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. FV94-997-2FIR]

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: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a

final rule, without change, the provisions of an interim rule that

clarified 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. The interim rule also updated information on

the laboratories qualified to perform aflatoxin testing of shelled

peanuts, and certain cleaned inshell 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.

EFFECTIVE DATE: December 9, 1994.

FOR FURTHER INFORMATION CONTACT: Richard Lower, Marketing Order

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

Box 96456, room 2523-S, Washington, DC 20090-6456, telephone (202) 720-

2020, facsimile (202) 720-5698.

SUPPLEMENTARY INFORMATION: This 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 is issuing this rule in conformance with Executive

Order 12866.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. This 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

Public Law 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 are

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 rule continues in effect the clarification of the handling

provisions in paragraph (e) of Sec. 997.20 Incoming regulation allowing

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 damage 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 completed rulemaking

implementing such a clarification in handling requirements applied on

signatory handlers.

Continuation of the amendment to paragraph (e) of Sec. 997.20(e)

for non-signer seed peanuts will continue the continuity between the

non-signatory handling requirements and those specified in the

Agreement, and facilitate the movement of peanuts to market.

This rule will not affect 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, continue to be effective for 1994-95

crop peanuts.

The interim rule also updated 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. The interim rule

also updated information in paragraph (c)(5)(ii) identifying the

contact point of the USDA Science Division headquarter's office. This

final rule continues the aforementioned changes.

The interim final rule was published in the Federal Register on

August 30, 1994 (59 FR 44610). That interim final rule provided that

interested persons could file comments through September 29, 1994. No

comments were received.

Based on available information, the Administrator of the AMS has

determined that the issuance of this 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 rule, as hereinafter set forth, will tend to effectuate the

declared policy of the Act.

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

Accordingly, the interim final rule amending 7 CFR part 997 which

was published at 59 FR 44610, on August 30, 1994, is adopted as a final

rule without change.

Dated: November 3, 1994.

Martha B. Ransom,

Acting Deputy Director, Fruit and Vegetable Division.

[FR Doc. 94-27768 Filed 11-8-94; 8:45 am]

BILLING CODE 3410-02-P