such cases, the Segregation 1 peanuts take on the identity
of the lower quality Segregation 2 or 3 peanuts, because it dilutes the
quality of higher quality Segregation 1 peanuts. In those cases, the
quantity of former Segregation 1 peanuts which were commingled are
exempt from program assessments.
Further, this action amends Sec. 998.300 Terms and conditions of
indemnification by establishing reduced indemnification values
specified in paragraphs (e), (h), (i), and (x); and revising paragraph
(z) by specifying a reduced ceiling and/or number of claims to
``trigger'' payments. The indemnification value of rejects and entire
lots is reduced to 35 cents per pound from the previous 45 cents. The
interim final rule failed to mention that the reduction in
indemnification value also required changes to paragraph (e) of
Sec. 998.300. This inadvertent omission is corrected in this document.
These changes are intended to reduce the problem encountered by the
Committee and the Department on 1993 crop indemnification claims when
the indemnification payment ceiling and number of claims was
significantly exceeded and the Department was asked for and approved
the authority for the Committee to spend up to $500,000 from the
indemnification reserve fund to pay the excess claims. These changes
are expected to reduce by $2 million the cost to the Committee for
indemnification payments, and reduce the possibility of handlers making
indemnification, rather than the edible market, the primary market for
peanuts when regular market prices are low. When the market is weak
some handlers may send their peanuts directly to indemnification rather
than incur the cost of reworking the peanuts to improve the quality of
the lots enough to sell them in the edible market.
The unchanged portions of the incoming, outgoing, and
indemnification regulations currently in effect for 1994 crop peanuts
are left in
[[Page 46753]]
effect, as is, for 1995 and subsequent crop years.
In accordance with the Paperwork Reduction Act of 1988 (44 U.S.C.
Chapter 35), information collection requirements that are contained in
this rule have been previously approved by the Office of Management and
Budget (OMB) and have been assigned OMB No. 0581-0067.
Based on the above, the Administrator of the AMS has determined
that this final rule will not have a significant economic impact on a
substantial number of small entities.
After consideration of all relevant matter presented, the
information and recommendations submitted by the Committee, and other
information, it is found that finalizing the interim final rule which
was published in the July 14, 1995, issue of the Federal Register (60
FR 36205), with one correction adding paragraph (e) to amended
Sec. 998.300, will tend to effectuate the declared policy of the Act.
That rule provided that interested persons could file comments through
August 14, 1995. No comments were received.
It is further found that good cause exists for not postponing the
effective date of this action until 30 days after publication in the
Federal Register (5 U.S.C. 553) because: (1) This action continues in
effect relaxed requirements for peanut handlers, who voluntarily signed
the agreement; and (2) the interim final rule provided that interested
persons could file comments through August 14, 1995. No comments were
received and the Department is adopting as a final rule the provisions
of the interim final rule, with one correction.
List of Subjects in 7 CFR Part 998
Marketing agreements, Peanuts, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 998 is
amended as follows:
PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF
DOMESTICALLY PRODUCED PEANUTS
1. The authority citation for 7 CFR part 998 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Accordingly, the interim final rule amending 7 CFR part 998
which was published at 60 FR 36205 on July 14, 1995, is adopted as a
final rule and corrected as follows:
In amendatory item 4, on page 36208, in the third column, the 4th
line, a reference to ``(e)'', is added between the word ``paragraphs''
and the letter ``(h)''.
Dated: September 1, 1995.
Ronald Cioffi,
Acting Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-22283 Filed 9-7-95; 8:45 am]
BILLING CODE 3410-02-P
