2011-2879. Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States; Section 610 Review

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Confirmation of regulations.

SUMMARY:

This action summarizes the results under the criteria contained in section 610 of the Regulatory Flexibility Act (RFA), of an Agricultural Marketing Service (AMS) review of the Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States contained in 7 CFR part 996 (Standards). AMS has determined that the Standards should be continued.

ADDRESSES:

Interested persons may obtain a copy of the review. Requests for copies should be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax: [phone]; or E-mail: [e-mail]. A copy of the review may also be obtained via the Internet at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Kenneth G. Johnson, DC Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737; Telephone: [phone]; Fax: [phone]; or E-mail: [e-mail]; or Martin Engeler, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey St., Fresno, California 93721; Telephone: [phone]; Fax: [phone]; or E-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

The Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States (Standards), as amended (7 CFR part 996), were established at 7 U.S.C. 7958 pursuant to Public Law 107-171, the Farm Security and Rural Investment Act of 2002 (Act). The Standards regulate the quality and handling of domestic and imported peanuts marketed in the United States.

The Act also provided for establishment of the Peanut Standards Board (Board) to advise the Secretary of Agriculture (Secretary) in establishing the Standards. The Board is comprised of 18 members. Nine of the members are peanut producers representing three producing regions, and nine are peanut industry representatives that also represent the three producing regions. Board members are nominated by the industry and selected by the Department of Agriculture (USDA). The Board is responsible for advising the USDA regarding the quality and handling requirements under the Standards. USDA is required by the Act to consult with the Board prior to making any change to the Standards.

Currently, it is estimated that there are 8,500 peanut producers in the U.S. There are approximately 70 shelling plants operated by approximately 55 shelling entities in the industry, and an estimated 25 importers of peanuts. The Small Business Administration (SBA) defines small farms as those having annual receipts of less than $750,000. Small agricultural service firms are defined by the SBA as those whose annual receipts are less than $7,000,000. It is estimated that approximately 90 percent of the peanut producers in the U.S. can be considered small businesses under this definition. It is also estimated that approximately two-thirds of U.S. peanut handlers can be considered small businesses, and nearly all of the importers. The regulations implemented under the Standards are applied uniformly to small and large entities, and are not intended to have differential impacts based on size.

AMS published in the Federal Register on February 18, 1999 (64 FR 8014), a plan to review certain regulations under criteria contained in section 610 of the RFA (5 U.S.C. 601-612). Updated plans were published in the Federal Register on January 4, 2002 (67 FR 525), August 14, 2003 (68 FR 48574), and again on March 24, 2006 (71 FR 14827). Accordingly, AMS published a notice of review and request for written comments on the Standards in the April 28, 2010, issue of the Federal Register (75 FR 22213). The deadline for comments ended June 28, 2010. Several comments were received in response to the notice, and are discussed later in this document.

The review was undertaken to determine whether the Standards should be continued without being changed, amended, or rescinded to minimize the impacts on small entities. In conducting this review, AMS considered the following factors: (1) The continued need for the Standards; (2) the nature of complaints or comments received from the public concerning the Standards; (3) the complexity of the Standards; (4) the extent to which the Standards overlap, duplicate, or conflict with other Federal rules, and, to the extent feasible, with State and local governmental rules; and (5) the length of time since the Standards have been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the Standards.

The Standards establish minimum incoming and outgoing quality requirements for domestic and imported peanuts marketed in the U.S. Mandatory inspection is required to ensure the quality regulations are met. The Standards also require positive lot identification (PLI) of peanuts so they can be identified and tracked during processing and disposition. Finally, the Standards require reporting and recordkeeping by handlers and importers.

The quality and inspection requirements have helped ensure that domestic and imported peanuts meet an acceptable quality level before being shipped for human consumption. Ensuring a good quality product contributes to consumer confidence. The PLI requirements help to maintain the identity of peanuts throughout the handling process, thus maintaining the integrity of lots being shipped to human consumption outlets, lots that are subjected to the reconditioning process, and lots that are disposed of to non-human consumption outlets. This helps to ensure that nuts certified for human consumption are not commingled with lower quality nuts. In addition, the PLI requirements are a useful tool in product traceability. The reporting and recordkeeping requirements substantiate handler and importer compliance with the Standards.

Regarding complaints or comments received from the public concerning the order, AMS received five comments in response to the notice of review published in the Federal Register on April 28, 2010 (75 FR 22213). In addition, nine letters were received from congressional representatives after the comment period was closed. All of the comments expressed support for outgoing quality requirements shipped to human consumption outlets. Three comments received from peanut shellers and sheller associations stated that while they support the quality requirements, they do not support the PLI and recordkeeping requirements associated with reconditioned peanuts. They expressed the belief that these requirements result in inefficiencies and unnecessary costs to shellers, and that the goal of ensuring peanuts meet minimum quality requirements can be achieved without these requirements. They further contend that foreign peanut shellers are not subject to the same requirements. At least one of the comments pointed out that the Board, which is responsible for advising USDA in regard to the Standards, has not met in at least two years.

Two comments from grower associations support the program as it currently exists. They support not only the quality standards in place, but also the PLI procedures and recordkeeping requirements. These comments stated that it is important to track lots of peanuts that fail to meet the quality standards to ensure those nuts are disposed of properly to protect consumers from poor quality product and to prevent potential related problems or issues for the peanut industry. The comments cite recent adverse events in the peanut industry as an example of the importance of an effective quality control program.

The nine congressional letters essentially reiterate the comments submitted by the peanut shellers and sheller associations. They support food quality and safety, but do not support the PLI requirements for the same reasons cited above.

However, as previously discussed, the PLI requirements help to maintain the identity of peanuts throughout the handling process and are a useful tool in product traceability, and the reporting and recordkeeping requirements substantiate compliance with the Standards.

In considering the complexity of the Standards, AMS has determined that they are not unduly complex.

During the review, the Standards were checked for duplication and overlap with other regulations. AMS did not identify any relevant Federal rules, or State and local regulations that duplicate, overlap, or conflict with the Standards.

The Standards were established in 2002 and have been revised two times, with the last revision occurring in 2005. Since the Standards have been in effect, AMS and the U.S. peanut industry have monitored their implementation and operation. Changes in regulations have been implemented to reflect current industry operating practices, and to solve problems as they occur. The goal of periodic evaluations is to ensure that the Standards continue to fit the needs of the industry and are consistent with the Act.

The Board meets periodically to discuss issues and to determine if, or what, changes may be necessary to reflect current industry practices. As a result, regulatory changes have been made to the Standards to reflect current industry operations and procedures, and continue to meet the industry's needs.

Based upon our review, AMS has determined that the Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States should be continued. However, USDA believes that a meeting with the Board would be beneficial to discuss any potential improvements to the program. As required by the Act, The Secretary of Agriculture must consult with the Board prior to making any changes to the Standards. Any changes to the Standards would then be made by notice and comment rulemaking by USDA. All comments would be considered in the decision making process by the Board and USDA before recommendations are implemented.

AMS will continue to work with the peanut industry to maintain useful and effective quality and handling standards, and in accordance with the Act will consult with the Board, as appropriate.

Dated: February 3, 2011.

Rayne Pegg,

Administrator, Agricultural Marketing Service.