Specialty Crops; Import Regulations; Peanut Import Regulations

SUMMARY: This final rule establishes minimum quality, identification,

certification and safeguard requirements for imported farmers stock,

shelled, and cleaned-inshell peanuts. This rule is issued under section

108B(f)(2) of the Agricultural Act of 1949, as amended. The provisions

of paragraph (f)(2) require all peanuts in the domestic market to fully

comply with all quality standards under Peanut Marketing Agreement No.

146 (Agreement). Therefore, this rule establishes the same quality

requirements and handling procedures for imported peanuts as those

which are in effect for domestically produced peanuts. This final rule

addresses comments to the proposed rule submitted by members of the

industry and other interested persons. This action will benefit peanut

handlers, importers and consumers by helping to ensure that all peanuts

in the marketplace comply with the same quality standards.

EFFECTIVE DATE: July 19, 1996.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor or Rick Lower, Marketing

Specialists, Marketing Order Administration Branch, Fruit and Vegetable

Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-

6456; tel: (202) 720-6862 or (202) 720-2020 respectively; fax (202)

720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under paragraph

(f)(2) of section 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c-

3), as amended November 28, 1990; Pub. Law 101-624, hereinafter

referred to as the Act. Paragraph (f)(2) of section 108B of the Act

provides that the Secretary of Agriculture (Secretary) shall require

that all peanuts in the domestic market fully comply with all quality

standards under Marketing Agreement No. 146 (7 CFR part 998), issued

pursuant to the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674).

This rule adds ``Sec. 999.600 governing the importation of

peanuts'' under 7 CFR part 999--Specialty Crops; Import Regulations.

Section 999.600 establishes minimum quality, identification,

certification and safeguard requirements for foreign produced farmers

stock, shelled and cleaned-inshell peanuts presented for importation

into the United States. The quality requirements are the same as those

specified in Sec. 998.100 Incoming quality regulation and Sec. 998.200

Outgoing quality regulation established pursuant to the Agreement.

Whenever the regulations specified in the Agreement are changed, the

regulations in Sec. 999.600 will be changed accordingly. Safeguard

procedures enable the Department to monitor and assure importers'

compliance with the requirements of this regulation.

The intent of paragraph (f)(2) of section 108B of the Act is to

ensure that all peanuts in the domestic marketplace comply with the

same quality standards.

The U.S. Department of Agriculture (Department or USDA) is issuing

this rule in accordance with Executive Order 12866.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform, and 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 requirements set forth in the Regulatory Flexibility

Act (RFA), 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. Small agricultural

service firms, which include importers, have been defined by the Small

Business Administration (13 CFR 121.601) as those whose annual receipts

are less than $5 million. This import regulation is based on

regulations established under the Agreement which regulates the quality

of domestically produced peanuts.

Experience shows that peanut importers affected by this regulation

are comprised primarily of signatories to the Agreement and import

brokers. The majority of signatories to the Agreement cannot be

classified as small entities. Import brokers may contract with peanut

handlers who have the equipment and storage facilities needed to carry

out necessary shelling and reconditioning of imported peanuts. While

the Department is aware of at least seven importers who imported

peanuts into the United States (most of whom are small entities), it is

unable to accurately estimate the number or size of importers who may

choose to import peanuts in the future. The Department estimates that

there are as many as 50 domestic peanut handlers with storage and

milling facilities that can be used to prepare peanuts for human

consumption markets.

The quality and handling requirements of this import regulation

apply uniformly to all importers, whether small or large. The peanut

import quota, while limited, is available to all importers, regardless

of size or business orientation. There are no known additional costs

incurred by small importers that are not incurred by large importers.

No significant alternatives which could accomplish the objectives

of this action were identified.

Importers must incur the costs of inspection and aflatoxin

analysis. However, these costs are proportional to the volume of

peanuts imported and the size of each inspected and tested lot. Such

costs are applied to all importers regardless of size and also are

consistent with such costs incurred by handlers of domestically

produced peanuts. Additional costs are incurred if an imported lot must

be reconditioned to meet quality requirements of the import rule.

Losses may occur if an imported failing lot cannot be reconditioned and

must be disposed to a non-edible peanut outlet, destroyed or re-

exported. However, such costs are relative to the quality of each

imported peanut lot, and importers may reduce the likelihood of

incurring reconditioning costs or other losses due to poor quality

peanuts, by importing only high quality peanuts. In this regard, the

business risks for peanut importers are no different than those for

handlers of domestically produced peanuts. Further, it is common

industry practice that buyers (manufacturers) of peanuts require, or

make purchase contingent upon, passing grade and aflatoxin certificates

of each peanut lot purchased. Thus, the costs of inspection and

maintenance of lot identification are a part of normal business

practices for this industry.

While the level of benefits of this action are difficult to

quantify, the stabilizing effects of shipping only high quality and

wholesome peanuts to human consumption outlets impact both small and

large importers positively by helping them maintain and expand markets.

The Department is not aware of any Federal rules which duplicate,

overlap, or conflict with this final rule. Finally, this action is

required by statute.

[[Page 31307]]

Based on available information, the AMS has determined that this

rule would not have a significant impact on a substantial number of

small entities.

In the past, the importation of peanuts has been limited to 1.71

million pounds annually. However, the Schedule of the United States

annexed to the North American Free Trade Agreement (NAFTA), implemented

on January 1, 1994, provided duty free entry for up to approximately

7.43 million pounds of qualifying peanuts from Mexico. For 1996, the

duty-free access for Mexican peanuts increased to approximately 7.88

million pounds. In calendar year 2008, access for Mexican peanuts will

be unlimited. In addition, the United States Schedule to the Uruguay

Round Agreements negotiated under the General Agreement on Tariffs and

Trade (GATT) relaxes the peanut import quota to 74.5 million pounds in

1995, with additional annual increases of approximately 10 million

pounds to reach a ceiling of 125 million pounds by the year 2000 for

all imported peanuts.

Various qualities of peanuts are entered into the United States

from countries such as Argentina, Mexico, Nicaragua, India, and the

People's Republic of China. Foreign produced peanuts are produced under

varying weather conditions and using different cultural practices.

Consistent with the Agreement's regulatory provisions, each lot of

peanuts entered into the U.S. would be required to be officially

sampled and graded by the Federal or Federal-State Inspection Service

(inspection service). Incoming inspection for farmers stock peanuts and

outgoing inspection for edible quality shelled peanuts and cleaned-

inshell peanuts will be required for imported peanuts. A list of

inspection service offices is provided in paragraph (d)(2)(i) of this

regulation.

Some peanuts contain defects or other damage which cause them to be

of low quality or have poor taste which could affect the demand for

peanuts. Producers, handlers and manufacturers in the domestic peanut

industry believe that even an isolated quality problem could adversely

affect consumer confidence, which would be detrimental to the domestic

peanut industry.

The Agreement imposes quality standards for domestically produced

inshell and shelled peanuts. Peanut lots are graded based on the

percentage of unshelled peanuts, percentage of kernels with damage and

minor defects, percentage of loose shelled kernels, percentage of

foreign material, and percentage of moisture content. In addition, an

integral part of these quality standards is the extent of the presence

of Aspergillus flavus mold (the principal cause of aflatoxin, which is

a carcinogen). This mold is more likely to be found on damaged or

defective kernels than on sound, whole, good quality kernels. A

chemical analysis for aflatoxin is required on shelled peanut lots not

meeting superior quality requirements. Shelled lots that exceed certain

superior quality requirements need not be analyzed prior to shipment

for human consumption.

The proposed rule was issued January 23, 1996, and published in the

Federal Register February 1, 1996. A 30-day comment period was provided

and 16 comments were received. Comments were received from a United

States Congressman, as well as persons representing the agricultural

office of a South American embassy, the Peanut Administrative Committee

(PAC), the American Farm Bureau Federation, the Southwestern Peanut

Growers' Association, the Peanut Growers Cooperative Marketing

Association in the Virginia-Carolina area, the American Peanut Shellers

Association, and the American Peanut Product Manufacturers, Inc.

Comments were also received from a peanut product manufacturer, three

peanut brokers, one peanut handler/importer, and a company making

chemical analysis testing kits. Most all commenters agree that imported

peanuts should meet domestic requirements for human consumption.

However, they also were critical of various provisions in the proposed

rule.

Three commenters stated that the regulation should establish

requirements for aflatoxin testing of peanut butter and peanut paste

imported from Canada and Mexico. However, Peanut Marketing Agreement

No. 146, the authorizing statute, and the quality regulations under the

Agreement are only applicable to peanuts and not peanut products. The

Food and Drug Administration (FDA) is responsible for certifying the

aflatoxin level of imported peanut butter and peanut products.

Four commenters recommended that the rule should establish country-

of-origin requirements on imported peanuts to guard against peanuts

produced in one country and transhipped through another country before

importation into the U.S. However, the purpose of this rule is to

establish quality requirements for all imported peanuts, and

establishment of country-of-origin requirements is not necessary. The

United States Customs Service (Customs Service) monitors country-of-

origin on imported peanuts for tariff purposes. In addition, the grade

and aflatoxin certificates will identify the country-of-origin as the

shipping country unless another producing country is identified on

Customs Service documentation.

Five commenters were of the opinion that the regulation is contrary

to the spirit of GATT and NAFTA, which is to promote free and fair

trade. However, both GATT and NAFTA recognize the rights of signatories

to protect themselves from inferior quality imports by allowing the

receiving country to apply to imports the same standards mandated for

its domestically produced, agricultural products. The Department

believes that this rule meets such ``national treatment'' requirements

in that it provides the same grade and handling requirements applied to

peanuts domestically produced throughout the United States.

One commenter indicated that European countries are implementing a

program using the quality test results conducted by suppliers in

origin-producing countries. The commenter questioned why the Department

does not honor origin-testing programs in other countries while United

States peanut suppliers are aggressively supporting origin-testing of

peanuts they ship to Europe. The commenter recommended that imported

peanuts be origin-tested by recognized independent laboratories

overseas. The commenter suggested that a laboratory owned and operated

by a PAC-approved laboratory in the United States be authorized to

perform the grade and aflatoxin inspections in Argentina. The lab is

currently certifying peanut shipments to the United States and Europe,

and those shipments have met minimum aflatoxin requirements over the

past year.

The Agreement's requirements, as reflected in these import

regulations, are supported by an integrated quality assurance system

that includes statistically based sampling, positive lot

identification, and laboratory oversight. Because it would be

difficult, at this time, to ascertain that imported peanuts meet the

same quality requirements as domestic peanuts without the application

of that inspection system, these regulations do not provide for country

of origin inspection and testing.

A number of commenters complained about the increased burden on

importers, and four commenters contended that the regulation is more

burdensome on importers than the domestic regulation is on handlers

under the Agreement. Individually or jointly, they commented that the

proposed regulations would increase importers' burdens by: placing time

constraints on certification or non-edible disposition of each imported

lot;

[[Page 31308]]

requiring bonded storage which may be scarce or not available; adding

costs for demurrage, sampling, and inspection of imported lots; and

adding layers of bureaucracy and regulations. They commented that any

peanut lots requiring more than simple aflatoxin testing could not be

shelled, sorted, sized, remilled, and reported in 23 days.

As stated in the proposed rule, the purpose of these regulations is

to ensure that all peanuts (including imported peanuts) marketed in the

United States comply with quality standards of the Agreement. Quality

standards cannot be guaranteed without handling requirements that

prohibit the commingling of certain peanut lots and ensure lot

identification of imported shipments. Further, in order to ensure

compliance with non-edible disposition requirements, it is necessary to

require that imported peanut lots failing edible quality be certified

as handled and disposed of to appropriate non-edible peanut uses.

In this rule, the Department attempted to establish the least

burdensome and least costly procedures which would assure that imported

peanuts meet the required quality standards. Grade and disposition

requirements are the same as those provided under the Agreement. Lot

identification and storage requirements are similar to those of the

Agreement, but vary slightly because of Customs Service requirements

and because shipments have to be monitored from the place and time of

conditional release rather than from a buying point or shelling

facility.

The initial 30 day reporting period is a Customs Service

requirement that cannot be changed by a USDA regulation. It is applied

by Customs Service to imported merchandise that must meet product

requirements in effect in the United States. Also, as stated in the

proposed rule, the Department needs to establish a shorter reporting

period because a Customs Service port-of-entry office issuing the entry

documentation needs up to 7 days to issue a redelivery demand notice.

Therefore, the Department established a reporting period of 23 days

from the date of entry by the Customs Service.

The intent of a Customs Service redelivery notice is not

necessarily to require immediate return of the shipment to the port-of-

entry. Rather, the redelivery notice serves as a notice to the importer

that the lot must be either: (1) Brought into compliance with program

requirements within the number of days specified on the redelivery

notice, or (2) returned to the port-of-entry. During the redelivery

period, the importer may recondition a failing lot in order to bring

the lot into compliance with regulatory requirements. This option was

not clearly stated in the proposed rule.

The Department has been informed that it may establish a redelivery

period which is longer than the 30 days specified in the proposal.

Therefore, to enable importers more opportunity to meet the

requirements of this regulation, the Department is extending the

redelivery demand period from 30 days to 60 days. Customs Form 4647

(``Notice to Mark and/or Notice to Redeliver'') is issued by the

Customs Service at the request of AMS. A 60 day redelivery period

should be entered by the Customs Service under item 15 on the form.

Thus, an importer has as long as 90 days to move an imported peanut lot

through the peanut handling process. By the end of the redelivery

period, the importer must submit certifications to AMS that the lot

either: (1) Meets requirements for human consumption; (2) is disposed

to one or more non-edible peanut outlets; (3) is destroyed under

supervision of the inspection service and Customs Service; or (4) is

exported out of the U.S. Alternatively, the importer must redeliver the

peanuts to the port-of-entry pursuant to the redelivery notice.

An exception to this rule may be applied to cleaned-inshell peanuts

that are conditionally released for movement to an inland facility for

outgoing inspection. As stated in the proposed rule, such cleaned-

inshell peanut lots must proceed directly to the outgoing inspection

and may not undergo any cleaning, drying or sorting prior to outgoing

inspection. During outgoing inspection, if AMS determines that the

peanut lot sampled and graded is a farmers stock lot which has been

mislabeled or misrepresented as cleaned in-shell peanuts, the lot is

considered as ungraded farmers stock peanuts and must be sent to

incoming inspection or redelivered to the port-of-entry. Such lots, if

determined to be Segregation 1 quality at incoming inspection, can then

be cleaned, dried, sorted and otherwise prepared for outgoing

inspection as cleaned-inshell peanuts.

The importer must notify both the Customs Service and the AMS that

an outstanding lot has been certified as meeting disposition

requirements of these regulations, destroyed or exported. Failure to

meet these requirements or redeliver the peanut lot can result in

liquidated damages up to three times the value of the product.

The Department also wishes to reiterate that the above import

procedure is not the only procedure available to importers. Importers

can avoid the 23-day reporting requirement by holding shelled and

cleaned-inshell shipments under Customs Service custody until the

peanuts are sampled, tested and certified as meeting requirements for

human consumption. This should be possible with containerization of the

shipment that allows for sampling by the inspection service and storage

while under Customs Service custody.

The Customs Service requires (19 CFR part 141.5) that lots so held

must be entered within 5 working days after arrival at the port. Thus,

it is important that the peanut shipment be sampled and the samples

sent for outgoing quality inspection and chemical analysis as soon as

possible after unloading. Using overnight mail services and fax

transmissions, the importer should be able to obtain grade and

aflatoxin content certificates within 2 or 3 days. If certified as

meeting import requirements for human consumption, such peanuts do not

have to be reported to the Department and are not subject to further

handling requirements of this regulation. As stated in the proposed

regulations, shipments moved inland under Customs Service custody and

held in bonded warehouses are not considered as entered by the Customs

Service. Thus, the time under Customs Service custody will not be

counted against the 23-day reporting period.

One commenter questioned how the time frames relate to the stamp-

and-fax procedure and receipt of aflatoxin analyses. For all imported

shipments, it is incumbent on the importer to plan ahead by contacting

the inspection service offices where sampling and grading will take

place and the aflatoxin lab where the analysis will be conducted. The

stamp and fax procedure should take place before arrival of the

shipment. As noted above, the 23-day reporting period begins when the

shipment is released from Customs Service custody, whether at the port-

of-entry or inland after movement and storage under Customs Service

custody. Samples can be taken, inspections performed, and results

reported back to the importer within 2 or 3 days. Extra demurrage

charges at a port-of-entry would be less likely if the importer or

customs broker makes proper preparations prior to the arrival of a

shipment.

The Customs Service suggested that two definitions in paragraph (a)

be changed to be consistent with terminology used by Customs. The

Department has revised definitions for ``importation'' and

``conditionally released'' and has made conforming

[[Page 31309]]

changes throughout this final rule to be consistent with the new

definitions. In the proposed rule, the term ``importation'' was defined

to mean release from custody of the Customs Service. That definition

referred to peanuts after arrival and release by the Customs Service

for inland movement. To make the term consistent with Customs Service

operations, and for the purposes of this peanut import regulation, the

term ``importation'' means the arrival of a peanut shipment at a port-

of-entry with the intent to enter the peanuts into channels of commerce

of the United States.

``Conditionally released'' was defined in the proposed rule to mean

peanuts released under bond for consumption or withdrawal from

warehouse for consumption. This definition did not describe the reason

for release. For the purposes of this import regulation, ``conditional

release'' means released from Customs Service custody for further

handling (sampling, inspection, chemical analysis, or storage) before

liquidation (final release after computation of applicable duties) by

the Customs Service of the imported peanut lot.

After receiving information from a Customs Service port-of-entry

officer, the Department has made an additional relaxation that could

reduce the filing burden on importers. The proposed rule stated that

one Customs Service entry document must be filed for each peanut lot

entered. However, one entry document may encompass several lots. Each

lot must be separately identified on the entry document to allow for

appropriate monitoring and clearance. For example, a shipment of

500,000 pounds of shelled peanuts in 10 containers can be entered on

one entry document as 10 lots of one container per lot; 5 lots of two

containers per lot; 3 lots of 200,000 and 200,000 and 100,000 pounds

per lot, or other variations. Subdivision of a large shipment is a

decision for the importer, working cooperatively with the Customs

Service and the inspection service at the port-of- entry. Paragraph (g)

has been changed accordingly.

Two commenters pointed out that the proposed rule did not provide

for changes in lot weight, especially after remilling or cleaning of a

failing lot. The Department acknowledges potential difficulty in

accounting for the total weight of a very large lot which may be

shelled and reconditioned several times. However, the Department

believes that the accepted percentage for the weight of shells in the

shelling process plus the combined weight of resultant sublots and

residuals should account for the total weight of the original lot. The

Customs Service and the inspection service both recognized that inshell

peanuts are 65 percent kernel weight and 35 percent shell weight.

Further, the lot identification procedures of the inspection service

identify the weight of the certified lot. Thus, when an importer

reports disposition of a lot that has been reconditioned, the report

must include inspection and lot identification certificates on all

sublots--both edible and non-edible residuals--resulting from remilling

or blanching.

One commenter offered three recommendations that the Department has

included in this final rule. The commenter correctly stated that, under

the Agreement, in addition to shelling, failing cleaned-inshell lots

may be remilled by running the inshell peanuts through inshell milling

two or more times to remove moldy, damaged, moisture laden peanuts, and

foreign material that prompted the failing certification. However, as

noted above regarding reconditioning of cleaned-inshell peanuts,

reconditioning may not be conducted if the inspection service

determines that the failing peanuts are farmers stock peanuts and not

cleaned-inshell peanuts. Such lots are considered to be mislabeled and,

therefore, subject to redelivery without reconditioning.

The commenter also pointed out that destroying failing peanuts by

burying must be carried out under the supervision of the inspection

service. Finally, he pointed out that under the Agreement, Segregation

2 and 3 farmers stock peanuts which are shelled before exportation,

must first also be fragmented. This requirement is a safeguard against

such peanuts being diverted to human consumption outlets. Therefore

these changes have been made in the final rule.

A commenter pointed out two places in the preamble of the proposed

rule where positive lot identification provisions could be inserted to

ensure positive lot identification of failing peanut lots. The

commenter also suggested that a definition for positive lot

identification be added to the final rule. While the Department agrees

with the need to ensure lot identification on all imported lots, it

also understands the great burden that 'positive' lot identification

could place on importers--particularly for large shiploads of peanuts.

Positive lot identification involves an inspection service seal or tag

that clearly identifies the peanuts covered by the seal or tag--which

is affixed in such a way that the peanut container cannot be tampered

with without destroying the seal or tag. Because of the size of some

imported shipments (up to 200,000 pounds), or because of the multiple

containers or bags used for such lots, it would be impractical to

require that a seal be placed or tag be sewed onto every container or

bag of such large shipments at the port-of-entry. For this reason, a

definition of positive lot identification was not included in the

proposed rule. This does not mean, however, that lot identity is not as

important under the import regulation as it is under the Agreement.

Each imported lot must be lot identified in such a way as to clearly

distinguish the peanuts in the lot, but not necessarily require tags on

individual bags or plastic wrap around an entire lot. Arrangements for

lot identification should be made with the inspection service and

Customs Service officers at the port-of-entry. Such arrangements can be

tailored for the particular circumstances of each imported lot. Lot

identification requirements of this rule should provide no less

assurance of positive lot identity than is provided under the Agreement

for domestically produced peanuts.

The commenter's suggestion that positive lot identification be

placed on failing lots is accepted by the Department. This final rule

makes the identification procedures for failing residual peanuts more

precise by establishing that residual peanuts resulting from the

reconditioning, remilling or blanching of a failing imported lot must

be positive lot identified. At this point in the handling process,

residual peanuts from a milling process are capable of being handled

the same as domestically produced peanuts--and therefore, should be

subject to the same positive lot identity labeling requirements (such

as sewing tags on bags or stamping individual containers of failing

peanuts) that are required for domestically produced failing peanuts.

Clarifying sentences are added to paragraphs (c)(3) and (g)(2)

requiring positive lot identification of residual lots.

Several commenters addressed the proposed provision which states

that superior quality shelled peanuts do not have to be tested for

aflatoxin prior to shipment for human consumption. Two addressed the

dangers of aflatoxin contamination in food products and recommended

that aflatoxin testing be required on all peanut lots imported into the

United States.

Under the Agreement, all domestically produced, shelled peanuts

intended for human consumption use must meet specified minimum quality

requirements found in the Agreement's ``Other Edible Quality'' table

and must

[[Page 31310]]

undergo chemical analysis for aflatoxin content prior to shipment for

human consumption. Other edible quality grade is referred to as minimum

grade in this import regulation. Further, the Agreement provides that

peanuts which meet the higher quality requirements found in the

``Indemnifiable Grades'' table do not need to undergo such chemical

analysis. Indemnifiable grade is referred to as superior grade in this

import regulation.

One commenter referred to paragraph (l)(3) of section 998.300

``Terms and Conditions for Indemnification'' as a requirement for

aflatoxin analysis. However, this section of the Agreement refers to

indemnified lots and has no relevance to imported peanuts as those

peanuts cannot be indemnified under the Agreement.

One commenter, while recognizing that the superior grade peanuts do

not have to be tested for aflatoxin, suggested that uncontrolled

temperature, humidity, and moisture could degrade the condition of a

peanut lot during shipment. Therefore, the commenter recommended that

all imported peanuts, even those that meet ``Superior Quality

Requirements'' upon arrival in the U.S., should be chemically tested

for aflatoxin content. Imported peanut lots which are not properly

packaged or handled during shipment and are degraded or otherwise

damaged as a result, would most likely fail ``Superior Quality

Requirements'' and would be subject to aflatoxin analysis. Therefore,

the recommendation is denied.

One commenter asked whether the regulations in the proposed rule

represented an overlap of responsibility between the Department and FDA

with regards to the methodology used for sampling and testing peanut

shipments and the enforcement of test results. As stated in the

proposed rule, this rule does not supersede laws or requirements of

other Federal government agencies. Thus, this rule does not prevent FDA

from inspecting imported peanut shipments, should it choose to do so.

The Department has initiated a Memorandum of Understanding with FDA to

minimize possible duplication of inspections.

Three commenters recommended that the implementation of the

regulation be delayed. Two suggested that because some members of the

Agreement wish to amend the regulations regarding the handling of

farmers stock peanuts, it would be better to delay implementation of

the import regulation until such a change, if approved by the

Secretary, is implemented. They commented that such delay would avoid

confusion regarding applicable import requirements. One commenter

complained that some peanut shipments are already in transit to the

United States and should not be held to requirements established after

departure of the shipment. Because of concerns such as these, the

Department has decided to make this rule effective 30 days after the

date of publication in the Federal Register. Since the rule was first

proposed on February 1, 1996, importers should have ample time to

prepare for its implementation.

As noted in the proposed rule, whenever the quality requirements

and handling procedures are changed in the Agreement, the same or

equivalent changes will be made in the quality requirements and

handling procedures of this import regulation.

In preparing for implementation of this regulation, the inspection

service has issued instructions to its field offices which will receive

and collect the samples of imported peanut shipments. To reduce the

possibility of split kernels caused in the sampling process, special

instructions have been issued for collecting the samples from bags.

While no comments were received regarding this issue, the Department

wants the industry to be aware that precautions have been taken to

avoid causing defects in lots during the handling. The same procedures

are followed when sampling domestically produced peanuts presented in

bags.

Several minor corrections and clarifications also are made to

correct references to paragraphs in the regulatory text and clarify

procedures presented in the proposed rule. The changes are based on

comments received and on the Department's review of the published

proposed rule.

Customs Service Entry Requirements and USDA Safeguard Procedures

Importer obligations include filing documents notifying the Customs

Service and the Department of different actions taken concerning

foreign produced inshell and shelled peanuts. Customs Service

importation procedures and requirements are set out in title 19 of the

Code of Federal Regulations (19 CFR). The Customs Service regulations

applicable to peanut handling and processing include, but are not

limited to: bond requirements (19 CFR part 113); transfer from port-of-

entry to another Customs Service office location (19 CFR part 112);

entry of merchandise for consumption (19 CFR part 141); warehouse

entry, and withdrawal from warehouse for consumption (19 CFR part 144);

establishment of bonded warehouses (19 CFR parts 19.13 and 19.2); and

manipulation in bonded warehouses (19 CFR part 19.11); transfer of

ownership (19 CFR parts 141.113 and 141.20); failure to recondition (19

CFR part 113.62(e); and redelivery of merchandise 19 CFR part

113.62(d). For purposes of this regulation, the term ``consumption''

means ``use in the United States.'' Customs Service entry procedures

are not superseded by this import regulation.

Foreign produced peanuts may be entered for ``warehouse'' or

entered for ``consumption,'' or may be transported to another Customs

Service port-of-entry to be entered there for warehouse or consumption.

Peanuts transported from one Customs Service port-of-entry to another

Customs Service port-of-entry must be transported by a carrier

designated by the Customs Service under 19 U.S.C. 1551. Peanuts entered

for warehouse are stored in a Customs Service bonded warehouse. Such

peanuts remain in Customs Service custody until they are withdrawn from

warehouse, or entered, for consumption--and are released from Customs

Service custody. Peanuts entered for consumption, or withdrawn from

warehouse for consumption, are released conditionally, pending

certification that the peanuts meet the handling and quality

requirements of this regulation and conform to Customs Service entry

requirements. The Customs Service can demand redelivery of peanuts that

fail these requirements.

The importer, or import broker acting on behalf of the importer, is

required to file with the Customs Service required entry documentation

for each foreign produced peanut shipment to be entered. More than one

lot can be filed on one entry document. Under safeguard procedures

established in this rule, each importer is also required to file

completed entry documentation (Customs Form 3461 or other equivalent

form) with the inspection service office that will perform the sampling

of the lot for inspection to provide that office with advanced notice

of requested inspection. The entry documentation may be filed by mail

or facsimile transmission (fax). The filing should occur prior to

arrival of the shipment at the port-of-entry in order to expedite entry

procedures. The inspection service office will stamp, sign, and date

the entry document and return it to the importer or broker by fax or

mail. The importer/broker will then submit the stamped copy to the

Customs Service. This ``stamp-and-fax'' procedure is similar to a

procedure in place for other imported agricultural commodities under

AMS jurisdiction. Failure to show the Customs Service a copy of the

entry

[[Page 31311]]

documentation stamped by the inspection service will result in a delay

or denial of entry of a peanut lot. The importer/broker must also mail

or fax a completed copy of the document to AMS to initiate the

Department's monitoring process.

The location and telephone numbers of inspection service offices

that perform peanut sampling and/or grade inspections are provided in

paragraph (d)(3) of this rule. Inspection service offices at other

locations may be contacted to sample the imported peanut lot. In such

cases, the collected peanut samples will be shipped to an inspection

service office which has equipment and personnel qualified to perform

grade inspections. Samples of lots meeting minimum grade requirements

will also be sent to an approved laboratory (listed in paragraph

(d)(4)) for aflatoxin analysis. The lot will have to remain in storage

pending grade and aflatoxin certification.

It is the importer's responsibility to provide, in the mailed or

faxed documentation, sufficient information to identify the peanut lot

being entered and to ensure that arrangements are made for sampling and

inspection. The information will include the container identification,

weight of the peanut lot, the city, street address, and building number

(if known) receiving the peanut lot, the requested date and time of

inspection, and a contact name or number at the destination. If the

destination is changed from that listed on the stamp-and-fax document,

it is the importer's responsibility to immediately advise inspection

service offices at both the original destination and the new

destination of such change. Shipments which are not made available

pursuant to the entry document, or are not properly displayed for

sampling purposes, will be reported to the Customs Service.

Falsification of reports submitted to AMS is a violation of Federal

law punishable by fine or imprisonment, or both.

A bond secured by surety or U.S. Treasury obligations is required

to be posted by the importer with the Customs Service to guarantee the

importer's performance. Peanuts can be determined inadmissible because

the importer failed to follow Customs Service importation procedures,

the peanuts failed to meet quality requirements, or because the

handling procedures (including lot identification and certification)

specified in this regulation were not followed.

Redelivery will be demanded for failure to comply with the quality,

handling, and reporting requirements of this import regulation,

including: arrival at the inland destination with a broken Customs

Service or inspection service seal; failure to maintain lot identity;

mislabeling of the peanuts being imported; failure to receive required

inspection; commingling of peanut lots not of like quality or

condition; disposition of non-edible peanuts to an edible peanut outlet

or an improper, non-edible peanut outlet; and failure to fully report

the disposition of foreign produced peanuts. Disposition reports will

include grade, aflatoxin, and identification certifications and bills

of lading, sales receipts, and other documentation showing the peanuts

were disposed to a non-edible peanut outlet, exported, or destroyed.

Following Customs Service regulations, a redelivery demand must be

issued by the Customs Service within 30 days of Customs Service entry

of the peanuts--if the peanuts are not certified as meeting

requirements of this import regulation. Because the Customs Service

requires one week to prepare and issue a redelivery demand notice, this

import rule establishes that importers must report disposition of lots

of peanuts to AMS within 23 calendar days of the date of entry.

Although a 23-day reporting deadline may be considered burdensome by

some, the deadline is necessary because of the Customs Service 30-day

notification requirement.

If an importer has difficulty meeting edible consumption

certification or completing necessary shelling, remilling, or other

reconditioning by the 23rd day after entry, the importer should notify

AMS of such difficulty. If the importer fails to so notify AMS, or

fails to report necessary certification, AMS will request the Customs

Service to issue a redelivery demand for the out-of-compliance lot.

As covered above, after receiving a notice of redelivery, the

importer may continue to try to recondition the failing lot or

redeliver the failing lot to the port-of-entry. The redelivery notice,

in effect, provides an additional 60 days, from the date of issuance,

for the importer to comply with requirements of this import regulation.

The exception to this is for peanuts labeled as cleaned-inshell which

are determined by the inspection service to be unprepared farmers stock

peanuts. Such peanuts must be redelivered immediately and may not be

reconditioned.

If the importer is unable to meet these import requirements by the

end of the 60-day redelivery period, the importer may request an

extension of the period from the Customs Service. The Customs Service

may authorize an appropriate extension for good cause. The importer is

responsible for reporting any such extension to AMS.

When moving a conditionally released lot inland, the importer will

cause a copy of the entry documentation applicable to the peanut lot to

be forwarded with the peanuts to the lot's inland destination. If the

shipment is sealed by Customs Service or the inspection service, the

seal must remain intact and can be broken only by an authorized

official at the destination point.

The identification requirements in this regulation are similar to

the Agreement's lot identification requirements. Lot size is limited to

200,000 pounds to comply with Agreement requirements and sampling

provisions of the inspection service. Boatload shipments exceeding

200,000 pounds must be entered as two or more lots, but may be entered

under one Customs Service entry document. For instance, five containers

averaging 40,000 pounds each (the domestic industry standard) may be

entered as five lots on one entry document. Lot size and identification

arrangements must be made consistent with the port-of-entry inspection

service office requirements and should be established cooperatively

between the inspection service, Customs Service offices and the

importer at the port-of entry. This will facilitate subsequent lot

identification, inspection, and reporting of large imported shipments.

Foreign produced peanuts placed in storage may be commingled only

with like-quality, foreign produced peanuts belonging to the same

importer. Similarly, failing quality peanuts may be commingled with

other such foreign produced peanuts prior to clean-up or non-edible

disposition. Reports certifying disposition of all peanuts in the

commingled lot must be filed within 23 days of Customs Service entry of

the earliest-entered lot commingled, or, if a redelivery notice is

issued on the earliest entered lot, within the 60-day redelivery period

for that lot. The remaining commingled peanuts must be withdrawn,

inspected, properly disposed, and reported before the end of that 60-

day redelivery period. If necessary, the importer may request that

Customs Service extend the redelivery period for the remaining peanuts

in the commingled lot.

The objective of the lot identification requirements is to help

ensure that individual peanut lots are disposed as required and that

defects in poor quality peanut lots are not blended out by commingling

poor quality peanuts with higher quality peanuts. The lot

identification requirements in this

[[Page 31312]]

import regulation are similar to positive lot identification

requirements specified for domestically produced peanuts. Positive lot

identification involves a Federal or Federal-State Inspection Service

seal or tag that clearly identifies the peanuts covered by the seal or

tag, and which is affixed in such a way that the peanut lot cannot be

tampered with, without destroying the seal or tag. Because of the size

of some imported shipments (up to 200,000 pounds) it would be

impractical to have a seal or tag sewed onto every bag or container in

such a lot. Thus, an imported lot may be lot identified in such a way

as to clearly distinguish the peanuts in the lot, but not require tags

on individual bags or plastic wrap around the entire lot. However,

residual sublots resulting from the reconditioning, remilling or

blanching of a failing lot must be positive lot identified, consistent

with the provisions of lot identification provisions of the Agreement.

All USDA required sampling, quality certification, and lot

identification must be conducted by the inspection service. Chemical

analysis must be conducted by a USDA or an approved laboratory. Foreign

produced peanuts stored in bonded warehouses are subject to Customs

Service audits. Importers will reimburse the inspection service,

laboratories, and the Customs Service for services provided and costs

incurred with regard to the entry of the importer's peanuts.

Depending on condition (shelled or cleaned-inshell) and

containerization, foreign produced peanuts may be either: (1) Sampled,

inspected, and held in a Customs Service bonded warehouse at the port-

of-entry until certified by the inspection service as meeting the

edible quality requirements of this rule; or, (2) conditionally

released at the port-of-entry and entered under Customs Service entry

procedures for later inspection and certification.

Under option (1), foreign produced shelled or cleaned-inshell

peanuts which are cleaned, sorted, sized, and otherwise prepared for

edible consumption prior to importation, are sampled at the port-of-

entry. The importer must present such peanuts in containers or bags

that allow appropriate sampling of the lot pursuant to inspection

service requirements. After sampling, such lots are held at the port-

of-entry, under lot identification requirements of the inspection

service, pending results of the inspection and chemical analysis.

Depending on location of the port-of-entry, portions of the samples are

sent to an inspection service inspection facility for grade inspection

and to an aflatoxin laboratory for chemical analysis. If determined to

meet the applicable edible quality requirements in paragraph (c) of

this rule, the shelled or cleaned-inshell peanuts may be entered for

consumption without further inspection. Reports of such entries do not

have to be filed with AMS because the lots cleared all requirements

while under Customs Service custody.

Such shelled or cleaned-inshell peanuts, sampled and held at the

port-of-entry, which fail edible quality requirements may, at the

importer's discretion, be: (1) re exported; (2) entered for

reconditioning, and if satisfactorily remilled or blanched, certified

for edible consumption; or (3) entered for non-edible consumption.

Failing peanuts that are re-exported do not have be reported to AMS

because the peanuts were not entered into the U.S. The importer must

file certifications which report all actions taken on each lot entered

for reconditioning or non-edible consumption. Such certifications must

be reported within 23 days of entry, or, if a redelivery notice is

issued, within the 60-day redelivery period.

Under option (2), shelled and cleaned-inshell peanuts which are

cleaned, sorted, sized, and otherwise prepared for edible consumption

prior to importation, may be entered and transported inland for

subsequent sampling, inspection, and certification. Farmers stock

peanuts also must be shipped inland for sampling and inspection because

specialized, farmers stock sampling facilities are not available at

ports-of-entry. Certifications reporting disposition of these lots must

be filed within 23 days of entry, or, if a redelivery notice is issued

on the lot, within the 60-day redelivery period.

Categories of Peanuts Submitted for Importation

Farmers Stock Peanuts

Such peanuts are required to undergo incoming inspection at a

prearranged buying point prior to arrival at a shelling or storage

destination. All required inspections, shelling, and dispositions of

farmers stock peanuts must be completed and reported within 23 days of

entry, or, if a redelivery notice is issued on the lot, within the 60-

day redelivery period.

Foreign produced farmers stock peanut lots cannot be commingled

with other peanut lots prior to incoming inspection. Incoming

inspection determines the quality of the farmers stock peanuts based on

moisture content, foreign material, damage, loose shelled kernels, and

visible Aspergillus flavus mold. The inspection service will issue USDA

form CFSA-1007, ``Inspection Certificate and Sales Memorandum''

(formerly ASCS-1007) designating the lot as either Segregation 1, 2, or

3 quality.

Only Segregation 1 peanuts can be prepared for human consumption

use. Such peanuts may be shelled or prepared for cleaned-inshell use.

For quality control and reporting purposes, Segregation 1 lots intended

for human consumption outlets may be commingled only with other like

quality peanuts of the same importer. A Segregation 1 lot which is

commingled with Segregation 2 or 3 peanuts must assume the lower

Segregation 2 or 3 quality and must be disposed as non-edible quality

peanuts.

Foreign produced farmer stock peanuts received by importers and

determined at incoming inspection to be Segregation 2 and 3 quality

peanuts must be disposed only as non-edible peanuts. Segregation 3 and

commingled Segregation 2 and 3 farmers stock peanuts may be exported

inshell or exported shelled if fragmented prior to export. Segregation

2 and 3 peanuts also may be destroyed by burying (under inspection

service and Customs Service supervision) or exported (certified by

Customs Service). The importer must report non-edible disposition by

providing a copy of the incoming inspection certificate, bills of

lading and sales receipts, or other official certifications as proof of

disposition to crushing, exportation, other non-edible outlets, or

burying. Segregation 2 and 3 peanuts that are exported must be lot

identified by the inspection service and certified as exported by the

Customs Service. Certification of non-edible disposition or export must

be filed with AMS within 23 days of entry, or, if a redelivery notice

is issued, within the 60-day redelivery period. Customs Service re-

export procedures must be followed.

Foreign produced Segregation 2 and 3 quality peanuts may be shelled

by a custom seed sheller for seed use and, if so disposed, such peanuts

must be dyed or chemically treated so as to be unfit for human or

animal consumption. Domestically produced Segregation 2 and 3 peanuts

shelled for seed need not be dyed or treated but must be produced under

the auspices of a State agency, shelled by a custom seed sheller, and

subject to PAC oversight. Measures such as these are necessary to

ensure that peanuts used for human consumption are safe and wholesome.

Proof of dyeing or chemical treatment of foreign produced peanuts must

be filed with AMS within 23 days of entry, or, if a

[[Page 31313]]

redelivery notice is issued on the lot, within the 60-day redelivery

period.

Foreign produced farmers stock peanuts do not qualify for the

support program administered by the Department's Farm Service Agency,

formerly the Agricultural Stabilization and Conservation Service.

Shelled peanuts: Foreign produced shelled peanuts may: (1)

Originate from foreign produced Segregation 1 farmers stock milled at

facilities in the U.S., or (2) be peanuts produced and milled in

another country which are conditionally released at the port-of-entry

for inland sampling and inspection. Both categories of shelled peanuts

must be sampled and inspected against outgoing quality requirements

specified in paragraph (c) of this regulation.

Domestically produced shelled peanuts intended for edible markets

must originate from farmers stock peanuts which have undergone incoming

inspection and are determined to be of Segregation 1 quality. AMS

cannot determine whether peanuts produced and shelled in a foreign

country originated from Segregation 1 quality peanuts prior to

shelling. However, because outgoing inspection and chemical analysis is

more reliable and precise in determining aflatoxin content in peanut

kernels, this import regulation provides that peanuts shelled prior to

importation are exempt from incoming inspection before delivery for

outgoing inspection. Such shelled peanuts must be sampled and tested

against outgoing quality requirements prior to disposition to edible

outlets.

Two grade levels for shelled peanuts are in effect under the

Agreement and are established in this import regulation. The Agreement

provides that shelled peanut lots meeting the quality requirements

specified in a table entitled ``Other Edible Quality,'' under paragraph

(a) of Sec. 998.200, must be chemically analyzed for aflatoxin content

prior to disposition to edible outlets. The quality requirements

specified in the Other Edible Quality table are duplicated in ``Table

1, Minimum Grade Requirements--Peanuts for Human Consumption'' of this

import regulation. The outgoing quality requirements also include a

parts-per-billion tolerance for aflatoxin, determined by chemical

analysis.

The Department has corrected an entry in Table 1. Minimum Grade

Requirements'' as published in the proposed rule. Under the ``Lots of

splits'' category, the cite for Virginia peanuts should read ``Virginia

(not less than 90% splits).'' The proposed rule incorrectly stated not

more than 90%.

Aflatoxin appears most frequently in damaged, stressed, under-

developed and malformed kernels. Domestic lots with fewer poor quality

kernels are less likely to be contaminated and, thus, do not have to be

chemically tested. The Agreement's ``Indemnifiable Grades'' table in

paragraph (a) of Sec. 998.200, provides for a superior quality level

with more rigorous percentage tolerances than those found in the Other

Edible Quality table. Foreign produced shelled lots meeting the

superior quality standards do not have to be chemically analyzed prior

to their disposition for human consumption. The quality requirements

specified in the ``Indemnifiable Grades'' table are duplicated in

``Table 2 Superior Quality Requirements--Peanuts for Human

Consumption'' of this rule.

Paragraph (c)(4) of Sec. 998.200 provides that peanuts are

considered edible quality if the chemical assay shows the lot contains

15 ppb or less of aflatoxin. Thus, the level of aflatoxin in foreign

produced peanut lots intended for edible peanut markets must not exceed

15 ppb. Consistent with paragraphs (c)(4) and (g)(3) of Sec. 998.200,

non-edible quality peanut lots with 25 ppb or less must be disposed to

certain non-edible peanut outlets. Disposition of non-edible quality

peanut lots with aflatoxin exceeding 25 ppb must be further restricted

to certain other non-edible peanut outlets. The sampling, testing,

certification and identification of foreign produced peanut lots must

be performed in accordance with paragraph (d)(4) of this rule.

Chemical testing is performed by an AMS, Science and Technology

Division laboratory or a laboratory approved by the PAC. The PAC

locally administers the Agreement with Department oversight. A list of

approved laboratories is provided in paragraph (d)(4)(iv) of this

regulation. These are the same laboratories specified in the Agreement

and any changes to the list will be incorporated in this section.

Thus, to obtain approval for human consumption use of a foreign

produced shelled peanut lot, the importer must present to AMS and the

Customs Service two certifications: (1) Quality certification Form FV-

184-9A ``Milled Peanut Inspection Certificate'' and (2) aflatoxin

certification Form CSSD-3 ``Certificate of Analysis for Official

Samples'' issued by USDA laboratories, or equivalent forms issued by a

PAC approved lab. An aflatoxin certificate is not required if the lot

meets the superior grade requirements, but may be required by the

buyer. The certificates are the same as those used to report grade and

chemical analysis results for domestically produced peanuts. The

required certificates must be received by AMS within 23 days of entry,

or, if a redelivery notice is issued, within 60 days of the redelivery

notice.

Cleaned-Inshell Peanuts

Inshell peanuts that have been cleaned, sorted, and prepared in

another country for edible inshell peanut markets in the U.S. may be

presented for importation at the port-of-entry. Such peanuts can be

declared as cleaned-inshell peanuts on the Customs Service entry

document and can either be presented for outgoing inspection at the

port-of-entry, if delivered in bags and presented is such a way as to

be accessible for sampling by the inspection service, or conditionally

released for outgoing inspection at a facility inside the U.S. Because

the Department is unable to determine if foreign produced cleaned-

inshell peanuts come from Segregation 1 peanuts, peanuts declared as

cleaned-inshell on a Customs Service entry document must not undergo

additional cleaning, sorting, sizing, or drying prior to outgoing

inspection at the destination point inside the U.S.

Cleaned-inshell lots that fail outgoing inspection for inshell

peanuts may be reconditioned (remilled) and subsequently sampled and

graded for outgoing inspection. If there is any indication that an

imported farmers stock lot is mislabeled or misrepresented as cleaned-

inshell peanuts when entered, redelivery of the lot will be required

and the lot may not be reconditioned prior to redelivery to the port-

of-entry.

Cleaned-inshell peanut lots destined for edible peanut markets are

required to meet certain minimum quality inshell requirements for

damage, moisture and foreign material. Cleaned-inshell lots containing

more than 1 percent kernels with visible mold have to be chemically

tested and meet minimum aflatoxin requirements. The cleaned-inshell

quality requirements specified in paragraph (c)(2) of this rule are the

same as the quality requirements in paragraph (b) of Sec. 998.200 of

the Agreement.

Foreign produced farmers' stock Segregation 1 peanuts also can be

prepared and presented at outgoing inspection as cleaned-inshell

peanuts. Such peanuts inspected and certified as meeting grade

requirements for edible cleaned-inshell peanuts must be designated as

imported peanuts on inspection service form FV-184-9A. The importer

must file form FV-184-9A with AMS for each lot of foreign produced

cleaned-inshell peanuts

[[Page 31314]]

meeting edible quality requirements for cleaned-inshell peanuts.

Imported peanuts certified as meeting edible requirements can be

used any way desired. Only after shelled and cleaned-inshell peanuts

are certified as meeting applicable requirements can such peanuts be

commingled with imported lots of other importers or domestically

produced peanuts which also have been certified for human consumption.

Disposition of Failing Peanuts

The following peanuts cannot be used for human consumption: (1)

Farmers' stock peanuts that grade either Segregation 2 or Segregation

3; (2) cleaned-inshell and shelled peanuts that fail outgoing quality

and/or aflatoxin requirements and are not reconditioned or reworked

(the removal of defective kernels); and (3) below grade residue from

any shelling, milling or blanching operations.

Cleaned-inshell lots that fail outgoing inspection requirements of

paragraph (c)(2) can be reconditioned by remilling the peanuts, which

can include shelling. If shelled or remilled, the peanuts must meet

outgoing requirements of paragraph (c)(1) for shelled peanuts or (c)(2)

for inshell peanuts.

Failing lots of shelled peanuts, which originated from Segregation

1 peanuts, can be reconditioned following procedures established in

paragraph (f) of this rule. These provisions are the same as those

established under various provisions of the Agreement. Segregation 1

shelled peanuts which fail quality requirements in Table 1 and/or

exceed 15 ppb aflatoxin content can be reconditioned by remilling and/

or blanching and, when subsequently reinspected and certified as

meeting edible quality and aflatoxin requirements, can be disposed to

edible peanut outlets. If not reconditioned, failing Segregation 1 lots

must be disposed to non-edible peanut outlets as unrestricted or

restricted peanuts as described below.

Provisions controlling the disposition of residue peanuts from

inshell remilling and shelled remilling and blanching that continue to

fail edible quality requirements are also provided in this rule. Two

categories of non-edible peanuts are specified under the Agreement--

``unrestricted'' and ``restricted.'' The designation is based on the

amount of aflatoxin detected in the lot. ``Unrestricted'' peanuts are

peanuts which fail one or more quality requirements and, when

chemically assayed, contain more than 15 ppb but 25 ppb or less

aflatoxin. While such peanuts are of non-edible quality, they can be

crushed for oil, exported or used in animal feed, provided that certain

handling and container labeling requirements are followed. Unrestricted

peanuts also can be used for seed (if dyed or treated to prevent edible

use), crushed for oil, exported, or buried. Meal resulting from the

crushing of unrestricted peanuts does not have to be tested a second

time for aflatoxin content. Disposition of meal resulting from the

crushing of peanuts is not regulated under the Agreement or this

regulation.

Peanuts containing more than 25 ppb aflatoxin are designated as

``restricted'' peanuts. Restricted peanut lots may or may not meet

quality requirements of Table 1. At the direction of the importer,

restricted peanut lots must be used either for seed (if dyed or

treated), crushed for oil, destroyed by burying (under supervision of

the inspection service), or exported. Meal resulting from the crushing

of restricted peanuts must be certified as to aflatoxin content and

such certification must accompany the meal into the channels of

commerce.

The importer can dispose of a failing peanut lot directly to a non-

edible peanut outlet or set aside and commingle several failing lots

for eventual disposition to one or more non-edible outlets. Commingled

failing quality peanuts must be held separate and apart from edible

peanuts and identified with red tags indicating non-edible peanuts.

Eventual disposition must be to non-edible peanut outlets consistent

with the failing quality of the peanuts, pursuant to paragraph (e) of

this rule.

If an importer chooses to destroy unrestricted or restricted

peanuts by burying, the peanuts must be lot identified and disposition

must be reported to AMS. The importer must provide inspection service

and Customs Service certification if a lot is buried, or a Customs

Service export declaration if a lot is exported. Customs Service

procedures controlling re-exported merchandise must also be followed by

the importer. Burying and exportation expenses are borne by the

importer.

It is the importer's responsibility to file inspection certificates

and other documentation sufficient to account for disposition of all

failing quality peanuts acquired by the importer. Such proof consists

of copies of bills of lading and sales receipts between the importer

and non-edible peanut outlet receivers. The documentation must contain

identifying information, such as container or lot numbers, that tie the

peanuts reported on the documents to failing quality peanuts on

inspection service or aflatoxin certificates. The name and address of

the non-edible peanut receiver and valid contact information must also

be specified on the documentation.

Disposition of unrestricted and restricted peanut lots must be

reported to AMS within 23 days of filing for entry with the Customs

Service, or, if a redelivery notice is issued, within the 60-day

redelivery period. As noted in above, disposition of unrestricted and

restricted peanut lots may be carried out and reported during the

redelivery demand period.

The inspection service identifies imported peanuts as peanuts of

foreign origin on the inspection certificate to assist in lot

identification. Foreign origin designations also help AMS meet its

monitoring responsibilities.

From time to time, the PAC may recommend to the Secretary that

quality requirements or handling procedures specified in the Agreement

be revised. If such changes are approved by the Secretary and

implemented for the domestic peanut industry in 7 CFR Part 998,

corresponding changes will be made in Sec. 999.600. Changes in

regulations for domestically produced peanuts are generally made

effective July 1. Thus, corresponding changes to the import regulation

will be made effective on that date, or as close to that date as

possible under informal rulemaking, unless otherwise specified in the

regulation. Quality requirements in effect on the date of inspection of

a foreign produced lot will be applied to the inspected lot.

Safeguard Procedures

This rule establishes a procedure to verify importers' compliance

with import requirements. The safeguard procedures provide for

monitoring of peanut lots from importation to final disposition. The

purpose of these procedures are to ensure that foreign produced peanuts

either meet edible requirements or are appropriately disposed to non-

edible peanut outlets, exported or destroyed. The safeguard procedures

are similar to safeguard procedures already in place for other imported

commodities and are consistent with the inspection, identification and

certification requirements applied to domestically produced peanuts

under the Agreement.

The safeguard process includes the ``stamp-and-fax'' entry

procedure, as already described, whereby the importer provides the

Customs Service with an entry document stamped by the inspection

service. The importer also files a copy of the entry document with AMS

and forwards a copy, with the released lot, to the inland destination

[[Page 31315]]

where the lot is to be inspected or warehoused. Edible certification

and non-edible disposition is reported by filing with AMS copies of all

grade certificates, aflatoxin certificates, and proof of non-edible

disposition. Such certifications must be filed within 23 days of filing

for entry, or, if a redelivery notice is issued, within the 60-day

redelivery period.

Failure to report or redeliver peanuts within applicable time

frames could result in liquidated damages against the importer.

Certificates and other supplementary documentation must be sent to

AMS, Marketing Order Administration Branch (MOAB) which oversees the

domestic peanut program and this import program. Facsimile or express

mail deliveries can be used to ensure timely receipt of certificates

and other required documentation. Overnight and express mail deliveries

should be addressed to the USDA, AMS, Marketing Order Administration

Branch, 14th and Independence Avenue, SW., Room 2525, Washington, DC

20250, Attn: Report of Imported Peanuts. The MOAB's fax number is (202)

720-5698, Attn: Report of Imported Peanuts.

For the purposes of checking and verifying reports filed by

importers and disposition outlets, this regulation provides that

importers must allow the Secretary, through duly authorized agents, to

have access to any premises where peanuts may be held and processed.

Authorized agents, at any time during regular business hours, are

permitted to inspect any peanuts held, and any and all records with

respect to the acquisition, holding or disposition of any peanuts which

may be held, or which may have been disposed by that importer.

USDA record retention requirements also are established to require

importers to retain information for at least two years beyond the year

of applicability. Customs Service record retention requirements are

longer.

The handling of each imported lot must be consistent with Customs

Service procedures and reported in accordance with normal Customs

Service requirements. Any Customs Service reporting or recordkeeping

requirements for disposition of imported merchandise or clearance of

bonding requirements are not superseded by this regulation.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

Chapter 35) as amended in 1995, the information and collection

requirements that are contained in this rule have been approved by the

Office of Management and Budget (OMB) on a temporary basis and have

been assigned OMB number 0581-0176. A 60-day period was established in

the proposed rule to receive comments on the information collection

requirements. All responses to the request for comments will be

summarized and included in the request for OMB approval. All comments

will become a matter of public record.

In addition to the reporting requirements, this rule establishes

that importers and customs brokers retain copies of all certifications

and entry documentation for not less than two years after the calendar

year of acquisition. This is a commonly accepted records retention

period and within good business practices. The time for maintaining

records by filing each document internally is included in the filing

estimate. The information collected is used only for compliance

purposes by personnel of the Department.

The reporting and recordkeeping requirements established in this

rule will enable the Department to oversee the entry of peanuts and

help ensure that only good quality, wholesome peanuts will be used in

edible peanut outlets in the U.S. Without the quality requirements

specified in the Agreement (7 CFR Part 998), regulations for non-

signatory handlers (7 CFR Part 997), and these regulations, poor

quality peanuts could more easily be entered into edible channels,

causing consumer dissatisfaction and having a negative impact on the

market for peanuts and peanut products. Compliance with these standards

help the peanut industry in its efforts to expand markets.

Although these requirements result in some additional costs for

importers, the benefits from restricting low quality peanuts from

edible markets outweigh any additional inspection, handling,

recordkeeping and reporting costs resulting from the requirements.

These requirements have been carefully reviewed and every effort has

been made to minimize any unnecessary reporting and recordkeeping

costs.

List of Subjects in 7 CFR part 999

Dates, Filberts, Food grades and standards, Imports, Nuts, Peanuts,

Prunes, Raisins, Reporting and recordkeeping requirements, Walnuts.

For the reasons set forth in the preamble, 7 CFR part 999 is

amended as follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

1. The authority citation for 7 CFR part 999 is revised to read as

follows:

Authority: 7 U.S.C. 601-674; and 7 U.S.C. 1445c-3.

2. A new Sec. 999.600 is added to part 999 to read as follows:

Sec. 999.600 Regulation governing imports of peanuts.

(a) Definitions. (1) Peanuts means the seeds of the legume Arachis

hypogaea and includes both inshell and shelled peanuts produced in

countries other than the United States, other than those marketed in

green form for consumption as boiled peanuts.

(2) Farmers stock peanuts means picked and threshed raw peanuts

which have not been shelled, crushed, cleaned or otherwise changed

(except for removal of foreign material, loose shelled kernels, and

excess moisture) from the form in which customarily marketed by

producers.

(3) Inshell peanuts means peanuts, the kernels or edible portions

of which are contained in the shell.

(4) Incoming inspection means the sampling and inspection of

farmers stock peanuts to determine Segregation quality.

(5) Segregation 1 peanuts, unless otherwise specified, means

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 mold.

(6) Segregation 2 peanuts, unless otherwise specified, means

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 mold.

(7) Segregation 3 peanuts, unless otherwise specified, means

farmers' stock peanuts with visible Aspergillus flavus mold.

(8) Shelled peanuts means the kernels of peanuts after the shells

are removed.

(9) Outgoing inspection means the sampling and inspection of

either: shelled peanuts which have been cleaned, sorted, sized and

otherwise prepared for human consumption markets; or inshell peanuts

which have been cleaned, sorted and otherwise prepared for inshell

human consumption markets.

(10) Negative aflatoxin content means 15 parts-per-billion (ppb) or

less for peanuts which have been certified as meeting edible quality

grade requirements, and 25 ppb or less for non-edible quality peanuts.

(11) Person means an individual, partnership, corporation,

association, or any other business unit.

[[Page 31316]]

(12) Secretary means the Secretary of Agriculture of the United

States or any officer or employee of the United States Department of

Agriculture (Department or USDA) who is, or who may hereafter be,

authorized to act on behalf of the Secretary.

(13) Inspection service means the Federal or Federal-State

Inspection Service, Fruit and Vegetable Division, Agricultural

Marketing Service, USDA.

(14) USDA laboratory means laboratories of the Science and

Technology Division, Agricultural Marketing Service, USDA, that

chemically analyze peanuts for aflatoxin content.

(15) PAC approved laboratories means laboratories approved by the

Peanut Administrative Committee, pursuant to Peanut Marketing Agreement

No. 146 (7 CFR Part 998), that chemically analyze peanuts for aflatoxin

content.

(16) Conditionally released means released from Customs Service

custody for further handling (sampling, inspection, chemical analysis,

or storage) before final release.

(17) Importation means the arrival of a peanut shipment at a port-

of-entry with the intent to enter the peanuts into channels of commerce

of the United States.

(b) Incoming regulation: (1) Farmers stock peanuts presented for

consumption must undergo incoming inspection. Only Segregation 1

peanuts may be used for human consumption. All foreign produced farmers

stock peanuts for human consumption must be sampled and inspected at a

buying point or other handling facility capable of performing incoming

sampling and inspection. Sampling and inspection shall be conducted by

the inspection service. Only Segregation 1 peanuts certified as meeting

the following requirements may be used in human consumption markets:

(i) Moisture. Except as provided under paragraph (b)(2) Seed

peanuts, of this section, peanuts may not contain more than 10.49

percent moisture: Provided, That peanuts of a higher moisture content

may be received and dried to not more than 10.49 percent moisture prior

to storage or milling.

(ii) Foreign material. Peanuts may not contain more than 10.49

percent foreign material, except that peanuts having a higher foreign

material content may be held separately until milled, or moved over a

sand-screen before storage, or shipped directly to a plant for prompt

shelling. The term sand-screen means any type of farmers stock cleaner

which, when in use, removes sand and dirt.

(iii) Damage. For the purpose of determining damage, other than

concealed damage, on farmers stock peanuts, all percentage

determinations shall be rounded to the nearest whole number.

(iv) Loose shelled kernels. Peanuts may not contain more than 14.49

percent loose shelled kernels, except that peanuts having a higher

loose shelled kernel content may be imported if held separately until

milled or shipped directly to a shelling facility for prompt shelling.

All percentage determinations shall be rounded to the nearest whole

number. Kernels which ride screens with the following or larger slot

openings may be separated from loose shelled kernels: Runner--\16/64\ x

\3/4\ inch; Spanish and Valencia--\15/64\ x \3/4\ inch; Virginia--\15/

64\ x 1 inch. If so separated, those loose shelled kernels which ride

the screens may be included with shelled peanuts prepared for

inspection and sale for human consumption: Provided, That no more than

5 percent of such loose shelled kernels are kernels which would fall

through screens with such minimum prescribed openings. Those loose

shelled kernels which do not ride the screens shall be removed from the

farmers' stock peanuts and shall be held separate and apart from other

peanuts and disposed of for non-edible use, pursuant to paragraph (e)

of this section. If the kernels which ride the prescribed screen are

not separated from the kernels which do not ride the prescribed screen,

the entire amount of loose shelled kernels shall be removed from the

farmers stock peanuts and shall be held separate and apart and disposed

of for non-edible use, pursuant to paragraph (e) of this section.

(2) Seed peanuts. Farmers stock peanuts determined to be

Segregation 1 quality, and shelled peanuts certified negative to

aflatoxin (15 ppb or less), may be imported for seed purposes.

Disposition of such peanuts to a seed outlet must be reported to the

Secretary by submitting a copy of the bill of lading or sales contract

which reports the weight of the peanuts so disposed, and the name,

address and telephone number of the receiving seed outlet. Residuals

from the shelling of Segregation 1 seed peanuts shall be held and/or

milled separate and apart from other peanuts, and such residuals

meeting quality requirements specified in paragraph (c)(1) of this

section may be disposed to human consumption channels, and any portion

not meeting such quality requirements shall be disposed to non-edible

peanut channels pursuant to paragraph (e) of this section. Segregation

2 and 3 peanuts may be shelled for seed purposes but must be dyed or

chemically treated so as to be unfit for human or animal consumption.

All disposition of seed peanuts and residuals from seed peanuts shall

be reported to the Secretary pursuant to paragraphs (g)(2) and (g)(3)

of this section. The receiving seed outlet must retain records of the

transaction, pursuant to paragraph (h)(7) of this section.

(3) Oilstock and exportation. Farmers stock peanuts of lower

quality than Segregation 1 (Segregation 2 and 3 peanuts) shall be used

only in non-edible outlets as provided herein. Segregation 2 and 3

peanuts may be commingled but shall be kept separate and apart from

edible quality peanut lots. Commingled Segregation 2 and 3 peanuts and

Segregation 3 peanuts shall be disposed only to oilstock, exported

inshell, or exported as shelled if fragmented as provided in paragraph

(e)(3) of this section. Shelled peanuts and cleaned-inshell peanuts

which fail to meet the requirements for human consumption in paragraph

(b)(1) may be crushed for oil or exported.

(4) Whenever the Secretary has reason to believe that peanuts may

have been damaged or deteriorated while in storage, the Secretary may

reject the then effective inspection certificate and may require the

importer to have the peanuts reinspected to establish whether or not

such peanuts may be disposed of for human consumption.

(c) Outgoing regulation. No person shall import peanuts for human

consumption into the United States unless such peanuts are lot

identified and certified by the inspection service as meeting the

following requirements:

(1)(i) Shelled peanuts. All shelled peanuts shall at least meet the

requirements specified in Table 1 as follows:

[[Page 31317]]

Table 1.--Minimum Grade Requirements--Peanuts for Human Consumption

[Whole Kernels and Splits]

--------------------------------------------------------------------------------------------------------------------------------------------------------

Maximum limitations

---------------------------------------------------------------------------------------------------------------------------------------------------------

Excluding lots of ``splits''

---------------------------------------------------------------------------------------------------------------------------------------------------------

Unshelled Fall through

Unshelled peanuts, ------------------------------------------------------------------

peanuts and damaged Foreign

Type and grade category damaged kernels and materials Moisture

kernels minor Sound split and Sound whole kernels Total (percent) (percent)

(percent) defects broken kernels

(percent)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Runner............................ 1.50 2.50 3.00%; \17/64\ inch 3.00%; \16/64\ x \3/ 4.00%; both screens. .20 9.00

round screen. 4\ inch; slot

screen.

Virginia (except No. 2)........... 1.50 2.50 3.00%; \17/64\ inch; 3.00%; \15/64\ x 1 4.00%; both screens. .20 9.00

round screen. inch; slot screen.

Spanish and Valencia.............. 1.50 2.50 3.00%; \16/64\ inch; 3.00%; \15/64\ x \3/ 4.00%; both screens. .20 9.00

round screen. 4\ inch; slot

screen.

No. 2 Virginia.................... 1.50 3.00 6.00%; \17/64\ inch; 6.00%; \15/64\ x 1 6.00%; both screens. .20 9.00

round screen. inch; slot screen.

--------------------------------------------------------------------------------------------------------------------------------------------------------

Lots of ``Splits''

--------------------------------------------------------------------------------------------------------------------------------------------------------

Runner (not more than 4% sound 1.50 2.50 3.00%; \17/64\ inch; 3.00%; \14/64\ x \3/ 4.00%; both screens. .20 9.00

whole kernels). round screen. 4\ inch; slot

screen.

Virginia (not less than 90% 1.50 2.50 3.00%; \17/64\ inch; 3.00%; \14/64\ x 1 4.00%; both screens. .20 9.00

splits). round screen. inch slot screen.

Spanish and Valencia (not more 1.50 2.50 3.00%; \16/64\ inch; 3.00%; \13/64\ x \3/ 4.00%; both screens. .20 9.00

than 4% sound whole kernels). round screen. 4\ inch; slot

screen.

--------------------------------------------------------------------------------------------------------------------------------------------------------

(ii) Peanuts meeting the specifications in Table 1 must also be

certified ``negative'' to aflatoxin content, pursuant to paragraph

(d)(4) of this section, prior to shipment to domestic human consumption

markets. Shelled peanuts meeting requirements specified in Table 2 must

be sampled pursuant to paragraph (d)(4) of this section but may be

disposed to human consumption outlets without testing for aflatoxin.

Table 2.-- Superior Quality Requirements--Peanuts for Human Consumption

[Whole Kernels and Splits]

--------------------------------------------------------------------------------------------------------------------------------------------------------

Maximum limitations

---------------------------------------------------------------------------------------------------------------------------------------------------------

Unshelled Fall through

Unshelled peanuts, ------------------------------------------------------------------

peanuts and damaged Foreign

Type and grade category damaged kernels and Sound split and materials Moisture

kernels minor broken kernels Sound whole kernels Total (percent) (percent)

(percent) defects (percent) (percent)

(percent)

--------------------------------------------------------------------------------------------------------------------------------------------------------

Runner U.S. No.1 and better....... 1.25 2.00 3.00%; \17/64\ inch, 3.00%; \16/64\ x \3/ 4.00%; both screens. .10 9.00

round screen. 4\ inch, slot

screen.

Virginia U.S. No.1 and better..... 1.25 2.00 3.00%; \17/64\ inch, 3.00%; \15/64\ x 1 4.00%; both screens. .10 9.00

round screen. inch, slot screen.

Spanish and Valencia U.S. No.1 and 1.25 2.00 3.00%; \16/64\ inch, 2.00%; \15/64\ x \3/ 4.00%; both screens. .10 9.00

better. round screen. 4\ inch, slot

screen.

Runner U.S. Splits (not more than 1.25 2.00 2.00%; \17/64\ inch, 3.00%; \14/64\ x \3/ 4.00%; both screens. .20 9.00

4% sound, whole kernels). round screen. 4\ inch, slot

screen.

[[Page 31318]]

Virginia U.S. Splits (not less 1.25 2.00 3.00%; \17/64\ inch, 3.00%; \14/64\ x 1 4.00%; both screens. .20 9.00

than 90% splits and not more than round screen. inch, slot screen.

3.00% sound whole kernels and

portions passing through \20/64\

inch round screen).

Spanish and Valencia U.S. Splits 1.25 2.00 2.00%; \16/64\ inch, 3.00%; \13/64\ x \3/ 4.00%; both screens. .20 9.00

(not more than 4% sound, whole round screen. 4\ inch, slot

kernels). screen.

Runner with splits (not more than 1.25 2.00 3.00%; \17/64\ inch, 3.00%; \16/64\ x \3/ 4.00%; both screens. .10 9.00

15% sound splits). round screen. 4\ inch, slot

screen.

Virginia with splits (not more 1.25 2.00 3.00%; \17/64\ inch, 3.00%; \15/64\ x 1 4.00%; both screens. .10 9.00

than 15% sound splits). round screen. inch, slot screen.

Spanish and Valencia with splits 1.25 2.00 3.00%; \16/64\ inch, 2.00%; \15/64\ x \3/ 4.00%; both screens. .10 9.00

(not more than 15% sound splits). round screen. 4\ inch, slot

screen.

--------------------------------------------------------------------------------------------------------------------------------------------------------

(2) Cleaned-inshell peanuts. Peanuts declared as cleaned-inshell

peanuts may be presented for sampling and outgoing inspection in bags

at the port-of-entry. Alternatively, peanuts may be conditionally

released as cleaned-inshell peanuts but shall not subsequently undergo

any cleaning, sorting, sizing or drying process prior to presentation

for outgoing inspection as cleaned-inshell peanuts. Cleaned-inshell

peanuts which fail outgoing inspection may be reconditioned or

redelivered to the port-of-entry, at the option of the importer.

Cleaned-inshell peanuts determined to be unprepared farmers stock

peanuts must be inspected against incoming quality requirements and

determined to be Segregation 1 peanuts prior to outgoing inspection for

cleaned-inshell peanuts. Cleaned-inshell peanuts intended for human

consumption may not contain more than:

(i) 1.00 percent kernels with mold present, unless a sample of such

peanuts is drawn by the inspection service and analyzed chemically by a

USDA or PAC approved laboratory and certified ``negative'' as to

aflatoxin.

(ii) 2.00 percent peanuts with damaged kernels;

(iii) 10.00 percent moisture (carried to the hundredths place); and

(iv) 0.50 percent foreign material.

(3) Reconditioned peanuts. Peanuts shelled, sized and sorted in

another country prior to arrival in the U.S. and shelled peanuts which

originated from Segregation 1 peanuts that fail quality requirements of

Table 1 (excessive damage, minor defects, moisture, or foreign

material) or are positive to aflatoxin may be reconditioned by

remilling and/or blanching. After such reconditioning, peanuts meeting

the quality requirements of Table 1 and which are negative to aflatoxin

(15 ppb or less) may be disposed for edible peanut use. Residuals

resulting from such reconditioning of failing lots shall be positive

lot identified, and red-tagged if in sacks, and disposed of pursuant to

paragraphs (g)(2) and (g)(3) of this section.

(d) Sampling and inspection. (1) All sampling and inspection,

quality certification, chemical analysis, and lot identification,

required under this section, shall be done by the inspection service, a

USDA laboratory, or a PAC-approved laboratory, as applicable, in

accordance with the procedures specified herein. The importer shall

make arrangements with the inspection service for sampling, inspection,

lot identification and certification of all peanuts accumulated by the

importer. The importer also shall make arrangements for the appropriate

disposition of peanuts failing edible quality requirements of this

section. All costs of sampling, inspection, certification,

identification, and disposition incurred in meeting the requirements of

this section shall be paid by the importer. Whenever peanuts are

offered for inspection, the importer shall furnish any labor and pay

any costs incurred in moving and opening containers as may be necessary

for proper sampling and inspection.

(2) For farmers stock inspection, the importer shall cause the

inspection service to perform an incoming inspection and to issue an

CFSA-1007, ``Inspection Certificate and Sales Memorandum'' form

designating the lot as Segregation 1, 2, or 3 quality peanuts. For

shelled and cleaned-inshell peanuts, the importer shall cause the

inspection service to perform an outgoing inspection and issue an FV-

184-9A, ``Milled Peanut Inspection Certificate'' reporting quality and

size of the shelled or cleaned-inshell peanuts, whether the lot meets

or fails to meet quality requirements for human consumption of this

section, and that the lot originated in a country other than the United

States. The importer shall provide to the Secretary copies of all CFSA

1007 and FV-184-9A applicable to each peanut lot conditionally released

to the importer. Such reports shall be submitted as provided in

paragraphs (g)(2) and (g)(3) of this section.

(3) Procedures for sampling and testing peanuts. Sampling and

testing of

[[Page 31319]]

peanuts for incoming and outgoing inspections of peanuts presented for

consumption into the United States will be conducted as follows:

(i) Application for sampling. The importer shall request inspection

and certification services from one of the following inspection service

offices convenient to the location where the peanuts are presented for

incoming and/or outgoing inspection. To avoid possible delays, the

importer should make arrangements with the inspection service in

advance of the inspection date. A copy of the Customs Service entry

document specific to the peanuts to be inspected shall be presented to

the inspection official prior to sampling of the lot.

(A) The following offices provide incoming farmers stock

inspection:

Dothan, AL, tel: (205) 792-5185,

Graceville, FL, tel: (904) 263-3204,

Winter Haven, FL, tel: (813) 291-5820, ext 260,

Albany, GA, tel: (912) 432-7505,

Williamston, NC, tel: (919) 792-1672,

Columbia, SC, tel: (803) 253-4597,

Suffolk, VA, tel: (804) 925-2286,

Portales, NM, tel: (505) 356-8393,

Oklahoma City, OK, tel: (405) 521-3864,

Gorman, TX, tel: (817) 734-3006,

Yuma, AZ, tel: (602) 344-3869.

(B) The following offices, in addition to the offices listed in

paragraph (d)(3)(i) (A) of this section, provide outgoing sampling and/

or inspection services, and certify shelled and cleaned-inshell peanuts

as meeting or failing the quality requirements of this section:

Eastern U.S.

Mobile, AL, tel: (205) 690-6154,

Jacksonville, FL, tel: (904) 359-6430,

Miami, FL, tel: (305) 592-1375,

Tampa, FL, tel: (813) 272-2470,

Presque Isle, ME, tel: (207) 764-2100,

Baltimore/Washington, tel: (301) 344-1860,

Boston, MA, tel: (617) 389-2480,

Newark, NJ, tel: (201) 645-2670,

New York, NY, tel: (212) 718-7665,

Buffalo, NY, tel: (716) 824-1585,

Philadelphia, PA, tel: (215) 336-0845,

Norfolk, VA, tel: (804) 441-6218,

Central U.S.

New Orleans, LA, tel: (504) 589-6741,

Detroit, MI, tel: (313) 226-6059,

St. Paul, MN, tel: (612) 296-8557,

Las Cruces, NM, tel: (505) 646-4929,

Alamo, TX, tel: (210) 787-4091,

El Paso, TX, tel: (915) 540-7723,

Houston, TX, tel: (713) 923-2557,

Western U.S.

Nogales, AZ, tel: (602) 281-0783,

Los Angeles, CA, tel: (213) 894-2489,

San Francisco, CA, tel: (415) 876-9313,

Honolulu, HI, tel: (808) 973-9566,

Salem, OR, tel: (503) 986-4620,

Seattle, WA, tel: (206) 859-9801.

(C) Questions regarding inspection services or requests for further

assistance may be obtained from: Fresh Products Branch, P.O. Box 96456,

room 2049-S, Fruit and Vegetable Division, AMS, USDA, Washington, D.C.

20090-6456, telephone (202) 690-0604, fax (202) 720-0393.

(ii) Sampling. Sampling of bulk farmers' stock lots shall be

performed at a facility that utilizes a pneumatic sampler or approved

automatic sampling device. The size of farmers' stock lots, shelled

lots, and cleaned-inshell lots, in bulk or bags, shall not exceed

200,000 pounds. For farmers' stock, shelled and cleaned-inshell lots

not completely accessible for sampling, the applicant shall be required

to have lots made accessible for sampling pursuant to inspection

service requirements. The importer shall cause appropriate samples of

each lot of edible quality shelled peanuts to be drawn by the

inspection service. The amount of such peanuts drawn shall be large

enough to provide for a grade and size analysis, for a grading check-

sample, and for three 48-pound samples for aflatoxin assay. Because

there is no acceptable method of drawing official samples from bulk

conveyances of shelled peanuts, the importer shall arrange to have bulk

conveyances of shelled peanuts sampled during the unloading process. A

bulk lot sampled in this manner must be positive lot identified by the

inspection service and held in a sealed bin until the associated

inspection and aflatoxin test results have been reported.

(4) Aflatoxin assay. (i) The importer shall cause appropriate

samples of each lot of shelled peanuts intended for edible consumption

to be drawn by the inspection service. The three 48-pound samples shall

be designated by the inspection service as ``Sample 1IMP,'' ``Sample

2IMP,'' and ``Sample 3IMP'' and each sample shall be placed in a

suitable container and lot identified by the inspection service. Sample

1IMP may be prepared for immediate testing or Samples 1IMP, 2IMP and

3IMP may be returned to the importer for testing at a later date, under

lot identification procedures.

(ii) The importer shall cause Sample 1IMP to be ground by the

inspection service or a USDA or PAC-approved laboratory in a

subsampling mill. The resultant ground subsample shall be of a size

specified by the inspection service and shall be designated as

``Subsample 1-ABIMP.'' At the importer's option, a second subsample may

also be extracted from Sample 1IMP and designated ``Subsample 1-CDIMP''

which may be sent for aflatoxin assay to a USDA or PAC-approved

laboratory. Both subsamples shall be accompanied by a notice of

sampling signed by the inspector containing identifying information as

to the importer, the lot identification of the shelled peanut lot, and

other information deemed necessary by the inspection service.

Subsamples 1-ABIMP and 1-CDIMP shall be analyzed only in a USDA or PAC-

approved laboratory. The methods prescribed by the Instruction Manual

for Aflatoxin Testing, SD Instruction-1, August 1994, shall be used to

assay the aflatoxin level. The cost of testing and notification of

Subsamples 1-ABIMP and 1-CDIMP shall be borne by the importer.

(iii) The samples designated as Sample 2IMP and Sample 3IMP shall

be held as aflatoxin check-samples by the inspection service or the

importer until the analyses results from Sample 1IMP are known. Upon

call from the USDA or PAC-approved laboratory, the importer shall cause

Sample 2IMP to be ground by the inspection service in a subsampling

mill. The resultant ground subsample from Sample 2IMP shall be

designated as ``Subsample 2-ABIMP.'' Upon further call from the

laboratory, the importer shall cause Sample 3IMP to be ground by the

inspection service in a subsampling mill.

The resultant ground subsample shall be designated as ``Subsample

3-ABIMP.'' The importer shall cause Subsamples 2-ABIMP and 3-ABIMP to

be sent to and analyzed only in a USDA or PAC-approved laboratory. Each

subsample shall be accompanied by a notice of sampling. The results of

each assay shall be reported by the laboratory to the importer. All

costs involved in the sampling, shipment and assay analysis of

subsamples required by this section shall be borne by the importer.

(iv)(A) Importers should contact one of the following USDA or PAC-

approved laboratories to arrange for chemical analysis.

Science and Technology Division, AMS/USDA, P.O. Box 279, 301 West

Pearl St., Aulander, NC 27805, Tel: (919) 345-1661 Ext. 156, Fax:

(919) 345-1991

Science and Technology Division, AMS/USDA, 1211 Schley Ave., Albany,

GA 31707, Tel: (912) 430-8490 / 8491, Fax: (912) 430-8534

Science and Technology Division, AMS/USDA, P.O. Box 488, Ashburn, GA

31714, Tel: (912) 567-3703

Science and Technology Division, AMS/USDA, 610 North Main St.,

Blakely, GA 31723, Tel: (912) 723-4570, Fax: (912) 723-3294

Science and Technology Division, AMS/USDA, P.O. Box 1368, Dothan, AL

36301, Tel: (205) 792-5185, Fax: (205) 671-7984

[[Page 31320]]

Science and Technology Division, AMS/USDA, 107 South Fourth St.,

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

Science and Technology Division, AMS/USDA, P.O. Box 272, 715 N. Main

Street, Dawson, GA 31742, Tel: (912) 995-7257, Fax: (912) 995-3268

Science and Technology Division, AMS/USDA, P.O. Box 1130, 308

Culloden St., Suffolk, VA 23434, Tel: (804) 925-2286, Fax: (804)

925-2285

ABC Research, 3437 SW 24th Avenue, Gainesville, FL 32607-4502, Tel:

(904) 372-0436, Fax: (904) 378-6483

J. Leek Associates, Inc., P.O. Box 50395, 1200 Wyandotte (31705),

Albany, GA 31703-0395, Tel: (912) 889-8293, Fax: (912) 888-1166

J. Leek Associates, Inc., P.O. Box 368, 675 East Pine, Colquitt, GA

31737, Tel: (912) 758-3722, Fax: (912) 758-2538

J. Leek Associates, Inc., P.O. Box 6, 502 West Navarro St., DeLeon,

TX 76444, Tel: (817) 893-3653, Fax: (817) 893-3640

J. Leek Associates, Inc., P.O. Box 548, 42 N. Ellis St., Camilla, GA

31730, Tel: (912) 336-8781, Fax: (912) 336-0146

Pert Laboratories, P.O. Box 267, Peanut Drive, Edenton, NC 27932,

Tel: (919) 482-4456, Fax: (919) 482-5370

Pert Laboratory South, P.O. Box 149, Hwy 82 East, Seabrook Drive,

Sylvester, GA 31791, Tel: (912) 776-7676, Fax: (912) 776-1137

Professional Service Industries, Inc., 3 Burwood Lane, San Antonio,

TX 78216, Tel: (210) 349-5242, Fax: (210) 342-9401

Southern Cotton Oil Company, 600 E. Nelson Street, P.O. Box 180,

Quanah, TX 79252, Tel: (817) 663-5323, Fax: (817) 663-5091

Quanta Lab, 9330 Corporate Drive, Suite 703, Selma, TX 78154-1257,

Tel: (210) 651-5799, Fax: (210) 651-9271.

(B) Further information concerning the chemical analyses required

pursuant to this section may be obtained from: Science and Technology

Division, USDA/AMS, P.O. Box 96456, room 3507-S, Washington, DC 20090-

6456, telephone (202) 720-5231, or facsimile (202) 720-6496.

(v) Reporting aflatoxin assays. A separate aflatoxin assay

certificate, Form CSSD-3 ``Certificate of Analysis for Official

Samples'' or equivalent PAC approved laboratory form, shall be issued

by the laboratory performing the analysis for each lot. The assay

certificate shall identify the importer, the volume of the peanut lot

assayed, date of the assay, and numerical test result of the assay. The

results of the assay shall be reported as follows.

(A) Lots containing 15 ppb or less aflatoxin content shall be

certified as ``Meets U.S. import requirements for edible peanuts under

Sec. 999.600 with regard to aflatoxin.''

(B) Lots containing more than 15 ppb aflatoxin content shall be

certified as ``Fails to meet U.S. import requirements for edible

peanuts under Sec. 999.600 with regard to aflatoxin.'' The importer

shall file USDA Form CSSD-3, or equivalent form, with the Secretary,

regardless of result.

(5) Appeal inspection. In the event an importer questions the

results of a quality and size inspection, an appeal inspection may be

requested by the importer and performed by the inspection service. A

second sample will be drawn from each container and shall be double the

size of the original sample. The results of the appeal sample shall be

final and the fee for sampling, grading and aflatoxin analysis shall be

charged to the importer.

(e) Disposition of peanuts failing edible quality requirements. (1)

Peanuts failing grade and/or aflatoxin requirements shall be designated

as non-edible quality ``unrestricted'' peanuts or ``restricted''

peanuts and shall be crushed for oil, exported, or disposed to other

non-edible outlets as specified in this section. For the purposes of

this regulation, the term ``non-edible quality unrestricted peanuts''

means loose shelled kernels, fall through, and pickouts from--and the

entire milled production of--Segregation 1, Segregation 2, and

commingled Segregation 1 and 2 farmers stock peanuts which contain more

than 15 ppb and 25 ppb or less aflatoxin. The term ``non-edible quality

restricted peanuts'' means loose shelled kernels, fall through, and

pickouts from--and the entire milled production of--Segregation 1,

Segregation 2, and commingled Segregation 1 and 2 farmers stock peanuts

which contain in excess of 25 ppb aflatoxin. The term loose shelled

kernels means peanut kernels or portions of kernels completely free of

their hulls, as found in deliveries of farmers stock peanuts or those

which fail to ride the screens prescribed in paragraph (b)(1)(iv) of

this section; the term fall through means sound split and broken

kernels and whole kernels which pass through specified screens; and the

term pickouts means those peanuts removed during the final milling

process at the picking table, by electronic equipment, or otherwise

during the milling process.

(2) Non-edible quality unrestricted peanuts may be disposed to

animal feed: Provided, That such peanuts are certified by the

inspection service as to moisture, foreign material content and treated

with a coloring agent or dyeing solution covering at least 80 percent

of the peanuts, handled and shipped under lot identification

procedures. Except for bulk loads, red tags shall be used and marked

``Animal Feed, Not For Human Consumption.''

(3) Lots of non-edible quality unrestricted peanuts may be

commingled during or after fragmentation and, if certified as meeting

fragmentation requirements by the inspection service, such fragmented

peanuts may be exported. For the purposes of this section, the term

fragmented means that not more than 30 percent of the peanuts shall be

whole kernels that ride the following screens, by type: Spanish--\15/

64\ x \3/4\ inch slot; Runner--\16/64\ x \3/4\ inch slot; and

Virginia--\15/64\ x 1 inch slot. All peanut lots exported must be lot

identified by the inspection service, certified as exported by the

Customs Service, and reported to AMS pursuant to paragraphs (g)(2) and

(g)(3) of this section. Applicable Customs Service procedures for the

export of merchandise must be followed.

(4) Unrestricted fall through may be disposed for use as wild-life

feed and rodent bait, if in labeled containers.

(5) Seed peanuts which are chemically treated causing them to be

unfit for edible or animal feed use shall be exempt from the

requirements of paragraph (c) of this section.

(6) Meal produced from the crushing of unrestricted peanuts shall

be exempt from further aflatoxin testing. Meal produced from the

crushing of restricted peanuts shall be tested and the numerical test

result of the chemical assay shall be shown on a certificate covering

each lot and the certification shall accompany each shipment or

disposition.

(7) Non-edible quality restricted peanuts may be crushed for oil or

exported: Provided, That such peanuts are positive lot identified,

bagged, red tagged, and so certified by the inspection service.

(8) All certifications and proof of non-edible dispositions

sufficient to account for all peanuts in each consumption entry filed

by the importer must be reported to the Secretary by the importer

pursuant to paragraphs (g)(2) and (g)(3) of this section.

(f) Reconditioning of failing peanuts: (1) Importers may remill

and/or blanch shelled peanuts which originated from Segregation 1

peanuts that fail quality requirements of Table 1 or are positive to

aflatoxin. After such reconditioning, peanuts meeting the quality

requirements of Table 1 and which are certified negative to aflatoxin

(15 ppb or less) may be disposed for edible use.

(2) Whole lots of remilled and/or blanched peanuts, and residuals

of such peanuts, which continue to fail quality requirements of Table 1

and contain 25 ppb or less aflatoxin content shall be considered ``non-

edible quality unrestricted'' peanuts and shall be disposed as

``unrestricted'' peanuts

[[Page 31321]]

crushed for oil, exported, or animal feed, pursuant to provisions of

paragraph (e) of the section. Meal produced from unrestricted peanuts

shall be disposed pursuant to paragraph (e)(6) of this section.

(3) Whole lots of remilled and/or blanched peanuts, and residuals

of such peanuts, which continue to fail quality requirements of Table 1

and contain more than 25 ppb aflatoxin content, shall be considered

``non-edible quality restricted'' peanuts and shall be disposed as

``restricted'' peanuts pursuant to paragraph (e)(6) of this section.

Meal produced from restricted peanuts shall be disposed pursuant to

paragraph (e)(6).

(4) All certifications and proof of non-edible dispositions

sufficient to account for all peanuts in each consumption entry filed

by the importer must be reported to the Secretary by the importer

pursuant to paragraphs (g)(2) and (g)(3) of this section.

(g) Safeguard procedures. (1) Prior to arrival of a foreign

produced peanut lot at a port-of-entry, the importer, or customs broker

acting on behalf of the importer, shall mail or send by facsimile

transmission (fax) a copy of the Customs Service entry documentation

for the peanut lot or lots to the inspection service office that will

perform sampling of the peanut shipment. More than one lot may be

entered on one entry document. The documentation shall include

identifying lot(s) or container number(s) and volume of the peanuts in

each lot being entered, and the location (including city and street

address), date and time for inspection sampling. The inspection office

shall sign, stamp, and return the entry document to the importer. The

importer shall present the stamped document to the Customs Service at

the port-of-entry and send a copy of the document to the Secretary. The

importer also shall cause a copy of the entry document to accompany the

peanut lot and be presented to the inspection service at the inland

destination of the lot.

(2) The importer shall file with the Secretary copies of the entry

document and grade, aflatoxin, and lot identification certifications

sufficient to account for all peanuts in each lot listed on the entry

document filed by the importer. Positive lot identification of residual

lots, transfer certificates, and other documentation providing proof of

non-edible disposition, such as bills of lading, certificates of

burying, export declarations, and sales receipts which report the

weight of peanuts being disposed and the name, address and telephone

number of the non-edible peanut receiver, must be sent to the Marketing

Order Administration Branch, Attn: Report of Imported Peanuts.

Facsimile transmissions and overnight mail may be used to ensure timely

receipt of inspection certificates and other documentation. Fax reports

should be sent to (202) 720-5698. Overnight and express mail deliveries

should be addressed to USDA, AMS, Marketing Order Administration

Branch, 14th and Independence Avenue, SW, Room: 2525-S, Washington, DC,

20250, Attn: Report of Imported Peanuts. Regular mail should be sent to

AMS, USDA, P.O. Box 96456, room 2526-S, Washington, DC 20090-6456,

Attn: Report of Imported Peanuts. Telephone inquiries should be made to

(202) 720-6862.

(3) Certificates and other documentation for each peanut lot must

be filed within 23 days of the date of filing for consumption entry,

or, if a redelivery notice is issued on the peanut lot, subsequently

filed prior to conclusion of the redelivery period which will be 60

days, unless otherwise specified by the Customs Service.

(4) The Secretary shall ask the Customs Service to issue a

redelivery demand for foreign produced peanut lots failing to meet

requirements of this section. Extensions in a redelivery period granted

by the Customs Service will be correspondingly extended by the

Secretary, upon request of the importer. Importers unable to account

for the disposition of all peanuts covered in a redelivery order, or

redeliver such peanuts, shall be liable for liquidated damages. Failure

to fully comply with quality and handling requirements or failure to

notify the Secretary of disposition of all foreign produced peanuts, as

required under this section, may result in a compliance investigation

by the Secretary. Falsification of reports submitted to the Secretary

is a violation of Federal law punishable by fine or imprisonment, or

both.

(h) Additional requirements: (1) Nothing contained in this section

shall preclude any importer from milling or reconditioning, prior to

importation, any shipment of peanuts for the purpose of making such lot

eligible for importation into the United States. However, all peanuts

presented for entry for human consumption use must be certified as

meeting the quality requirements specified in paragraph (c) of this

section.

(2) Conditionally released peanut lots of like quality and

belonging to the same importer may be commingled. Defects in an

inspected lot may not be blended out by commingling with other lots of

higher quality. Commingling also must be consistent with applicable

Customs Service regulations. Commingled lots must be reported and

disposed of pursuant to paragraphs (e)(2) and (e)(3) respectively of

this section.

(3) Inspection by the Federal or Federal-State Inspection Service

shall be available and performed in accordance with the rules and

regulations governing certification of fresh fruits, vegetables and

other products (7 CFR part 51). The importer shall make each

conditionally released lot available and accessible for inspection as

provided herein. Because inspectors may not be stationed in the

immediate vicinity of some ports-of-entry, importers must make

arrangements for sampling, inspection, and certification through one of

the offices and laboratories listed in paragraphs (d)(3) and (d)(4),

respectively, of this section.

(4) Imported peanut lots sampled and inspected at the port-of-

entry, or at other locations, shall meet the quality requirements of

this section in effect on the date of inspection.

(5) A foreign-produced peanut lot entered for consumption or for

warehouse may be transferred or sold to another person: Provided, That

the original importer shall be the importer of record unless the new

owner applies for bond and files Customs Service documents pursuant to

19 CFR Secs. 141.113 and 141.20: and Provided further, That such

peanuts must be certified and reported to the Secretary pursuant to

paragraphs (g)(2) and (g)(3) of this section.

(6) The cost of transportation, sampling, inspection,

certification, chemical analysis, and identification, as well as

remilling and blanching, and further inspection of remilled and

blanched lots, and disposition of failing peanuts, shall be borne by

the importer. Whenever peanuts are presented for inspection, the

importer shall furnish any labor and pay any costs incurred in moving,

opening containers, and shipment of samples as may be necessary for

proper sampling and inspection. The inspection service shall bill the

importer for fees covering quality and size inspections; time for

sampling; packaging and delivering aflatoxin samples to laboratories;

certifications of lot identification and lot transfer to other

locations, and other inspection certifications as may be necessary to

verify edible quality or non-edible disposition, as specified herein.

The USDA and PAC-approved laboratories shall bill the importer

separately for fees for aflatoxin assay. The importer also shall pay

all required Customs Service costs as required by that agency.

[[Page 31322]]

(7) Each person subject to this section shall maintain true and

complete records of activities and transactions specified in this part.

Such records and documentation accumulated during entry shall be

retained for not less than two years after the calendar year of

acquisition, except that Customs Service documents shall be retained as

required by that agency. The Secretary, through duly authorized

representatives, shall have access to any such person's premises during

regular business hours and shall be permitted, at any such time, to

inspect such records and any peanuts held by such person.

(8) The provisions of this section do not supersede any

restrictions or prohibitions on peanuts under the Federal Plant

Quarantine Act of 1912, the Federal Food, Drug and Cosmetic Act, any

other applicable laws, or regulations of other Federal agencies,

including import regulations and procedures of the Customs Service.

Dated: June 11, 1996.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 96-15361 Filed 6-18-96; 8:45 am]

BILLING CODE 3410-02-P