83 FR 13700 - Peanut Promotion, Research, and Information Order; Change in Assessment Rate Computation

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

Federal Register Volume 83, Issue 62 (March 30, 2018)

This proposal invites comments on changing the assessment rate computation under the Agricultural Marketing Service's (AMS) regulations regarding a national research and promotion program for U.S. peanuts. This proposal would change the basis for assessment under the regulations from value to volume (per ton). Two rates of assessment would be established instead of using a formula currently specified in the regulations. This proposal would also update the definition for ``fiscal year'' specified in the regulations to reflect current practices.

[Federal Register Volume 83, Number 62 (Friday, March 30, 2018)]
[Proposed Rules]
[Pages 13700-13703]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-06283]


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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: Proposed rule.

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

DATES: Comments must be received by April 30, 2018.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments may be submitted on the internet at: 
http://www.regulations.gov or to the Promotion and Economics Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Room 
1406-S, Stop 0244, Washington, DC 20250-0244; facsimile: (202) 205-
2800. All comments should reference the document number and the date 
and page number of this issue of the Federal Register and will be made 
available for public inspection, including name and address, if 
provided, in the above office during regular business hours or it can 
be viewed at http://www.regulations.gov.

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 proposal affecting 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 proposed 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

[[Page 13701]]

Regulation and Controlling Regulatory Costs''' (February 2, 2017).

Executive Order 13175

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

Executive Order 12988

    This proposal 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 proposal invites comments on changing the assessment rate 
computation under the Peanut Promotion, Research, and Information 
Order. Part 1216 is administered by the Board with oversight by USDA. 
This proposal would change the basis for assessment under the program 
from value to volume (per ton). Two rates of assessment would be 
established instead of using a formula currently specified in the part. 
The assessment rates would 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 would help facilitate program operations by providing a more 
predictable revenue stream for the Board. This proposal would also 
update the definition for fiscal year specified in the part to reflect 
current practices.
    The peanut program 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 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 
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 they 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 
rate will vary depending upon the quality of the peanuts.) 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. (This rate will also 
vary depending upon the quality of the peanuts).
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    \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.
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    Over the past three years (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.
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    \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.
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    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\
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    \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.
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Board Recommendation

    Thus, the Board met on April 4, 2017, and unanimously recommended 
changing the basis for assessment under the program from value to 
volume (per ton). Two rates of assessments would be established for 
farmers stock peanuts, depending upon their quality as defined in the 
Minimum Quality and Handling Standards for Domestic and Imported

[[Page 13702]]

Peanuts Marketed in the United States (Standards) codified in 7 CFR 
part 996.\11\ The assessment rates would be $3.55 per ton for 
Segregation 1 peanuts and $1.25 per ton for lower quality Segregation 2 
and 3 peanuts. (Section 517(d) of the 1996 Act provides authority for a 
board to recommend to the Secretary one or more rates of assessment 
under a program (7 U.S.C. 7416)).
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    \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).
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    Pursuant to Sec.  996.13(b) of the Standards, ``Segregation 1 
peanuts'' means farmers stock peanuts with not more than 3.49 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. Pursuant to Sec.  996.13(c), ``Segregation 2 peanuts'' means 
farmers stock peanuts with more than 3.49 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. Pursuant to 
Sec.  996.13(d), ``Segregation 3 peanuts'' means farmers stock peanuts 
with visible Aspergillus flavus.
    This action would help facilitate program operations by providing a 
more predictable revenue stream for the Board to carry out its mission. 
Section 1216.51 is proposed to be revised accordingly.
    This proposal would reference Sec.  996.13(b), (c) and (d) of the 
Standards which define the terms Segregation 1 peanuts, Segregation 2 
peanuts, and Segregation 3 peanuts, respectively.
    Further, this proposal would revise 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 proposal would remove that term from Sec.  1216.11. Section 
1216.11 is proposed to be revised accordingly.

Initial 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 proposed 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 covered 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.
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    \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.
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    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 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.
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    \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.
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    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 proposal would revise 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 would be 
established instead of using a formula currently specified in the 
regulations. The assessment rates would 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 
would help facilitate program operations by providing a more 
predictable revenue stream for the Board. Authority for this action is 
provided in Sec.  1216.48(m) and section 517 of the 1996 Act. This 
proposal would also update 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 proposed rule on affected 
entities, this action would change 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.)
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    \15\ This action would not increase the assessment rate. 
Therefore, a referendum is not required (see Sec.  1216.51(j)).
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    Regarding the impact of the peanut program on the industry as a 
whole, 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\
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    \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.
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    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.

[[Page 13703]]

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.
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    \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.
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    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 proposed rule would not result in a 
change to the information collection and recordkeeping requirements 
previously approved and would 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 proposed 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.
    AMS has performed this initial RFA regarding the impact of this 
proposed action on small entities and invites comments concerning 
potential effects of this action.
    USDA has determined that this proposed rule is consistent with and 
would effectuate the purposes of the 1996 Act.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this action would need to be completed by the spring of 2018 so that 
USDA would have sufficient time to code the assessment rates into its 
computer system to administer its loan program. (USDA collects the 
assessments for peanuts placed under loan by producers and remits the 
assessments to the Board.) All written comments received in response to 
this proposed rule will be considered prior to finalizing this action.

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 
proposed to be amended as follows:

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

0
1. The authority citation for 7 CFR 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.  1261.51, 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.  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: March 23, 2018.
Bruce Summers,
Acting Administrator.
[FR Doc. 2018-06283 Filed 3-29-18; 8:45 am]
 BILLING CODE 3410-02-P