Clarifying and Updating Provisions Regulating the Quality of Domestically Produced Peanuts Handled by Persons Not Subject to the Peanut Marketing Agreement

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 997

[Docket No. FV94-997-2IFR]

Clarifying and Updating Provisions Regulating the Quality of

Domestically Produced Peanuts Handled by Persons Not Subject to the

Peanut Marketing Agreement

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim rule clarifies that peanut handlers not signatory

to Peanut Marketing Agreement No. 146 (Agreement) may store and shell

certain Segregation 2 seed peanut lots with Segregation 1 seed peanut

lots when such lots are produced under the auspices of a State agency

which regulates or controls their production. This interim rule also

updates information on the laboratories qualified to perform aflatoxin

testing of shelled peanuts. Allowing peanut handlers to commingle

certain seed peanut lots reduces the space and costs needed to store

seed peanuts. Updating laboratory information should assist handlers in

moving peanuts to market. These changes are intended to bring the non-

signatory handling requirements into conformity with those specified in

the Agreement.

DATES: This interim final rule is effective August 30, 1994. Comments

received by September 29, 1994 will be considered prior to finalization

of the rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent in triplicate to the Docket

Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, Room

2523-S, Washington, D.C., 20090-6456, or Fax: (202) 720-5698. Comments

should reference the docket number and the date and page number of this

issue of the Federal Register and will be available for public

inspection in the Office of the Docket Clerk during regular business

hours.

FOR FURTHER INFORMATION CONTACT: Richard Lower, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.

Box 96456, Room 2523-S, Washington, D.C. 20090-6456, telephone (202)

720-2020, facsimile (202) 720-5698.

SUPPLEMENTARY INFORMATION: This interim rule is issued pursuant to

requirements of the Agricultural Marketing Agreement Act of 1937, as

amended [7 U.S.C. 601-674], hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. This interim final rule will not preempt any State or

local laws, regulations, or policies, unless they present an

irreconcilable conflict with this rule. This action is not intended to

have retroactive effect. There are no administrative procedures which

must be exhausted prior to any judicial challenge to the provisions of

this rule.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this rule 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 approximately 45 handlers of peanuts who have not signed

the Agreement who are subject to the regulations contained herein.

Small agricultural service firms are defined by the Small Business

Administration [13 CFR 121.601] as those whose annual receipts are less

than $5,000,000. It is estimated that most of the handlers are small

entities. Most producers doing business with these handlers are also

small entities. Small agricultural producers have been defined as those

having annual receipts of less than $500,000.

In 1993, the reported U.S. production, mostly covered under the

Agreement, was approximately 3.33 billion pounds of peanuts, a 22

percent decrease from 1992 and the lowest level since 1983. The

preliminary 1993 peanut crop value is $991.65 million, 77 percent of

the 1992 crop value.

After aflatoxin was found in peanuts in the mid-1960's, the

domestic peanut industry has sought to minimize aflatoxin contamination

in peanuts and peanut products. Under authority of the Act, Peanut

Marketing Agreement No. 146 and the Peanut Administrative Committee

(Committee) were established by the Secretary in 1965. The Agreement

was signed by a majority of domestic peanut handlers.

Public Law 101-220, enacted December 12, 1989, amended section

608(b) of the Act to require that all peanuts handled by persons who

have not entered into the Agreement (non-signers) be subject to quality

and inspection requirements to the same extent and manner as are

required under the Agreement. It is estimated that 5 percent of the

domestic peanut crop is marketed by non-signatory handlers and the

remainder of the crop is handled by signatory handlers.

Under the non-signer provisions, no peanuts may be sold or

otherwise disposed of for human consumption if the peanuts fail to meet

the quality requirements of the Agreement. Regulations to implement

Pub. L. 101-220 were issued and made effective on December 4, 1990 [55

FR 49980] and amended several times thereafter, and are published in 7

CFR Part 997. All such amendments were made to ensure that the non-

signer handling requirements remain consistent with modifications to

the handling requirements applied to signatory handlers under the

Agreement. Violation of those regulations may result in a penalty in

the form of an assessment by the Secretary equal to 140 percent of the

support price for quota peanuts. The support price for quota peanuts is

determined under section 108B of the Agricultural Act of 1949 (7 U.S.C.

1445c-3) for the crop year during which the violation occurs.

The intent of P.L. 101-220 and the objective of the Agreement is to

insure that only wholesome peanuts of good quality enter edible market

channels. Under the non-signer and Agreement regulatory provisions,

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 shelled peanuts and certain lots of inshell

peanuts, destined for edible channels, must be officially sampled and

chemically tested for aflatoxin by the Department or in other

laboratories listed in the regulations. Inspection and chemical

analysis programs are administered by the Department.

Under the non-signer provisions, the second sentence of paragraph

(e) Seed peanuts prohibits the commingling of Segregation 2 seed lots

with Segregation 1 peanut lots intended for human consumption. The

difference between Segregation 1 and Segregation 2 lots is that

Segregation 1 lots may contain no more than 2 percent damaged kernels

and no more than 1 percent concealed damaged kernels, while Segregation

2 lots may contain more than 2 percent damaged kernels and 1 percent

concealed damaged kernels. Both Segregation 1 lots and Segregation 2

lots must be free of visible Aspergillus flavus.

This interim rule clarifies the handling provisions in paragraph

(e) of Sec. 997.20 Incoming regulation to allow Segregation 2 seed

peanut lots containing up to 3 percent total damaged kernels to be

stored, shelled and commingled with Segregation 1 seed peanut lots if

both lots were produced under the auspices of a State peanut agency

which regulates or controls the production of the lots being

commingled.

The Committee meets in February or March each year and recommends

to the Secretary such rules and regulations as may be necessary to keep

the Agreement consistent with current industry practice. The Committee

met on March 16, 1994, and unanimously recommended clarification of

seed peanut handling regulations under the Agreement. Members of the

Committee noted the impracticality of having separate storage bins for

each of the various types and varieties of seed peanuts with up to 3

percent damage. It was noted that, if Segregation 2 seed lots with up

to 3 percent damaged must be stored separate from Segregation 1 seed

lots, ``foundation,'' ``registered,'' and ``certified'' seed lots would

have to be segregated into separate categories. This could increase the

number of separate bins and space needed to store seed peanut lots. The

current regulations for both signers and non-signers do not

specifically address commingling Segregation 1 seed lots with

Segregation 2 seed lots.

The Committee concluded that it is impracticable to require such

Segregation 2 seed peanuts be stored and shelled separate from

Segregation 1 seed peanuts. The Department has initiated rulemaking to

implement such a clarification in handling requirements applied on

signatory handlers.

This interim rule revises Sec. 997.20(e) for non-signer seed

peanuts and is intended to bring the non-signatory handling

requirements into conformity with those specified in the Agreement.

This rule clarifies handling requirements and will facilitate the

movement of peanuts to market.

This rule will have no affect on the outgoing quality regulation of

the non-signer provisions. The quality and handling requirements, as

specified in Sec. 997.30 Outgoing regulations applicable to non-

signatory 1993-94 crop peanuts, continues to be effective for 1994-95

crop peanuts.

This interim rule also updates addresses and facsimile numbers,

where applicable, of approved aflatoxin testing laboratories that

perform chemical analyses required by the non-signatory handling

regulations. This information is provided in paragraph (c)(5)(i) of

Sec. 997.30 Outgoing regulations. Non-signatory handlers may send

peanut samples to any laboratory on the list, per instructions

specified in paragraph (c) of the outgoing regulation. This rule also

updates information in paragraph (c)(5)(ii) identifying the contact

point of the USDA Science Division headquarter's office.

Based on available information, the Administrator of the AMS has

determined that the issuance of this interim final rule will not have a

significant economic impact on a substantial number of small entities.

After consideration of all available information, it is found that

this action will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined, upon

good cause, that it is impractical, unnecessary and contrary to the

public interest to give preliminary notice prior to putting this rule

into effect, and that good cause exists for not postponing the

effective date of this action until 30 days after publication in the

Federal Register because: (1) This action merely clarifies restrictions

on peanut handlers not subject to the Agreement; (2) the new crop year

begins on July 1, 1994, and handlers need to know the regulations

applicable to handling the 1994 and subsequent crop year peanuts as

soon as possible; (3) this action brings the quality requirements under

Part 997 into conformity with those under the Agreement, as required by

the Act; and (4) this action provides a 30-day comment period, and any

comments received will be considered prior to finalization of this

rule.

List of Subjects in 7 CFR Part 997

Food grades and standards, Peanuts, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR Part 997 is

amended as follows:

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY

PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO THE PEANUT

MARKETING AGREEMENT

1. The authority citation for 7 CFR Part 997 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. In Sec. 997.20, paragraph (e) is amended by removing the second

sentence and adding in its place the words: ``Peanuts intended for seed

use, produced under the auspices of a State agency which regulates or

controls the production of seed peanuts, which do not meet Segregation

1 requirements shall be stored and shelled separate from peanuts

intended for human consumption. However, Segregation 2 seed peanuts,

produced under the auspices of the State agency, which contain up to 3

percent damaged kernels and are free from visible Aspergillus flavus

may be stored and shelled with Segregation 1 seed peanuts which are

also produced under the auspices of the State agency.''

3. In Sec. 997.30, paragraphs (c)(5) (i) and (ii) are revised to

read as follows:

Sec. 997.30 Outgoing regulation.

* * * * *

(c) * * *

(5) * * *

(i) Laboratories at the following locations are approved to perform

the chemical analyses required pursuant to this part. The sampling plan

and procedures may be obtained from the Division.

USDA, AMS, Science Division, 1211 Schley Avenue, Albany, Georgia 31707,

Tel: (912) 430-8490, Fax: (912) 430-8534

USDA, AMS, Science Division, c/o Golden Peanut Company, 200 W.

Washington Street (Mail: P.O. Box 488), Ashburn, Georgia 31714, Tel:

(912) 567-3703

USDA, AMS, Science Division, c/o Golden Peanut Company, 301 W. Pearl

Street (Mail: P.O. Box 279), Aulander, North Carolina 27805, Tel: (919)

345-1661, ext. 156

USDA, AMS, Science Division, 610 North Main Street, Blakely, Georgia

31723, Tel: (912) 723-4570, Fax: (912) 723-7294

USDA, AMS, Science Division, c/o Golden Peanut Company, 42 North Ellis

Street (Mail: P.O. Box 548), Camilla, Georgia 31730, Tel: (912) 336-

0785, ext. 236

USDA, AMS, Science Division, c/o Stevens Industries, Cargill, Inc., 715

North Main Street (Mail: P.O. Box 272), Dawson, Georgia 31742, Tel:

(912) 995-2111, ext. 257

USDA, AMS, Science Division, 107 S. Fourth Street, Madill, Oklahoma

73446, Tel: (405) 795-5615, Fax: (405) 795-3645

USDA, AMS, Science Division, 1411 Reeves Street (Mail: P.O. Box 1368),

Dothan, Alabama 36302, Tel: (205) 794-5070, Fax: (205) 792-5185

USDA, AMS, Science Division, 308 Culloden Street (Mail: P.O. Box 1130),

Suffolk, Virginia 23434, Tel: (804) 925-2286, Fax: (804) 925-2275

Pert Laboratories, P.O. Box 267, Peanut Drive, Edenton, North Carolina

27932, Tel: 919/482-4456

J. Leek Associates, P.O. Box 368, Colquitt, Georgia 27932, Tel: 912/

758-3722

ABC Research, 3437 SW 24th Avenue, Gainesville, Florida 32607-4502,

Tel: 904/372-0436

J. Leek Associates, 502 West Navarro Street, DeLeon, Texas 76444, Tel:

817/893-3640

Professional Service Ind., Inc., 3 Burwood Lane, San Antonio, Texas

78216, Tel: 210/349-5242

(ii) Handlers should contact the nearest laboratory from the list

in paragraph (c)(5)(i) of this section to arrange to have samples

chemically analyzed for aflatoxin content, or for further information

concerning the chemical analyses required pursuant to this part

handlers may contact: William J. Franks Jr., Director, Science

Division, Agricultural Marketing Service, USDA, P.O. Box 96456, Room

3507-So, Washington, DC, 20090-6456, telephone (202) 720-5231,

facsimile (202) 720-6496.

Dated: August 22, 1994.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 94-21351 Filed 8-29-94; 8:45 am]

BILLING CODE 3410-02-P