Revised Quality and Handling Requirements and Entry Procedures for Imported Peanuts for 1999 and Subsequent Import Periods

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 999

[Docket No. FV98-999-1 PR]

Revised Quality and Handling Requirements and Entry Procedures

for Imported Peanuts for 1999 and Subsequent Import Periods

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on several revisions to

the peanut import regulation effective with the 1999 and subsequent

peanut import quota periods. The proposed changes would: Relax certain

quality requirements; modify entry procedures; revise handling

requirements; reduce the reporting burden; and establish a new

reporting period for peanuts imported into the United States. Changes

to the quality and handling requirements are proposed to make the

import requirements consistent, as required by law, with regulations

covering domestically-produced peanuts under Marketing Agreement No.

146 (Agreement). Changes to import procedures and reporting

requirements are proposed by the Agricultural Marketing Service (AMS)

to improve efficiency of the importation process, ease the reporting

burden, and provide importers with more time to meet peanut import

regulation requirements. This proposal continues safeguard measures

which prevent non-edible imported peanuts from being used in human

consumption outlets in the United States. This action would benefit

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

peanuts in the domestic marketplace comply with the same quality

standards.

DATES: Comments received by September 30, 1998 will be considered prior

to issuance of a final rule. The comment period for information

collections under the Paperwork Reduction Act of 1995 continues through

October 30, 1998.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule. Comments must be sent to the Docket

Clerk, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room

2525-S, Washington, D.C. 20090-6456; fax: (202) 720-5698, or E-mail:

[email protected]. All comments should reference the docket

number and the date and page number of this issue of the Federal

Register. Comments received will be made available for public

inspection in the Office of the Docket Clerk during regular business

hours. Comments concerning the amended information collection under the

Paperwork Reduction Act of 1995 should also be sent to the Desk Officer

for Agriculture, Office of Information and Regulatory Affairs, Office

of Management and Budget, Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor, Marketing Specialist,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room 2525-S, Washington, D.C. 20090-6456;

telephone: (202) 720-6862, or fax: (202) 720-5698. Small businesses may

request information on compliance with this regulation by contacting:

Jay Guerber at the same address and fax number, telephone: (202) 720-

2491.

SUPPLEMENTARY INFORMATION: This proposed rule would amend the peanut

import regulation (7 CFR Part 999.600) issued June 11, 1996, and

published in the Federal Register (61 FR 31306, June 19, 1996), which

regulates the quality of peanuts imported into the United States.

Amendments to the regulation were issued December 31, 1996 (62 FR 1269,

January 9, 1997) and September 19, 1997 (62 FR 50243, September 25,

1997).

The import regulation is effective under subparagraph (f)(2) of

section

[[Page 46182]]

108B of the Agricultural Act of 1949 (7 U.S.C. 1445c3) (Act), as

amended November 28, 1990, and August 10, 1993, and section 155 of the

Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7271).

These statutes provide that the Secretary of Agriculture (Secretary)

shall require that all peanuts in the domestic and export markets fully

comply with all quality standards under Marketing Agreement No. 146 (7

CFR Part 998) (Agreement), issued pursuant to the Agricultural

Marketing Agreement Act of 1937 (AMAA), as amended (7 U.S.C. 601-674).

The handling requirements proposed in this rule are the same as, or

similar to, those recommended by the Peanut Administrative Committee

(Committee or PAC), the administrative agency that oversees the

Agreement's quality assurance program.

This rule has been determined to be not significant for the

purposes of Executive Order 12866 and therefore has not been reviewed

by the Office of Management and Budget.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Under the regulations, importers of foreign-produced

peanuts must: Follow certain entry procedures with the U.S. Customs

Service (Customs Service); obtain certification that such peanuts meet

edible quality requirements or are disposed to non-edible peanut

outlets; and report disposition of peanuts to AMS within an established

time period. This rule proposes several changes to the current

regulation to relax quality requirements, modify entry procedures, and

relax reporting requirements. The rule 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.

Discussion

The peanut import regulation was issued June 11, 1996. At that

time, three duty free peanut quotas for 1996 had been filled and no

peanuts were entered under duty for the remainder of 1996. Therefore,

the peanut import regulation had its first practical application on

January 1, 1997, when the Mexican peanut quota opened, and again on

April 1, 1997, when Argentine and ``other country'' quotas opened. By

international agreements, these three duty free peanut quotas increase

each year, allowing more foreign-produced peanuts duty free access to

U.S. markets. For the 1999 peanut quota year, the Mexican quota will

total approximately 8.7 million pounds (3.95 million kilograms).

Argentina's 1999 peanut quota will total approximately 89 million

pounds (40.4 million kg.) and the quota for all other countries will be

approximately 17.7 million pounds (8 million kg.). The total volume

will be about a 10 percent increase over the combined 1998 peanut

quotas.

The Committee met April 29 and 30, 1997, and recommended

relaxations to the quality and handling requirements of the domestic

peanut program. Those relaxations have been finalized by the Department

of Agriculture (USDA) and made effective for domestically-produced

peanuts. Where applicable, those changes are proposed for imported

peanuts in this rulemaking. The Committee met a second time on May 27,

1998, and unanimously recommended no further changes in the domestic

program's quality requirements or handling procedures. In addition,

after review of the entry and certification process, AMS proposes

additional modifications to the import regulation to increase the

efficiency of the importation procedure and relax reporting

requirements.

Therefore, this rulemaking action proposes the following

modifications to Section 999.600.

(1) AMS proposes removal of a phrase in the definition of Negative

aflatoxin content, in Section 999.600, paragraph (a)(10). The phrase,

``and 25 parts-per-billion (ppb) or less for non-edible quality

peanuts,'' is proposed to be removed because that action level is no

longer used for non-edible peanuts. This proposed revision would make

the requirements under these regulations consistent with those under

the Agreement. Molds such as Aspergillus flavus (A.flavus) are present

naturally in soil. Aflatoxin is a carcinogen which may develop from

A.flavus which is more likely to be found on stressed peanut plants and

damaged or defective kernels than on sound, whole kernels.

Also, in paragraph (a)(15), Marketing Agreement No. 146 is referred

to as the Peanut Marketing Agreement No. 146. The word ``peanut'' is

not a part of the title of the Agreement and would be removed from the

definition to make it technically correct.

(2) AMS proposes to change the definition of Conditionally released

in Section 999.600, paragraph (a)(16), to conform with Customs Service

terminology. The current definition states that peanuts are

conditionally released for further handling ``before final release.''

The phrase ``final release'' is not consistent with Customs Service

terminology and would be removed to avoid confusion. This proposal

would define conditionally released as ``released from U.S. Customs

Service custody for further handling, sampling, inspection, chemical

analysis, storage, and, if necessary, reconditioning.'' These

activities are conducted to meet the requirements of the import

regulation. If inspection and certification are not obtained prior to

application for entry, or if peanuts are not held in Customs Service

bonded storage facilities when inspected, the peanuts would be

conditionally released for such inspection and needed reconditioning.

Conditional release would provide more time for importers to obtain

inspection certifications and to report compliance with the import

regulation.

(3) AMS proposes to remove a redundant sentence in paragraph (b)(1)

of Section 999.600. The second sentence states that ``only Segregation

1 peanuts may be used for human consumption.'' This sentence is re-

stated at the end of the paragraph and is more appropriately placed at

the end of the paragraph.

(4) Paragraph (c)(1)(i) of the Outgoing regulation in Section

999.600, currently states that ``no importer shall ship or otherwise

dispose'' of imported peanuts unless the peanuts meet certain import

requirements. The introductory sentence would be amended by removing

the words ``ship or otherwise.'' This change would make the text

consistent with the revised text of corresponding paragraph (a) of

Section 998.200 of the Agreement regulations.

This modification has the effect of removing text which allows

forwarding of very high quality imported peanuts to buyers before

receipt of quality certifications. However, the impact of this

modification is not expected to be significant. Given the quality of

imported peanuts, importers have been reluctant to forward lots to

buyers prior to receipt of both grade and aflatoxin certifications. The

risk of having to have the lot returned for reconditioning is greater

than the benefit of shipping a few days early. The delays are not

excessive as aflatoxin analyses are usually completed within two or

three days, and the results faxed back to importers. Finally, grade and

aflatoxin certifications often are completed before other Federal

agency clearances are received. Therefore, this modification would not

be expected to have an impact on the importation process or on peanut

importers. This modification is made in conjunction with Recommendation

6.

(5) To be consistent with a recent change in the Agreement

regulation's

[[Page 46183]]

``Other Edible Quality'' table, this rule proposes to relax the

tolerance for ``Unshelled and damaged kernels'' (from 1.50 to 2.00

percent) in the ``lots of splits'' categories specified in Table 1,

``Minimum Grade Requirements'' of paragraph (c)(1)(i). The new

requirement now matches the tolerance for ``Unshelled and damaged

kernels'' as specified in the U.S. Grade Standards for Peanuts. Table 1

shows the current tolerance for unshelled and damaged kernels as 1.50

percent (the second column under ``Lots of splits''). The tolerance

would be relaxed to allow for 2.00 percent unshelled and damaged

kernels in split lots. The relaxation in tolerance of one half of one

percent could reduce the number of imported peanut lots that need to be

reconditioned to meet outgoing quality requirements. This could save

importers reconditioning costs and storage costs. This relaxation

already has been made effective for domestically-produced peanuts.

(6) This modification would remove the text of paragraph (c)(1)(ii)

and the first six grade categories in Table 2--Superior Quality

Requirements. The Committee established Table 2 in the Agreement

regulations several years ago to qualify higher grade peanut lots for

its indemnification program. However, the indemnification coverage has

been greatly reduced by recent Committee actions and the first six

grade categories are no longer certified under the Agreement. Thus,

those grade categories would be removed from the import regulation in

this rulemaking action.

The final three grade categories in Table 2 covering domestically-

produced peanuts with not more than 15 percent sound split kernels

still have a small domestic marketing niche and have been moved to

Table 1 under the Maximum Limitations category in the Agreement

regulations. To be consistent with that modification, the last three

imported ``with splits'' categories covering Runners, Virginias, and

Spanish and Valencia with ``not more than 15 percent sound splits''

would be moved to the Minimum Grade Requirements table in paragraph

(c)(1)(i) of the import regulation. Also, to be consistent with the

other maximum tolerances in the ``Unshelled peanuts and damaged

kernels'' column, and in the ``Minor defects'' column, the percentage

tolerances for the three transferred categories would be increased

(relaxed) from 1.25 to 1.50 percent and from 2.00 to 2.50 percent,

respectively.

Recommendations 5 and 6 have the effect of relaxing the minimum

quality requirements of the import regulation, and, together, simplify

grade requirements by providing only one set of peanut quality

requirements for human consumption use. While these proposed changes

remove a provision that allows shipment of high quality lots to buyers

immediately after grading, given the nature of peanut quality and

importation processes, the proposed changes would not be expected to

delay shipments or negatively affect the handling of imported peanuts.

To effectuate the above three changes, paragraph (c)(1)(i) would be

modified by removing the words ``ship or otherwise.'' The text and the

first six grade categories of Table 2 in paragraph (c)(1)(ii) also

would be deleted from the regulation and the last three grade

categories would be moved to the table in paragraph (c)(1)(i).

Paragraph (c)(1)(iii) would be redesignated as paragraph (c)(1)(ii) and

a conforming change would be made to that paragraph by deleting the

second sentence which specifies that samples must be taken from

Superior Quality peanut lots prior to shipment. Finally, because Table

2 would be deleted, it would not be necessary to refer to the ``Minimum

Grade Requirements'' table as Table 1, and conforming changes would be

made in paragraph (c)(1)(i), introductory paragraph (e), and in

paragraph (e)(3).

(7) Paragraph (d)(3)(ii) would be changed to specify a maximum lot

size for farmers stock peanuts. The import regulation currently

specifies the maximum lot size for farmers stock, cleaned-inshell and

shelled peanuts as 200,000 pounds (90,720 kilograms). However, the

200,000 pound size limit is applied only to shelled peanuts under the

Agreement, and is based on an understanding between the Committee and

the inspection service, reached some years ago. The maximum lot size

for domestically-produced, farmers stock peanuts is limited to one

conveyance, or two or more conveyances with a combined weight not

exceeding 24,000 pounds (10,886 kilograms). The smaller lot size is

established for farmers stock peanuts because farmers stock peanuts

have not undergone extensive cleaning and sorting processes and,

generally, contain more foreign material and A.flavus mold than lots of

milled peanuts. Smaller lot sizes help increase the effectiveness of

sampling variability and assure that the collected sample is

representative of the entire lot. The 200,000 pound limit for shelled

peanuts is the maximum volume on which random sampling procedures can

be systematically and accurately implemented.

Therefore, under this proposal, foreign-produced peanuts imported

in farmers stock form would be inspected in single conveyances or

combined conveyances not exceeding a total of 24,000 pounds. Only a

small percentage of the peanuts imported during 1997 and 1998 were

imported in farmers stock form, and all complied with this maximum lot

size. This inspection practice would help exporters plan their

shipments and should not have a negative impact on future imports of

farmers stock peanuts. For these reasons, the second sentence of

paragraph (d)(3)(ii) would be modified to provide maximum lot size for

farmers stock peanuts.

Paragraph (d)(3)(i)(A) would be changed to reflect closing of the

inspection office in Yuma, Arizona. The introductory sentence in

paragraph (d)(3)(i)(B) would be changed to more accurately reflect the

sampling service provided by some inspection service offices.

(8) AMS proposes strengthening the lot identification requirements

for shelled peanuts by adding new paragraph (d)(4) of the import

regulation. The Agreement regulation requires Positive Lot

Identification (PLI) generally using tags which are sewn on each bag or

super sack of domestically-produced shelled peanuts. The PLI tag is

applied after shelling, at the time of packaging and inspection. The

current import regulation does not require PLI tags sewn at the time of

first inspection when several hundred thousand pounds of peanuts arrive

at a port-of-entry at one time. Such a requirement would be a burden on

importers because of the large volume and lack of equipment, space, and

time needed to sew tags on individual bags. However, better lot

identification for imported peanuts is needed to insure integrity of

the peanut import program.

Lot identification practices currently applied to imported peanuts

by the Federal-State Inspection Service (inspection service) provide

that lots, or pallets within a lot, be identified by a tag which is

affixed to the lot or pallet. Such identification does not prevent the

individual bags, sacks, or cartons in the lot from being tampered with

or exchanged with other bags, sacks, or cartons. The inspection service

cannot insure integrity of a lot that is only ``lot identified.''

Simple lot identity does not guarantee that peanuts drawn in a second

sample under an appeal process come from the same peanut lot or

containers from which the first sample was drawn.

Therefore, AMS proposes a more reliable PLI to be applied to

shelled peanuts by the inspector at the time of first inspection. This

may include: (1)

[[Page 46184]]

Wrapping PLI tape around the top layer of bags or boxes in such a way

that no peanuts could be removed or added; (2) shrink wrapping pallets

or multiple bags with a PLI sticker applied to the wrapped pallets or

bags; (3) stamping or stenciling and numbering individual bags or

boxes; (4) affixing a PLI seal to the door of a shipping container so

that it could not be opened without breaking the seal; or (5) other

methods acceptable to the inspection service that clearly identifies

the lot, is securely affixed to the lot, and prevents peanuts from

being removed or added to the lot.

These PLI methods represent substantially less burdensome and less-

costly procedures than PLI tags sewn on individual bags. For instance,

stenciling bags with a spray paint is a faster and much less expensive

method of lot identity that represents an acceptable alternative to

sewing tags on individual bags. The inspection service office in

Suffolk, Virginia, used stenciling of imported peanuts in bags during

the 1997 and 1998 quota years. These methods also do not require

special training or equipment and can be carried out by inspection

service personnel throughout the U.S. These methods should not require

substantial extra time or material at the time of first inspection.

Increased costs to the importer should be in the form of a few extra

minutes to wrap pallets or stencil bags, and would vary with the size

and containerization of each lot. These PLI methods could increase

average storage costs when warehouse space for inspection is very

limited or when an unusual amount of movement of lots is required

during lengthy warehouse storage. However, increased costs should not

be significant in comparison to overall costs of importation. Also,

importers should benefit from improved lot identity if a lot needs to

have an appeal inspection or if the Customs Service were to demand

redelivery.

The inspection service currently works with domestic peanut

handlers and storage warehouses to determine the most appropriate PLI

or lot identity method to be used. The same cooperative relationship

should apply to importers. Several factors will dictate which PLI

method should be used: (1) Size of the lot; (2) storage space on the

wharf or in the warehouse; (3) required, further movement of the lot

prior to receipt of certification; and (4) other needs of the importer,

wharf or warehouse operators, or the Customs Service. Any request for

extension of the reporting period, or appeal inspection, would include

the PLI number or designation of the lot needing additional reporting

time.

AMS believes that these increased lot identity practices outweigh

the possible minimal increases in handling or inspection costs

associated with better lot identification. Tighter lot-identity

requirements would be consistent with practices currently used by the

inspection service to PLI domestically-produced peanuts. PLI also would

help importers maintain the integrity of lots, should questions arise

from the Customs Service after conditional release.

AMS believes that positive lot identification of inspected lots is

essential in maintaining the integrity of imported shelled lots after

first inspection. Lots failing grade and aflatoxin certifications can

be appealed pursuant to current paragraph (d)(5). In the appeal

process, the lot is sampled a second time. Without PLI, there is no

guarantee that peanuts sampled under an appeal inspection are the same

peanuts as those which failed initial inspection. Therefore, a sentence

would be added to current paragraph (d)(5) to provide that peanut lots

which show evidence of tampering or PLI violation, would not be

eligible for an appeal inspection.

These PLI methods would be applied to peanut lots at the first

inspection. If a lot subsequently fails either grade or aflatoxin

analysis, the lot may be sent to a remilling or blanching operation for

reconditioning. In such cases, PLI of the lot from the warehouse to the

reconditioning site and during reconditioning does not have to be

maintained. However, the importer must maintain information which ties

the reconditioned lot to the original lot. This information must be

provided to the inspection service upon inspection after

reconditioning. Thus, inspection surveillance of the lot does not have

to be maintained during reconditioning. This lot identity procedure is

consistent with the handling requirements for domestically produced

peanuts under the Agreement.

PLI requirements after reconditioning also would be updated in this

proposal to make the treatment of reconditioned imported peanuts

consistent with current industry practice for domestically-produced

peanuts. Under Agreement requirements, failing lots that are

reconditioned by remilling or blanching are positive lot identified by

sewing tags on bags and by taping and tagging bulk bins. For shelled

peanuts, the tag is sewn into the closure of the bag. In plastic bags,

the tag is inserted prior to sealing so that the official stamp is

visible. This is the most efficient PLI procedure and is currently

carried out by the remiller or blancher at the end of the remilling and

blanching process. The inspection service certifies the reconditioned

lot based on the PLI tags applied to bags and bins. Bulk shipments and

bulk bins would be positive lot identified by sealing the conveyance

and, if in other containers, sealed by means acceptable to the

inspection service. This proposal would ensure that the same PLI

procedures are applied to imported peanuts which are reconditioned by

remilling or blanching. Costs for these PLI measures are covered in the

remilling and blanching charges, and, thus, would not be expected to

increase costs for importers. Indeed, some blanching operations used

this PLI method on imported peanuts during 1997 and 1998.

These PLI requirements and procedures would be established in the

import regulation by adding a new paragraph (d)(4) and redesignating

current paragraphs (d)(4) and (5) as (d)(5) and (6), respectively.

Also, references to lot identity in paragraphs (c), (d), (d)(1) and

(g)(6) would be amended to read ``Positive Lot Identification.''

It shall be noted that under the Agreement and import programs, a

failing lot that is reconditioned must be re-certified for both grade

and aflatoxin content after reconditioning. It does not matter whether

the original lot fails for grade or aflatoxin analysis; both analyses

must be conducted a second time. The reconditioned lot is considered to

be a new lot because the size and quality is different from the

original lot, and the previous lot identity has been lost. This

procedure was in effect and properly carried out for reconditioned

imported peanuts in 1997 and 1998.

A minor clarification would be added to redesignated paragraphs

(d)(5)(ii) and (iii). These paragraphs refer to a ``notice of

sampling'' as the inspection service's grade certification of shelled

peanuts. The inspection service now commonly uses the ``Milled Peanut

Inspection Certificate,'' AMS form FV-184-9A, to certify the grade

quality of shelled peanuts. That form's title would be added to

paragraphs (d)(5)(ii) and (iii).

AMS would advise importers that containers of imported lots of

shelled peanuts may be subdivided prior to inspection. During the 1997

and 1998 quota years, some containers of shelled peanuts, when off-

loaded and made available for inspection, revealed wet or moldy bags.

The importers, suspecting such bags would fail quality requirements,

isolated the wet and moldy bags apart from other bags in the container

to reduce possible contamination of good peanuts. This practice is

acceptable and can be done

[[Page 46185]]

at a Customs Service bonded warehouse without inspection service

oversight. If the moldy bags are held separately in a Customs Services

bonded warehouse and then re-exported without leaving Customs Service

custody, those moldy bags do not have to be reported to AMS--except

that the difference in the volume reported on the stamp-and-fax form

and the volume inspected must be reported to the inspection service.

However, if the moldy bags are combined into a separate lot and

identified on an inspection certificate, or moved out of Customs

custody, the bags are subject to import requirements and must be

reported as separate peanut lots. If such a lot fails quality

requirements, it may be reconditioned, disposed to an non-edible peanut

outlet pursuant to import requirements, or re-exported pursuant to

Customs Service procedures. These dispositions must be reported to AMS.

(9) The second to the last sentence in current paragraph

(d)(4)(iii) provides that laboratories shall provide aflatoxin assay

results to the importer. Upon review, USDA determines that this

sentence is redundant with provisions in current paragraph (d)(4)(v).

Thus, this proposal would remove the second to last sentence of current

paragraph (d)(4)(iii).

(10) Several changes in the regulatory text would be made regarding

reporting of aflatoxin certifications to AMS. Current paragraph

(d)(4)(iv)(A) provides that importers ``should'' contact one of the

laboratories to arrange for chemical analyses of imported peanut lots.

However, because chemical analysis is required under the regulation,

the word ``should'' does not convey the mandatory nature of the

requirement that aflatoxin analysis must be conducted on all imported

peanut lots intended for human consumption. Thus, the first sentence of

redesignated paragraph (d)(5)(iv)(A) would be revised to state that

importers ``shall'' contact one of the laboratories to arrange for

chemical analyses.

Current paragraph (d)(4)(v) would be revised to include the

requirement that importers ``shall cause'' aflatoxin certifications to

be reported to AMS. The last sentence in current paragraph (d)(4)(v)(B)

would be revised and moved to redesignated paragraph (d)(5)(v) for more

appropriate placement of the instructions.

(11) The list of aflatoxin testing laboratories shown in current

paragraph (d)(4)(iv)(A) would be updated in this rulemaking action. The

laboratory in Ashburn, Georgia formerly operated by AMS is now operated

privately as a PAC-approved laboratory. The USDA laboratory in Dothan,

Alabama is now operated by the Alabama-Federal State Inspection

Service. In addition, three new laboratories in Headland, Goshen, and

Enterprise, Alabama have been certified by AMS and approved by the PAC

as Alabama-Federal State laboratories. The PAC-approved laboratory in

San Antonio, Texas should be dropped from the list as that laboratory

no longer certifies the aflatoxin content of peanut lots. Finally, the

name of the AMS office that operates USDA laboratories and certifies

the private laboratories has been changed from Science and Technology

Division to Science and Technology Programs.

The import regulation refers to private aflatoxin testing

laboratories as ``PAC-approved'' because those laboratories are

approved by the Committee to perform chemical analyses on domestically-

produced peanuts. These PAC-approved laboratories also may be referred

to as ``designated'' laboratories. Whether a laboratory is referred to

as ``PAC-approved'' or ``designated,'' only those laboratories listed

in redesignated paragraph (d)(5)(iv)(A) may conduct aflatoxin content

analysis on imported peanuts.

(12) Another Committee recommendation to modify the Agreement

regulations would provide that shelled peanut lots failing quality

requirements because of excessive ``fall through'' may be blanched.

Paragraph (e) of the import regulation prescribes the corresponding

requirement that imported shelled peanuts failing quality requirements

because of excessive damage, minor defects, moisture, or foreign

material may be reconditioned by remilling and/or blanching. This

proposed change would add peanut lots failing ``fall through''

requirements to those lots that can be reconditioned by blanching.

After blanching, all such lots would have to be sampled and certified

as meeting minimum ``fall through'' requirements prior to disposition

to edible peanut outlets.

This change would be made in paragraph (e) of Section 999.600 by

adding a new second sentence to the introductory paragraph providing

that peanuts which fail minimum grade requirements because of excessive

``fall through'' may be blanched. For consistency, the second to last

sentence in introductory paragraph (e) also would be revised to include

minimum ``fall through'' requirements as a condition for human

consumption.

(13) A final change to be consistent with Agreement regulations

would prescribe that shelled peanut lots meeting the minimum grade

requirements specified in the Minimum Grade Requirements table, but

which fail aflatoxin requirements, may be roasted during the blanching

process. After roasting, the peanuts would be sampled and assayed for

aflatoxin content, and, if meeting aflatoxin requirements (15 ppb or

less), may be disposed of to human consumption outlets. The lot would

not have to be re-inspected for grade quality because the lot would

have already met grade requirements. This modification is a relaxation

of requirements and would be an optional process for importers who

intend to roast imported peanuts. It could save time, reduce costs, and

reduce possibilities for damage or split kernels.

This process was recommended by the Committee for domestic peanuts

because blanched peanuts, after sampling and certification, often are

placed back into the blancher to complete the roasting process. This

adds costs to the roasting process and can cause additional splits or

kernel damage due to the extra handling of the peanuts. Also, roasting

enhances the blanching efforts to eliminate aflatoxin, thus improving

the wholesomeness of the peanuts.

Inspection service oversight of the blanching process is necessary

to maintain lot identity. However, the Department believes that the

savings involved in blanching and roasting in one step and prevention

of additional damage and splits due to excessive handling are benefits

that would outweigh the costs of inspection service oversight. Any

residual peanuts, excluding skins and hearts, resulting from the

roasting process, must be red tagged and disposed of to non-edible

peanut outlets, and so reported to AMS. This proposal is added as new

paragraph (e)(4) in Section 999.600. Current paragraph (e)(4) would be

redesignated as (e)(5).

Paragraph (f) Safeguard procedures of Section 999.600 outlines the

steps that importers must follow when entering peanuts into U.S.

commercial markets. The stamp-and-fax process helps assure that AMS

will be notified of all peanut entries. This rule would modify or

remove several requirements of the current safeguard procedures and

reporting requirements to help streamline the entry process, ease

reporting burdens, and provide more time for importers to obtain human

consumption certification. The changes are proposed after AMS' review

of the peanut importation process during the 1997 and 1998 quota

periods. Where applicable, the changes are proposed

[[Page 46186]]

with the concurrence of the Customs Service.

(14) Under the ``stamp-and-fax'' procedure, importers notify the

inspection service of pending peanut shipments by faxing or mailing a

copy of the Customs Service entry documentation to the inspection

service office that will sample the imported peanut shipment. The first

sentence of paragraph (f)(1) provides that such documentation must be

sent ``prior to arrival'' of the peanuts at the port-of-entry. However,

experience shows that it may not be possible to send a completed stamp-

and-fax document to the inspection service ``prior to arrival'' of the

shipment at the port-of-entry. While it is in the importer's interest

to give the inspection service advance notice of inspection, it is not

essential that this be done before arrival of the shipment at a port.

Thus, the first sentence of paragraph (f)(1) would be changed to read

``Prior to, or upon, arrival * * *''.

The Customs Service will not release imported peanut lots without

entry documentation stamped by the inspection service. Further, the

inspection service will not sample and inspect peanuts that are not

covered in a stamp-and-faxed entry document.

(15) AMS proposes revising paragraph (f)(1) to change the

information that is currently required on the stamp-and-fax document.

This rule would add the Customs Service entry number(s) for the peanut

shipment(s) covered in a stamp-and-fax document. The entry number is

basic Customs Service entry information and appears on Customs Form

3461 (Entry/Immediate Deliver) which is commonly used as the stamp-and-

fax document. During the 1997 and 1998 quota periods, the inspection

service recorded the entry number on the grade certificates, enabling

AMS to monitor imported lots and communicate with the Customs Service

regarding importers' compliance with program requirements.

Experience of the last two import years shows that different

Customs Service forms may be used in the stamp-and-fax process. In most

cases, Customs Form 3461 has been used. USDA's Animal and Plant Health

Inspection Service (APHIS) Form 368 (Notice of Arrival) also may be

used as a stamp-and-fax document. In these cases, the importer or

customs broker filing the stamp-and-fax document must add the inland

destination and contact number before sending the document to the

inspection service.

The current provision specifies that the destination location,

including city and street address, be included on the stamp-and-fax

form. The street address is not necessary as long as the city and

receiving entity is identified. A telephone contact number also must be

included. Experience shows that the receiving entities are usually cold

storage warehouses.

The current provision specifies that the stamp-and-fax document

include the date and time that the peanut shipment will be inspected at

the inland destination. However, a date and time for inspection is not

always known at the time of entry, and it is not necessary that this

information be included on the stamp-and-fax document. The purpose of

the stamp-and-fax is to assure that the inspection service is aware of

every peanut lot being imported. Arrangements for the time and date of

the inspection often are made by the cold storage warehouse after

arrival of the imported lot at the inland destination.

Therefore, this rule proposes that the information required on the

stamp-and-fax be amended to include: the Customs Service entry number;

the volume (weight) of peanuts being imported; the city, and location

of the entity receiving the peanuts; and a contact name or number at

the destination. Paragraph (f)(1) would be changed accordingly.

(16) The ``stamp and fax'' process would be further modified by

removing the fifth sentence in paragraph (f)(1) that requires importers

to send a copy of the stamp-and-fax entry document to the Secretary.

AMS can obtain information on peanut entries from the inspection

service and from the Customs Service on data tapes. That information

effectively replaces the need for stamp-and-fax entry documents to be

reported by importers to AMS' headquarters office. The change would be

made in the fifth sentence in paragraph (f)(1) by removing the words

``and send a copy of the document to the Secretary.'' A similar change

also would be made in the first sentence in paragraph (f)(2) by

removing the words ``entry document'' from that sentence. This

modification does not change the requirement that importers must file

the stamp and fax with the inspection service office as provided in

paragraph (f)(1).

Another change regarding the stamp-and-fax reporting would be made

in paragraph (f)(1). The last sentence provides that the importer shall

cause a copy of the entry document to accompany the peanut lot and be

presented to the inspection service ``at the inland destination.'' The

intent of this requirement was to help inspection service offices

account for all peanut lots which those offices have authorized entry

by stamp-and-fax. However, the provision, as currently written, could

be interpreted as meaning that all peanut lots must be shipped inland

for inspection. This is not the intent of the provision. Peanuts may be

inspected and certified for human consumption while at the port-of-

entry, free trade zone, or bonded warehouse adjacent to the port of

entry. If inspected at the port or free trade zone and certified as

edible, the lot does not have to be seen again by the inspection

service and may be transported to its intended destination. Uninspected

lots and failing lots which are sent inland for inspection or

reconditioning must be accompanied by Customs Service entry

documentation relevant to the lots, which must be presented to the

inspection service at the time of inland inspection.

The last sentence in paragraph (f)(1) would, therefore, be modified

to provide that the entry documentation be presented at the time of

sampling--whether that sampling is at the port of entry or at an inland

destination. The last sentence of paragraph (d)(3)(i) also would be

revised to conform with this clarification.

(17) The import regulation's reporting requirements are specified

in paragraph (f)(2) of Section 999.600. Currently, importers are

required to file with the Secretary entry documents, including all

grade and aflatoxin certifications, showing that imported peanut lots

meet quality and disposition requirements of the regulation.

Certifications filed by importers enable AMS to monitor all imported

peanut shipments and ensure compliance with the regulation's quality

and disposition requirements. The reporting requirements can be

burdensome if, as now happens, large volumes of peanuts are entered

simultaneously when a country's peanut import quota is opened.

The inspection service performs all inspections of imported

peanuts, and AMS has access to all of those grade certificates. In

addition, AMS' Science and Technology Programs' laboratories conduct

chemical analysis of imported peanut lots, and, thus, AMS has access to

aflatoxin certificates issued by those laboratories. Through memoranda

of understanding with these offices, AMS' Marketing Order

Administration Branch (MOAB), which administers the import regulation,

can obtain copies of grade and aflatoxin certificates issued by the

inspection service and the USDA laboratories. Therefore, it is not

necessary that importers file inspection service grade certifications

and USDA laboratory aflatoxin certifications on lots which meet

requirements. Those certifications can be provided to MOAB

[[Page 46187]]

by the inspection service and laboratories. Filing of aflatoxin

certifications provided by PAC-approved private laboratories is

addressed below.

Experience shows that if importers do not have to file

certifications on peanut lots which meet import requirements, a large

portion of the reporting burden would be removed. Importer would

continue to be required to report failing lots and disposition of those

failing lots. AMS believes such a modification of the reporting

requirements would not reduce the effectiveness of the regulation's

safeguard procedures or AMS' program oversight, because its compliance

efforts focus on failing peanut lots. Therefore, AMS proposes to revise

paragraph (f)(2) of Section 999.600 to provide that importers file with

AMS only certificates of imported peanut lots failing quality or

aflatoxin requirements.

This proposed rulemaking action would update the kind of

information required to be filed by importers, or others on behalf of

importers.

Importers who choose to use PAC laboratories for aflatoxin

certification must either file those certifications themselves or

direct the private laboratory to file the certifications with AMS.

Similarly, it is the responsibility of the importer to either file, or

direct the filing of, documentation covering such non-edible peanut

dispositions. The first sentence of paragraph (f)(2) would be revised

to require that importers ``shall file, or cause to have filed''

documentation showing disposition of peanut lots which fail to meet

quality requirements. The phrase ``cause to have filed'' would enable

importers to direct the entity to file the documents on behalf of the

importer.

This optional reporting procedure could reduce importers' direct

reporting burdens because they would not have to file the certificates

themselves. The cost, if any, of reporting aflatoxin certifications to

AMS could be included in the cost of testing. Thus, while importers

would be responsible for the reporting charges, the additional

reporting costs should be less than the costs of individual importers

filing the certificates themselves. The certifications would not have

to be reported individually or on a scheduled basis, but would have to

be filed by the reporting deadline relevant to each imported lot. A

laboratory could file certificates from many importers in one mailing.

As noted above, this proposed rulemaking would continue importers'

responsibility for reporting, or causing the reporting of, final

disposition of all failing peanut lots. Proper disposition of a failing

peanut lot could include: (1) Appeal inspection and analysis which

results in subsequent certification that the peanut lot meets grade or

aflatoxin requirements; (2) reconditioning through remilling or

blanching of the lot to meet grade or aflatoxin requirements; (3)

disposition to a non-edible peanut outlet such as crushing oilmill,

animal feed, or seed use; (4) dumping in a landfill or otherwise

destroying the peanuts; or (5) re-exportation to another country.

It is the importer's responsibility to insure that the business

entity disposing of non-edible peanuts uses the peanuts in a non-edible

product, and that proof of such use is reported to AMS. The business

entity could be directed to file proof of disposition directly to AMS

or send the report to the importer who would then forward the report to

AMS.

Paragraph (f)(2) would also be modified to clarify the type of

documentation needed to prove such disposition. AMS requires ``source''

documents as proof of disposition. Source documents are documents

originating from the business entity carrying out the actual

disposition of the peanuts. For example: proof of crushing must be

reported by the oilmill performing the crushing; an animal feed

manufacturer must file proof of receipt of non-edible peanuts and

certify in writing to the non-edible use of those peanuts; re-exported

peanuts must be reported on a Customs Service form showing exportation.

These certifications should be on the business letterhead of the

disposing entity as proof that it is a ``source'' document; i.e., a

document prepared by the originator of the disposition action. If such

a report cannot be obtained from the disposing entity, the inspection

service may be contacted to assist in documenting the disposition. For

instance, certification of a landfill dumping may not be provided by

the landfill. In such case, the inspection service may be contacted to

observe and certify such disposition. Peanut growers associations in

the Virginia-Carolina, Southeast, and Southwest also may be contacted,

particularly with regards to certifying disposition to an oilmill for

crushing.

``Source'' documents must include reference to the lot number or

Customs Service entry number for the peanut lot(s) and the volume

(weight) being disposed. For instance, if residual peanuts are crushed

for oil, the importer must file, or direct the crusher to file,

documentation which shows the name of the crusher, the failing lot

number, and the weight of residuals crushed. If crushing is directly

observed by a regional peanut growers association or the inspection

service, documentation can be provided by those entities. The volume

may reflect several residual lots commingled for crushing.

``Source'' documentation of a feed lot disposition would include

certification that the feed company received imported peanuts and has,

or intends to, use those peanuts as animal feed. Such documentation

must include, as required by paragraph (e)(2)(ii) of the import

regulation, an aflatoxin certificate showing that the peanuts did not

exceed 300 ppb aflatoxin content.

Non-edible peanuts sent to a landfill also must be reported. If no

documentation can be obtained from the landfill operator, the

inspection service may be contacted to certify the dumping.

Documentation of re-exported peanuts must include a completed

Customs Service form, specific to the peanuts, verifying exportation

from the U.S.

The current regulation specifies bills-of-lading as documentation

that can be filed in reporting disposition. In reporting dispositions,

many importers have filed bills of lading showing residual peanuts were

transported to a crushing facility. However, neither the importers nor

crushers filed proof of crushing. A bill-of-lading showing shipment to

an oilmill operation is not sufficient to verify that the residuals

were received by the oilmill and crushed. Bills-of-lading and transfer

certificates may be filed in conjunction with other source documents to

help show movement of non-edible peanuts, but cannot be filed as proof

of final non-edible disposition. Therefore, the terms ``bills-of-

lading'' and ``transfer certificates'' would be removed from paragraph

(f)(2) as a document showing proof of disposition.

Further, some importers have requested appeal analyses on failing

peanut lots. An appeal inspection involves resampling and reinspection

by the inspection service and/or aflatoxin testing laboratory. If the

failing lot is determined to meet requirements upon an appeal analysis,

the importer must file both the initial failing certificate(s) and the

appeal certificate(s) showing the same peanut lot ultimately was

certified as meeting quality requirements on appeal.

Experience with the 1997 and 1998 imports also shows that most

failing lots were reconditioned by blanching. After reconditioning, the

lots are reinspected and, in most cases, certified for edible

consumption. In reporting reconditioning of a failing peanut lot, the

importer must account for pickouts

[[Page 46188]]

and other poor quality kernels that are removed from the lot during the

reconditioning process. For example, if a 40,000 pound container of

peanuts fails grade requirements, the lot may be blanched. If the

resulting lot, weighing 30,000 pounds, is certified as edible, the

importer must file: (1) The first failing grade certificate; (2) the

first passing aflatoxin certificate (``negative'' to aflatoxin); (3)

the second passing grade certificate; (4) the second passing aflatoxin

certificate; and (5) proof of disposition of the non-edible residuals.

The volume of residual peanuts may not exactly equal the difference

between the two weights because of ``disappearance'' during the

reconditioning and re-inspection process. Such disappearance can

include bag weight, skins, moisture from the blanching, other loss of

kernels, and differences in weighing scales, which, to the extent

practical, must be documented.

Fees charged for disposition of failing peanuts must be borne by

the importer.

AMS has found that grade and aflatoxin certificates are the primary

documentation for monitoring edible and non-edible disposition of

imported peanuts. Tying a disposition back to an original imported

peanut lot may be difficult without reference to grade and aflatoxin

certificate numbers. Thus, for compliance purposes, it is necessary

that all reporting of non-edible disposition include the grade and

aflatoxin certificate numbers of the original failing lot(s).

Residuals from the remilling or blanching of several imported

peanut lots belonging to the same importer may be commingled into a

larger, residual lot. Proof of disposition of a commingled residual lot

must include: (1) The name and telephone number of the disposition

outlet; (2) lot numbers from which the residuals were removed; and (3)

the total weight of the disposed residual lot. The report must be

sufficient to account for all of the residual peanuts and identify the

lots from which the residuals were taken. Residuals from imported

peanut lots cannot be commingled with domestically-produced residual

peanuts because of the separate compliance and recordkeeping

responsibilities for domestic peanuts (to the Committee) and imported

peanuts (to AMS). Certification of PLI issued by the inspection service

may be used to verify commingling of multiple residual peanut lots.

During the 1997 and 1998 quotas, some customs brokers, warehouse

operators, and blanchers failed to identify the importer of record when

requesting inspections. If the warehouse or blancher is shown as the

applicant for the inspection and the importer's name withheld, AMS has

difficulty matching up certificates and verifying that the importer has

satisfied reporting requirements. For AMS recordkeeping purposes, the

applicant requesting inspection must provide the name of the importer

to the inspection service. A provision to this effect would be added to

the first sentence of paragraph (f)(2).

Because of the extent of these revisions, the first half of

paragraph (f)(2) would be revised. Crushing, feed, seed, or burying

would be added as examples of non-edible disposition outlets. Bills-of-

lading and transfer certificates would be removed as proof of final

disposition. The address to which disposition documentation must be

filed would remain unchanged. Finally, current paragraph (d)(4)(v)(B),

which provides that importers file aflatoxin certificates ``regardless

of the test result'' would be removed to conform with reduced reporting

of only failing lots.

(18) Paragraph (f)(3) of the peanut import regulation establishes

the period for importers to obtain inspection and certification of

their imported peanut lots and report disposition to AMS. The current

reporting period is 23 days after Customs Service release of the peanut

lot. However, based on the experience of the 1997 and 1998 import

quotas, the 23-day period does not provide enough time for importers to

meet requirements for all lots and report disposition to AMS. Indeed,

the 23-day reporting period was extended for the 1997 reports only in a

separate rulemaking (62 FR 50243, September 25, 1997). Therefore,

current paragraph (f)(3) and the reporting period would be completely

revised.

Because of the high demand for foreign-produced peanuts, the 1997

Argentine and ``other country'' quotas were filled on the day of

opening. Among other things, this caused a flood of imported peanuts

into clearance channels at the same time. For the most part, the

inspection service and aflatoxin labs were able to provide timely

sampling and inspection of imported peanuts. However, some importers

encountered problems obtaining wharfage and storage space in bonded

warehouses and other delays in other clearance processes. Large volume

importers had particular difficulty coordinating the paperwork required

by different Federal government offices, and the quality inspections

and needed reconditioning to meet requirements of the import

regulation, 7 CFR Part 999.600.

Therefore, the period for reporting compliance with the import

regulation is proposed to be extended in this rulemaking. An extended

period would help alleviate problems encountered with the large numbers

of lots entered under Argentine and ``other country'' quotas on April 1

each year. The extended period also would be helpful for imports of

Mexican peanuts, some of which are farmers stock peanuts needing the

extra steps of shelling, sorting, and sizing before certification for

edible use.

The reporting period proposed in this rulemaking action would be

180 days from the date of release of a lot by the Customs Service.

Lengthening the reporting period would be accomplished by providing

that all Customs Service releases of peanuts be designated as

``conditional'' releases. The 180-day period would be established as

the conditional release period for Customs Service purposes.

A peanut lot which is inspected and certified as edible in advance

of a quota's opening day would be conditionally released, and would be

subject to the 180-day conditional release/reporting period. However,

importers would be able to dispose of those peanuts after receipt of

the required edible certifications and after conditional release of the

lots by the Customs Service.

Uninspected peanut lots would be conditionally released under bond,

provided that, within 180 days, those peanuts be inspected and reported

to AMS as meeting requirements of the import regulation.

Inspected peanut lots that fail to meet quality requirements would

be conditionally released for reconditioning and re-inspection.

Reconditioning and reinspection must be completed and reported to AMS

within the 180-day conditional release period. Non-edible disposition

of residual peanuts or pick-outs from the reconditioning process also

must be reported within the 180-day period. Positive lot identification

would have to be maintained on these peanuts.

If AMS finds that, after the 180-day conditional release period

expires, an uninspected or failing peanut lot has not been reported as

meeting import requirements, AMS would request the Customs Service to

issue a Notice of Redelivery to the importer. Subsequent to that

request, the Customs Service would have 30 days to issue, under the

terms of the basic importation bond, a valid demand for redelivery.

Upon receiving the Notice of Redelivery, the importer would have 30

days to

[[Page 46189]]

redeliver the unreported or failing peanuts to the Customs Service.

Current paragraph (f)(3) provides for a 60-day extension of the

redelivery demand period to enable an importer additional time to meet

a redelivery demand. This provision would be removed from paragraph

(f)(3) because the Department believes that, with the extended 180-day

conditional release period, an extension of the redelivery demand

period would not be needed. A conforming change would be made by

removing the second sentence in paragraph (f)(4).

Current paragraph (f)(4) also would be revised to restate the

redelivery demand process. The paragraph also would continue to include

the consequences of an importer's failure to comply with import

regulation, i.e., assessment of liquidated damages equal to the value

of the peanuts involved, under the terms of the Basic Importation and

Entry Bond. Further, failure to fully comply with quality and handling

requirements or failure to notify the AMS of disposition of uninspected

or failing imported peanuts, as required under this section, may result

in a compliance investigation by AMS. Finally, revised paragraph (f)(4)

includes the proviso that falsification of reports submitted to AMS

also is a violation of Federal law and is punishable by fine or

imprisonment, or both.

(19) AMS believes that the need for extension of the 180-day

conditional release and reporting period should be significantly

reduced because of the longer reporting period proposed in this

rulemaking. However, new paragraph (f)(5) would provide for extension

of the reporting period, should an importer be unable to dispose of a

particular peanut lot within 180 days. This rule proposes an extension

of an additional 60 days, giving importers a total of 240 days to meet

requirements of the import regulation.

Unusual circumstances could necessitate an extended delay in

disposition of an imported peanut lot. There have been a few instances

over the last two years where failing lots were set aside and not

reconditioned until months after the initial inspections. Disposition

of farmers stock peanuts which require shelling and final outgoing

inspection also may require an extended period of time to complete

shelling and final inspections. In such instances, the importers needed

an extension of the reporting period. Under this proposal, the length

of the extension, up to 60 days, would be specified in the extension

request and would be made by the importer in writing at the end of the

conditional release period. The extension request also would specify

the lot's Customs Service entry number, PLI designation, volume or

weight, and current location. Requests for extension would be made to

AMS at the address provided in paragraph (f)(2).

(20) AMS proposes to add a new paragraph (f)(6) to clarify a

procedural question that arose during the 1997 quota period. Not all

peanut lots that arrive in the U.S. are entered for consumption.

Because of the expected overfill of the Argentine quota, some importers

placed peanuts in bonded storage and did not file consumption entry

documents (including a stamp-and-fax) until after quota allotments were

determined by the Customs Service. The excess peanuts had to be either

exported to another country, held in bonded storage for the next year's

quota, or entered as admittable. Such peanuts that are held in bonded

storage and subsequently exported from the U.S. without import

application or stamp-and-fax communication, need not be reported to

AMS. However, if a peanut lot is included in a stamp-and-fax document,

but is subsequently exported without being entered by the Customs

Service, the importer must notify AMS of the export decision and

provide proof of export. The lot must be so reported even if it is not

sampled and inspected by the inspection service.

With the addition of new paragraphs (f)(5) and (f)(6), current

paragraphs (f)(5) and (f)(6) would be redesignated as paragraphs (f)(7)

and (f)(8), respectively, and references to those paragraphs would be

changed accordingly.

In addition, minor additions would be made in paragraphs (f)(7) and

(8) to clarify the current provisions of those paragraphs. In paragraph

(f)(7), the words ``and aflatoxin'' would be inserted between

``inspection certificate(s)'' to clarify that the Secretary may reject

a current aflatoxin certificate as well as grade certificate. The word

``may'' also would be removed from the sentence to clarify the

authority of the Secretary to require reinspections of suspect peanut

lots. In paragraph (f)(8), the second sentence would be changed by

adding the words ``the storage'' before the word location to clarify

the requirement that importers advise AMS of the storage location of

peanuts held in bonded storage for longer than one month prior to quota

opening.

(21) A clarification would be made to paragraph (g)(1) Additional

requirements. The second sentence currently states that all peanuts

presented for entry for human consumption must be certified as meeting

import requirements. The phrase ``presented for entry'' can be

misleading in that, as discussed above, many peanuts presented for

entry are not subsequently imported. AMS proposes to change the

sentence by replacing the phrase ``presented for entry'' with the term

``intended'' for human consumption. This clarifies the purpose for

importation. Also, the phrase ``prior to such disposition'' would be

added to the end of the sentence to further state that all peanuts

imported for edible use meet those requirements prior to movement to

the receiver or buyer.

(22) Finally, several minor changes would be made to paragraph

(g)(6) to clarify and simplify provisions regarding costs incurred in

meeting the requirements of the import regulation. The changes would

include clarification that the inspection service and aflatoxin testing

laboratories bill ``applicants'' making the request for inspection and

chemical analysis, not only the importer, as currently stated.

Applicants include customs brokers, storage warehouses, or other

entities acting of behalf of importers. The list of the types of

chargeable services would be modified for clarity and simplicity. PLI

certifications would replace ``certifications of lot identification''

to be in conformance with Recommendation 8, above.

The Department proposes these amendments and modifications to the

peanut import regulation, Section 999.600 to update and streamline the

provisions of that regulation.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

Chapter 35), the information collection requirements contained in this

proposed rule will be submitted to the Office of Management and Budget

(OMB) for approval. The information collection requirements in the

current peanut import regulation were approved by OMB on September 3,

1996, and assigned OMB number 0581-0176.

This paperwork burden analysis applies to only AMS' peanut import

regulation burden in Section 999.600, and does not include or supersede

other reporting requirements for imported peanuts that may be

established by APHIS, the Food and Drug Administration (FDA), the

Customs Service, or other agencies.

The current burden statement for the peanut import regulation was

developed and approved before the regulation was put into effect. The

reporting burden is based on importers, or others acting on behalf of

importers, filing copies of

[[Page 46190]]

documents necessary to show compliance with program requirements. There

are no forms to be completed and filed. The import program's current

reporting and recordkeeping estimates are not broken down in OMB's

0581-0176 burden statement--making it difficult to apply comparisons

for the individual changes proposed in this regulation. Also, because

the duty free quota has increased by approximately 21 percent since the

current burden statement was approved, savings calculated in this

proposal are based on 1999 quota volumes.

The average reporting time for each response is reduced in this

proposal from 5 minutes to 3.5 minutes. The current burden was

calculated based on importers filing certificates one at a time.

However, experience shows that importers generally file documents in

large groups, thus, saving considerable reporting time. With extended

reporting periods, importers will be able to collect relevant

inspection certificates and other needed documents and file them in

packages. This reduces the response time to an estimated 3.5 minutes

for each response--which is used in this reporting burden.

The current reporting burden estimates 25 respondents filing 5,000

responses, for a total of 300 burden hours--an average of 12 reporting

hours per importer. The current recordkeeping burden is estimated at 25

respondents and a total of 125 burden recordkeeping hours--an average

of 5 recordkeeping hours per importer.

This rule proposes to revise the current information collection

burden based on: (1) Experience of the 1997 and 1998 peanut quota

periods; (2) a two-year increase in peanut quota volume from 94.8

million to 115.4 million pounds for 1999, as established by trade

agreements; (3) an estimated 2,650 lots entered (based on lot sizes of

40,000 pounds for most lots and 200,000 pounds for a small number of

lots; (4) proposed reductions in information collection requirements;

(5) reduced response time from 5 minutes per response to 3.5 minutes;

(6) reduced number of respondents (importers) from 25 to 15; and (7)

generally good peanut quality, with an estimated 10 percent of the lots

failing initial quality requirements.

Reporting burden: The following proposed changes should reduce the

AMS paperwork reporting burden on peanut importers.

Recommendation 16: This recommendation would remove from paragraph

(f)(1) the requirement that importers must send copies of each stamp-

and-fax document to AMS headquarters. The intent of the current

requirement was to ensure AMS headquarters has knowledge of all peanut

imports for monitoring and compliance purposes. However, this rule

proposes that the inspection service and aflatoxin testing laboratories

provide copies of all inspection certificates issued on imported

peanuts (Recommendation 17). In addition, AMS receives periodic

database printouts of all peanut entries from the Customs Service.

Together, these reports should be sufficient documentation for AMS

headquarters' purposes. Therefore, it would not be necessary that

importers send copies of their stamp-and-fax documents to AMS

headquarters.

Savings: The burden of filing stamp-and-fax documents with AMS'

headquarters would be completely eliminated by this proposed rule. The

current burden for reporting stamp-and-fax documents is factored into

the total program burden of 5,000 hours. Based on the 1999 quota of

115.4 million pounds, projected entries of 2,650 lots, and 5 containers

listed on each stamp-and-fax document, approximately 530 stamp-and-fax

documents would be filed. This number of responses would be saved if

AMS headquarters did not have to be notified, as proposed. At 5 minutes

per filing, the new reporting burden for reporting stamp-and-fax would

total 44 hours and the savings would be 44 hours.

Recommendation 17: This recommendation would reduce the number of

inspection certificates which importers must report to AMS. Currently,

importers must file copies of both passing and failing grade and

aflatoxin certificates issued on all imported peanut lots. Those

certificates are issued by the inspection service and by AMS and

private laboratories. The certificates can be made available to AMS by

those entities, thus relieving importers of a significant direct

reporting burden.

Because AMS' compliance efforts focus on failing lots, AMS proposes

that importers continue to be required to file only certificates

covering failing peanut lots. AMS receives copies of passing

certificates from the inspection service and laboratories as a check on

all lots entered. Approximately 2,650 peanut lots are expected to be

imported under 1999 peanut quotas. For burden-reporting purposes, this

rule estimates that 10 percent of the imported lots will fail one or

both inspections. Thus, approximately 265 lots can be expected to fail

quality requirements and will have to be either reconditioned to meet

requirements, disposed of to non-edible peanut outlets, or re-exported.

The other 90 percent of the lots (2,385 lots) can be expected to meet

quality requirements, and would not have to be reported.

Recommendation 17 would make two clarifications. First, the name of

the importer would be entered on filed inspection certificates, which

are completed by the inspection service. Often the business requesting

the inspection is not the importer, but another entity acting on behalf

of the importer. This proposal would clarify that in such cases, the

importer's identity should be placed on the certificate. This would not

increase the reporting burden because the name is entered by the

inspector, not the importer. Secondly, the recommendation clarifies

that ``source'' documents must be used when reporting disposition of

failing lots. This also is not an increase in requirements, but a

clarification to identify the kinds of documentation needed to meet the

reporting requirements of this regulation. The documentation should be

available to importers as part of their normal business practices.

Savings: If importers are not required to file certificates on lots

meeting program requirements, a savings of approximately 4,770

responses would be realized (2,385 lots, times 2 certificates per lot)

and 398 hours saved (4,770 times 5 minutes per response). The new

reporting burden under Recommendation 17 would be 4 responses for each

of the 265 imported lots failing requirements, or 1,060 total

responses. At 3.5 minutes per filing, the total reporting burden for

filing disposition of failing lots only is projected to be 62 hours.

The new average would be 70 responses and 4 hours per importer. If this

proposed regulation does not become effective, the 1,999 reporting

burden on importers would be approximately 5,830 responses filed, and,

based on 5 minute reporting time per response, roughly 485 burden

hours. Thus, Recommendation 17 could result in an estimated savings of

roughly 4,770 responses and 423 burden hours in 1999.

Recommendation 18: A small portion of the 5,000 hours under the

current reporting burden accounts for importers filing requests for

extension of the reporting period. Recommendation 18 would extend the

reporting period from 23 days after entry to 180 days after conditional

release by the Customs Service. The 23-day period proved to be too

short for reporting most imported lots, forcing importers to request

extensions on nearly all lots imported during 1997 and 1998. Extension

of the reporting period to 180 days should

[[Page 46191]]

alleviate the need to file requests for extension for almost all

imported peanut lots. In addition, extension of the reporting period

also should affect an importer's reporting burden because, with more

time to meet requirements, an importer would be able to collect

certificates as the lots are certified, and file all certificates on

failing lots at one time, thus saving the burden of reporting

individual lots. After deadline extensions were granted by AMS during

the 1997 and 1998 quota periods, importers filed outstanding reports in

groups.

Savings: Extending the reporting period from 23 days to 180 days

means importers would likely not have to request extensions and they

would be able to combine the failing lot certificates into fewer

reports. Savings from the proposed reduction in the reporting burden is

factored into the estimate of Recommendation 17.

Recommendations 10, 15, and 20 would clarify reporting requirements

but not change the burden. Recommendation 10 would clarify that

importers may designate other entities (aflatoxin testing laboratories,

customs import brokers, warehouses, blanchers, crushers, etc.) to file

certificates and reports on their behalf. This reporting may be done as

a part of the business contract between the importer and the service-

provider at little or no cost to the importer, thus relieving the

importer of the reporting burden. Recommendation 15 would clarify the

information that is needed on stamp-and-fax documents. This change in

information needed would not increase the time needed to complete the

stamp-and-fax document or the reporting burden. Recommendation 20 would

clarify that if peanuts are not covered in a stamp-and-fax document and

are not inspected--but are subsequently exported--those peanuts should

not be reported.

Total average savings, reporting burden: This proposed rule could

represent an annual savings of approximately 5,300 responses and 467

reporting hours.

The savings may be only a few minutes for small importers who

import a few containers of peanuts. A large importer of 8 million

pounds of peanuts--200 lots with 20 lots failing requirements--could

have the following reporting burden in 1999 (vs. the current burden

estimate in parentheses): 40 stamp-and-fax notices (80 stamp-and-fax

notices); 0 certificates on passing lots (360 certificates on passing

lots); 80 certificates on failing lots (80 certificates on failing

lots); 0 deadline extensions (40 deadline extensions); total 120

reports filed (total 560 reports filed); 8 hours reporting burden (46.6

hours reporting burden). These are rough estimates for general

comparison purposes only.

Recordkeeping burden: In addition to the reporting requirements,

Section 999.600 requires that importers retain copies of certifications

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

year of acquisition. Customs Service document retention requirements

are five years. While the importers would not file grade and aflatoxin

certificates on passing lots, they must store that information for AMS

and the Customs Service. The current recordkeeping burden totals 125

hours, based on 25 respondents retaining records--an average of 5

recordkeeping hours per importer. The revised recordkeeping burden,

based on the 21 percent increase in the quota volume and 15 record

keepers, would be 151 hours for an average of 10 recordkeeping hours

per importer.

Cumulative new burden: This proposed rule would require a new

annual reporting and total recordkeeping burden for OMB number 0581-

0176 of 1590 responses and 257 hours. This compares to the current

burden of 5,000 responses and 425 hours. The proposed new burden would

average 106 annual responses and 17 burden hours for each peanut

importer. The burden hours per importer is increased because the

estimated number of importers is sharply reduced.

Comments to this amended Paperwork Reduction Act burden should

reference this proposed regulation and the date and page number of this

Federal Register. Comments should be submitted to the Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, D.C., 20503. OMB is required to make

a decision concerning the collection of information contained in this

rule between 30 and 60 days after submission to OMB. Therefore, a

comment to OMB is best assured of having full effect if OMB receives it

within 30 days of publication. This does not affect the deadline for

the public to comment on the rule.

Comments on proposed reduction of the paperwork burden also should

be submitted to the Department in care of the Docket Clerk, Fruit and

Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2523-S, Washington,

DC 20090-6456; fax: (202) 720-5698, or E-mail:

[email protected]. All comments received will also become a

matter of public record.

Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the AMS has considered the economic impact of the import

regulation on small entities and whether these proposed changes to the

regulation would disproportionately or unfairly effect 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. Accordingly, AMS has

prepared the following initial regulatory flexibility analysis.

The import regulation is required by law--subparagraph (f)(2) of

Section 108B of the Agricultural Act of 1949, as amended, and the

Federal Agriculture Improvement and Reform Act of 1996. Subparagraph

(f)(2) mandates that the Secretary shall require that ``all peanuts in

the domestic and export marketplace fully comply with quality standards

under Marketing Agreement 146.'' Handling requirements similar to those

established under the Agreement also are established in the import

regulation, to the extent necessary to assure comparability of quality

standards. The import regulation was issued June 11, 1996 (61 FR 31306,

June 19, 1996) with the intent to minimize the regulatory burden on

importers. An amendment was issued December 31, 1996, (62 FR 1269,

January 9, 1997), to conform to changes in the Agreement regulations

and to add necessary storage reporting requirements.

Experience of the 1997 and 1998 peanut quota periods shows that

approximately 15 business entities imported peanuts and were subject to

this import regulation. Importers appear to cover a broad range of

business entities, including fresh and processed food handlers, and

both large and small commodity brokers who buy agricultural products on

behalf of others. Small agricultural service firms have been defined by

the Small Business Administration (13 CFR 121.601) as those having

annual receipts of less than $5,000,000, and small agricultural

producers are defined as those having annual receipts of less than

$500,000. Less than one third of the importers appear to be small

business entities. The majority of peanut importers are large business

entities under this definition. AMS is not aware of any peanut

producers (farmers) who imported peanuts during these quota years.

The 1997 and 1998 peanut quota years were the first two years that

imported peanuts have been regulated

[[Page 46192]]

under 7 CFR Part 999.600. Analysis of the regulatory impact of the

regulation is complicated by several factors. Peanuts are imported from

at least half a dozen countries and can be imported in inshell,

shelled, or cleaned-inshell forms. This makes it difficult to compare

the costs of importation with purchase price of the product. The costs

of importation can vary greatly, with significant cost factors being

transportation distance, shipment method, wharf fees, demurrage costs,

storage charges, and the quality of the peanuts imported.

The proposed amendments to the import regulation in this rulemaking

action are recommended for the following reasons. Five changes are

proposed to conform with changing Agreement requirements (relaxing the

tolerance for unshelled and damaged kernels; allowing lots with

excessive fall-through peanuts to be blanched; and allowing failing

lots to be roasted during blanching without requiring grade re-

inspection). Seventeen changes are proposed by AMS to update, clarify,

and reduce the importation procedures and reporting requirements

specified in the regulation. Of the 17 changes, three relax reporting

requirements by removing nearly 90 percent of the documents that must

be filed and extending the reporting period to ease the time pressures

for those documents that must be filed. The AMS changes would improve

oversight of imported peanut lots, increase quality assurance, and

correct misunderstandings of importation procedures.

All of these proposed changes are intended to apply uniformly to

both large and small importers. None are intended to, or are expected

to, disproportionately affect small importers. The changes would have

the following regulatory impact on importers.

Recommendation 1 would make two changes in definitions. The first

change would remove reference to an out-of-date aflatoxin level for

non-edible peanuts in paragraph (a)(10) defining Negative aflatoxin

content. The level of 25 ppb should have been removed in previous

rulemaking. No imported peanuts have been graded against this old

quality level. Recommendation 1 also would remove the word ``Peanuts''

from the title of Marketing Agreement No. 146 as specified in paragraph

(a)(15) defining PAC-approved laboratories. The term ``Peanuts'' is not

a part of the title of the Agreement.

Recommendation 2 would change the definition of Conditionally

released in paragraph (a)(16) by removing the words ``before final

release'' and adding reference to reconditioning. The ``final release''

term does not conform with Customs Service terminology. The addition of

the words ``and, if necessary, reconditioning'' helps complete the

definition. These changes do not alter the intent or meaning of the

definition. There would be no regulatory impact on importers.

Recommendation 3 would remove a redundant sentence in paragraph

(b)(1) relating to use of Seg. 1 peanuts for human consumption only.

This reference appears twice in the same paragraph.

Recommendations 4 and 6 are inter related and are proposed to make

the import regulation consistent with changes in handling and quality

requirements to the Agreement. These changes simplify both the import

and Agreement regulations. Recommendation 6 would remove Table 2,

Superior Quality Requirements--Peanuts for Human Consumption from

paragraph (c)(1)(ii). Currently, peanut lots meeting the higher quality

requirements of Table 2 may be shipped to buyers prior to receiving

aflatoxin analyses on the lots. Recommendation 4 is a conforming change

that would have the affect or requiring importers to receive aflatoxin

analyses on all lots prior to forwarding the peanuts to buyers.

While these changes represent a tightening of handling

requirements, the affect on importers is minimal. Under limited

circumstances, the provisions help reduce, by a few days, the storage

time for such high quality peanuts. AMS does not have information on

the number of imported lots that would have been affected by this

proposal had it been in effect for the last two quota seasons. AMS also

does not have financial data on storage costs and whether those costs

are on a daily or weekly basis. However, in conversations between AMS

and importers and customs brokers during 1997 and 1998, importers did

not indicate that they shipped superior quality lots without waiting

for aflatoxin certification. Also, importers did not contact AMS about

the timeliness of aflatoxin certifications. Given today's overnight

mail and facsimile technologies, aflatoxin analyses are routinely

reported within two days. Finally, importers who arranged for arrival,

inspection, and bonded storage prior to quota opening had quality and

aflatoxin certifications ready when the peanuts were released by the

Customs Service. Thus, delays and any regulatory impact due to these

proposed changes would be negligible.

Not all categories of peanuts would be removed from Table 2. Three

``with split'' categories of peanuts would be moved from Table 2 to

Table 1 to retain the small marketing niche in the domestic market for

lots with high percentages of split kernels. This change was made to

the Agreement regulations in 1998 and is proposed in this regulation to

conform with that change. Any impact on importers would be positive as

it would allow lots with high split kernel content to continue to be

imported. AMS does not maintain data on the number of peanut lots that

were imported under these ``with splits'' categories. Data on the last

two years' imported peanut lots cannot be used to reliably indicate

quality of future shipments or the impact of this relaxation.

Recommendation 5 would relax tolerances in Table 1 for ``unshelled

and damaged kernels by one half of one percent in split lots. The

change is made to be consistent with a change already made to the

Agreement regulations. It should reduce the number of lots that must be

reconditioned to meet edible quality requirements. Reconditioning a lot

to remove excessive splits can significantly increase costs by adding

additional transportation costs, remilling or blanching charges, and

additional inspection fees. Data on the last two years' imported peanut

lots cannot be used to reliably indicate the impact on future shipments

because the quality of imports varies significantly from year to year

and country to country.

Recommendation 7 would set a maximum limit on the volume of farmers

stock peanuts that may comprise one lot. Paragraph (d)(3)(ii) would be

modified. The volume, 24,000 pounds (10,886 kg), has been in effect for

domestic peanuts as part of inspection service procedures. The lot size

is the largest for which optimum sampling procedures can be applied and

is the industry standard. Buying points where farmers stock peanuts

must be inspected are set up to handle this maximum lot size. For

logistical and cost reasons, farmers stock peanuts have been imported

only from Mexico--in large semi-trailer truck loads. The 24,000 pound

limit approximates the volume of farmers stock peanuts that are carried

in semi-trailer trucks. It would be unrealistic to transport a lot

larger than 24,000 pounds. Only a small percentage of imported peanuts

were imported in farmers stock form during 1997 and 1998 and all were

within this maximum lot size. Thus, Recommendation 7 can be expected to

have no negative impact on peanut importers.

[[Page 46193]]

Recommendation 8 would add new paragraph (d)(4) to strengthen lot

identification requirements for imported peanuts. In some situations,

the proposed modified positive lot identification procedures could take

additional warehouse personnel and space, as well as inspection service

time. However, warehouse labor is needed to lay out all bags for

sampling, so costs in addition to those normally charged should not be

significant. Additional inspection time could vary from a few minutes

to wrap PLI tape around containers or stacked bags to 30 minutes or

more to reassemble bags on pallets and shrink-wrapping pallets or

stenciling individual bags with spray paint. The PLI requirements could

increase costs for some, but not all, imported lots. Inspection service

sampling and grading costs currently are $43 an hour. Inspections

generally take from one to three hours, including travel time, to

complete. The costs to importers would be proportionate to the number

of lots inspected and is not considered to unfairly affect small

importers.

The amended PLI requirement would make the import regulation more

consistent with domestic program PLI requirements, and is consistent

with the intent of the Act. Importers, as well as domestic peanut

producers, handlers and manufacturers benefit from quality assurances

and the integrity of the product--due, in large part, to enforced PLI

procedures. The benefits of quality assurance and product integrity far

outweigh the small increased costs of modified PLI methods proposed in

this rulemaking.

Recommendation 9 would remove a redundant sentence in paragraph

(d)(4)(iii) which provides that laboratories provide aflatoxin assay

results to importers. This reference is repeated in paragraph

(d)(4)(v). There is no regulatory impact from this change.

Recommendation 10 would make minor changes in three paragraphs

regarding the mandatory nature of aflatoxin testing and reporting test

results. The regulation clearly states throughout that chemical

analysis is required on imported peanuts. Paragraph (d)(4)(iv)(A)

clarifies that importers ``shall,'' rather than ``should,'' contact a

laboratory to arrange for chemical testing. Also under Recommendation

10, the clarification that laboratories can be designated by the

importer to report test results to AMS would be moved from paragraph

(d)(4)(v)(B) to paragraph (d)(5)(v) for better placement of that

instruction. These changes identify an optional reporting procedure and

have no regulatory impact on importers.

Recommendation 11 would amend redesignated paragraph (d)(5)(iv)(A)

by updating the list of aflatoxin testing laboratories certified to

conduct chemical analyses on imported peanuts. There is no regulatory

impact.

Recommendation 12 would add a new sentence to introductory

paragraph (e) to provide a blanching option for shelled peanuts failing

quality requirements because of excessive ``fall through.'' This is a

relaxation in the regulation and is consistent with Agreement

requirements. AMS does not maintain records of the number of lots that

fail ``fall through'' and, thus, cannot estimate the impact of this

relaxation. However, allowing such lots to be reconditioned offers the

possibility of increasing the per ton value of the lot from

approximately $150 for non-edible use to over $500 for edible peanuts.

Recommendation 13 also would relax requirements by adding a new

paragraph (e)(4), pursuant to a change in Agreement regulations. The

change would allow lots meeting grade requirements but failing

aflatoxin requirements to be blanched until roasted and then

reinspected only for aflatoxin content. The impact of this relaxation

can be significant if the importer has many such failing lots which can

be roasted for the buyer. Savings are accrued because the peanuts do

not have to be removed from the blanching process for inspection and

then returned to the blanching process for the remaining portion of the

roasting process. The original grade certificate would be recognized

and the only additional inspection charges would be for sampling and

aflatoxin analyses. AMS does not have data on the actual costs that

could be saved in this process and cannot estimate the number of

imported peanuts that may be affected by it in the future.

Recommendations 14, 15, and 16 would relax requirements relating to

the stamp-and-fax entry process in paragraph (f)(1). Recommendation 14

would remove the terms which specify that the stamp-and-fax document be

filed ``prior to arrival'' at the port-of-entry. Experience shows that

importers may not have all of the needed information until after

arrival of the peanuts. Recommendation 15 would amend paragraph (f)(1)

by reducing, slightly, the information required on stamp-and-fax

documents. Information on subsequent inspection of the arriving peanuts

is not necessary for the purposes of the stamp-and-fax. One needed

piece of information, the Customs Service entry number applicable to

the lot, is not specified. In total, these changes reduce the reporting

burden by a few words. The needed information was included on the

stamp-and-fax documents during 1997 and 1998, but was not so specified

as part of the entry information in paragraph (f)(1). Recommendation 16

would remove the requirement in paragraph (f)(1) that a copy of the

stamp-and-fax document be forwarded to AMS headquarters. This reduces

one reporting requirement for importers. These three relaxations are

proposed to make the entry procedure consistent with the reporting

needs of AMS. The regulatory impact is minimal but does reduce

requirements on importers.

Recommendation 17 would reduce the number of lots that have to be

reported by requiring that only certificates on failing lots be filed

by importers. If imported peanut quality is the same in 1999 as the

average in 1997 and 1998, roughly 90 percent of the lots will meet

quality requirements and will not have to be reported to AMS

headquarters. This would save an estimated 423 reporting hours. The

revision is in paragraph (f)(2).

Recommendation 18 would extend the reporting period specified in

paragraph (f)(3) from 23 days after entry to 180 days after conditional

release by the Customs Service. The extended reporting period allows

importers more time to make good business decisions regarding imported

lots, particularly failing lots that must be either reconditioned or

re-exported. Also, with an extended reporting period, importers should

not have to request extensions of reporting periods and could file all

failing certifications and dispositions at one time after all

certifications and reports are acquired. This could save the time of

filing individual reports as each lot is certified, disposed of, or re-

exported.

Recommendation 19 provides for up to a 60-day extension of the

proposed 180 day reporting period. There is no time limit on domestic

peanut disposition. However, because of Customs Service required

liquidation of entry documentation, there must be some time limit for

importers to obtain clearances on failing lots and report to AMS. A

240-day reporting period represents a compromise between the open-ended

domestic requirements and Customs Service liquidation schedules. The

impact of this requirement should be minimal, as continued storage

costs or successive reconditions would eventually reduce margins and

force business decisions on lots pending eight months after conditional

entry. A new paragraph (f)(5) would be added.

[[Page 46194]]

Recommendations 20, 21, and 22 propose minor changes that would

have no regulatory impact on importers. Recommendation 20 clarifies

that if a container or shipment is re-exported without conditional

entry by the Customs Service, it does not have to be reported to AMS

and inspected. Such situations were not foreseen in the original import

regulation and are included for clarity in new paragraph (f)(6) in this

regulation. Recommendation 21 makes a minor wording change in paragraph

(g)(1) regarding peanuts that are ``intended'' to be entered but are

not entered. Recommendation 22 clarifies that those who are billed for

inspections are those requesting inspections. Customs house brokers and

storage warehouses often request inspections, and are the entities

billed for services provided. However, costs of the inspections are

borne by the importer. These three recommendations clarify current

provisions and do not change the regulatory aspects of the rule or

reporting burden already authorized by OMB.

The relaxation of quality and handling requirements proposed in

this rulemaking also would result in an overall reduction of the

information reporting and recordkeeping burden of the peanut import

regulation, currently assigned as OMB number 0581-0176. The most

significant reduction in the reporting burden would be that importers

must file copies of grade and aflatoxin certificates only on failing

lots, rather than all lots (Recommendation 17) . Using the quality of

1997 and 1998 imported peanuts as a guide, this proposal could reduce

that reporting requirement by as much as 90 percent. The proposed

recordkeeping requirement would be increased by an estimated 21 percent

because the 1999 duty-free tariff quota is 21 percent higher than the

1997 quota on which the current recordkeeping burden is based. Thus,

this proposed rule would establish an annual reporting and

recordkeeping burden of 1,590 responses and 257 hours. This is a

reduction from the current burden of 5,000 responses and 425 hours.

Finally, the Department has not identified any relevant Federal

rules that duplicate, overlap, or conflict with this proposed rule.

Besides meeting AMS import quality requirements, clearance of each

imported peanut lot also must be obtained from the Customs Service,

FDA, and APHIS. Program requirements of those entities do not overlap

the quality requirements of this regulation. AMS has consulted with the

Customs Service to assure that the proposed changes are consistent with

its entry procedures.

Based on available information, the Administrator of the AMS has

determined that this proposed rule could impose very small additional

costs (PLI) on affected importers, but could save considerable

reconditioning, storage, and reporting expenses. The benefits of

maintaining a high quality product should exceed any additional costs

which could be incurred in meeting these requirements. On balance, the

proposed changes would be expected to reduce program costs incurred by

importers.

This proposal provides a 30-day period for interested persons to

comment on the proposed changes in quality and handling requirements,

on import procedures, and on the impacts of this action on small

businesses. The proposed changes should be put into effect by January

1, 1999, when the next (Mexican) peanut quota period opens. Comments on

the proposed reduction in paperwork reporting and recordkeeping burden

must be submitted to both OMB and AMS within 60 days of publication of

this proposal.

Upon publication, this proposal will be distributed to the

Washington, D.C. embassies of peanut exporting countries, all known

peanut exporters and importers, customs house brokers, storage

warehouses, and reconditioning facilities. This proposal also will be

electronically disseminated on the Internet and comments may be

received electronically. Comments should be submitted to the mailing

address, fax number, or E-mail address listed under ADDRESSES at the

beginning of this document. All written comments timely received will

be considered before a final determination is made on the

recommendations proposed herein.

List of Subjects in 7 CFR Part 999

Dates, Food grades and standards, Hazelnuts, Imports, Nuts,

Peanuts, Prunes, Raisins, Reporting and recordkeeping requirements,

Walnuts.

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

proposed to be amended as follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

follows:

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

7271.

2. Section 999.600 is revised 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 I peanuts, unless otherwise specified, means

farmers stock peanuts with not more than 2.00 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 2.00 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, or

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.

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

association, or any other business unit.

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

States or any officer or employee of the U.S. Department of Agriculture

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

[[Page 46195]]

be, authorized to act on behalf of the Secretary.

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

Inspection Service, Fruit and Vegetable Programs, Agricultural

Marketing Service, USDA.

(14) USDA laboratory means laboratories of the Science and

Technology Programs, 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 Marketing Agreement No.

146 (7 CFR part 998), that chemically analyze peanuts for aflatoxin

content.

(16) Conditionally released means released from U.S. Customs

Service custody for further handling, sampling, inspection, chemical

analysis, storage, and, if necessary, reconditioning.

(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. 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) 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.

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

Segregation l quality, and shelled peanuts certified negative to

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

Residuals from the shelling of Segregation l seed peanuts may be milled

with other imported peanuts of the importer, and such residuals meeting

quality requirements specified in paragraph (c)(1) of this section may

be disposed to human consumption channels. Any portion not meeting such

quality requirements shall be disposed to non-edible peanut channels

pursuant to paragraphs (f) and (g) of this section. All disposition of

seed peanuts and residuals from seed peanuts, whether commingled or

kept separate and apart, shall be reported to the Secretary pursuant to

paragraphs (f)(2) and (f)(3) of this section. The receiving seed outlet

must retain records of the transaction, pursuant to paragraph (g)(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. 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 or exported. Shelled peanuts

and cleaned-inshell peanuts which fail to meet the requirements for

human consumption in paragraphs (c)(1) or (c)(2), respectively, of this

section, may be crushed for oil or exported.

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

consumption into the United States unless such peanuts are Positive Lot

Identified and certified by the inspection service as meeting the

following requirements:

(1) Shelled peanuts. (i) No importer shall dispose of shelled

peanuts to human consumption markets unless such peanuts are Positive

Lot Identified pursuant to paragraph (d)(4) of this section, certified

as ``negative'' to aflatoxin, pursuant to paragraph (d)(5)(v)(A) of

this section, and meet the requirements specified in the following

table.

Minimum Grade 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 materials Moisture

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

(percent) defects broken kernels

(percent)

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

Excluding lots of ``splits''

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

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.

Runner with splits (not more than 1.50 2.50 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 1.50 2.50 3.00% \17/64\ inch 3.00%; \15/64\ inch 4.00; both screens.. .10 9.00

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

[[Page 46196]]

Spanish & Valencia with splits 1.50 2.50 3.00%; \16/64\ inch 2.00%; \15/64\ inch 4.00; both screens.. .10 9.00

(not more than 15% sound splits). round screen. slot screen.

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

Lots of ``splits''

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

Runner (not more than 4% sound 2.00 2.50 3.00%; \17/64\ inch 3.00%; \14/64\ x 4.00; both screens.. .20 9.00

whole kernels). round screen. \3/4\ inch slot

screen.

Virginia (not less than 90% 2.00 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 & Valencia (not more than 2.00 2.50 3.00%; \16/64\ inch 3.00%; \13/64\ x 4.00; both screens.. .20 9.00

4% sound whole kernels). round screen. \3/4\ inch slot

screen.

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

(ii) The term ``fall through,'' as used in this section, shall mean

sound split and broken kernels and whole kernels which pass through

specified screens.

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

peanuts may be presented for sampling and outgoing inspection 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 l 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.

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

quality certification, chemical analysis, and Positive 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 in this

section. The importer shall make arrangements with the inspection

service for sampling, inspection, Positive 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 a

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 forms applicable to each peanut lot conditionally

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

in paragraphs (f)(2) and (f)(3) of this section.

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

testing of 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 at the time of sampling the lot.

(A) The following offices provide incoming farmers stock

inspection:

Dothan, AL, tel: (334) 792-5185,

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

Winter Haven, FL, tel: (941) 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: (757) 925-2286,

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

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

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

[[Page 46197]]

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

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

certification of shelled and cleaned in-shell peanuts:

Eastern U.S.

Mobile, AL, tel: (334) 415-2531,

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

Miami, FL, tel: (305) 870-9542,

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

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

Baltimore/Washington, tel: (301) 317-4387,

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

Newark, NJ, tel: (201) 645-2636,

New York, NY, tel: (718) 991-7665,

Buffalo, NY, tel: (800) 262-4810,

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

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: (956) 787-4091,

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

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

Western U.S.

Nogales, AZ, tel: (520) 281-4719,

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 Programs, 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 maximum lot size of farmers stock

peanuts shall be one conveyance, or two or more conveyances not

exceeding a combined weight of 24,000 pounds. Shelled peanut 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) Positive Lot Identification (PLI) shall be applied to all

shelled and cleaned-inshell peanut lots during or immediately after

first inspection by the inspection service or under the guidance of the

inspection service. Positive Lot Identification of a lot may be

accomplished by: Wrapping PLI tape around bags or boxes on pallets;

shrink wrapping pallets or multiple bags and applying a PLI sticker;

stenciling and numbering of individual bags or boxes; affixing PLI

seals on shipping container doors; or by other methods acceptable to

the inspection service that clearly identifies the lot, is securely

affixed to the lot, and prevents peanuts from being removed or added to

the lot. Such positive lot identification methods may be dictated by

the size and containerization of the lot, by warehouse storage or space

requirements, or, by necessary further movement of the lot prior to

receipt of certification. Failing lots that are reconditioned shall be

positive lot identified by sewing tags on bags or affixing a seal and

taping bulk bin containers after such reconditioning or by other means

acceptable to the inspection service that clearly identifies the

peanuts in the lot, is securely affixed to the lot, and which prevents

peanuts from being removed or added to the lot.

(5) 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

Positive 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 Milled Peanut

Inspection Certificate or 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 Milled Peanut Inspection Certificate or a Notice of

Sampling. All costs involved in the sampling, shipment and assay

analysis of subsamples required by this section shall be borne by the

importer.

(iv)(A) To arrange for chemical analysis, importers shall contact

one of the following USDA or PAC-approved laboratories:

Science and Technology Programs, AMS, 301 West Pearl St., Aulander,

NC 27805 (P.O. Box 279), Tel: (919) 345-1661 Ext. 156, Fax: (919)

345-1991

Science and Technology Programs, AMS, 1211 Schley Ave., Albany, GA

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

Science and Technology Programs, AMS, 610 North Main St., Blakely,

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

Science and Technology Programs, AMS, 107 South Fourth St., Madill,

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

Science and Technology Programs, AMS, 715 North Main St., Dawson, GA

31742 (P.O. Box 272), Tel: (912) 995-7257, Fax: (912) 995-3268

[[Page 46198]]

Science and Technology Programs, AMS, 308 Culloden St., Suffolk, VA

23434 (P.O. Box 1130), Tel: (757) 925-2286, Fax: (757) 925-2285

Federal-State Inspection Service Laboratory, 1557 Reeves St.,

Dothan, AL 36303 (P.O. Box 1368, ZIP 36302), Tel: (334) 792-5185,

Fax: (334) 671-7984

Federal-State Inspection Service Laboratory, 201 Broad St.,

Headland, AL 36345 (P.O. Box 447, ZIP 36345-0447), Tel: (334) 693-

2729, Fax: (334) 693-2183

Federal-State Inspection Service Laboratory, 103 Greenville Ave.,

Goshen, AL 36035 (P.O. Box 204), Tel: (334) 484-3340, Fax: (334)

484-3340

Federal-State Inspection Service Laboratory, 805 North Main St.,

Enterprise, AL 36330 (P.O. Box 310926), Tel: (334) 347-6525

ABC Research, 3437 SW 24th Ave., Gainesville, FL 32607, Tel: (904)

372-0436, Fax: (904) 378-6483

J. Leek Associates, Inc., 200 Wyandotte, Albany, GA 31705 (P.O. Box

50395, ZIP 31703), Tel: (912) 889-8293, Fax: (912) 888-1166

J. Leek Associates, Inc., 139 South Lee St., Ashburn, GA 31714, Tel:

(912) 567-3703, Fax: (912) 567-8055

J. Leek Associates, Inc., 402 S.E. 3rd Street, Anadarko, OK 73005,

Tel: (405) 247-3266, Fax: (405) 247-3270

J. Leek Associates, Inc., 502 West Navarro St., DeLeon, TX 76444

(P.O. Box 6), Tel: (817) 893-3653, Fax: (817) 893-3640

Pert Laboratories, 145 Peanut Drive, Edenton, NC 27932 (P.O. Box

267), Tel: (919) 482-4456, Fax: (919) 482-5370

Pert Laboratory South, Hwy 82 East, Seabrook Drive, Sylvester, GA

31791 (P.O. Box 129), Tel: (912) 776-1256, Fax: (912) 776-1029

Southern Cotton Oil Company, 600 E. Nelson Street, Quanah, TX 79252

(P.O. Box 180), 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

Programs, AMS, USDA, P.O. Box 96456, room 3507-S, Washington, DC 20090-

6456, Tel. (202) 720-5231, or Fax (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

importer shall file, or cause to be filed, with the Secretary, all USDA

Form CSSD-3, or equivalent chemical assay forms issued on failing

peanuts. The importer shall cause the results of all chemical assays

issued by PAC-approved laboratories to be filed with the Secretary. The

results of the assay shall be reported as follows:

(A) For the current peanut quota year, ``negative'' aflatoxin

content means 15 parts per billion (ppb) or less aflatoxin content for

peanuts which have been certified as meeting edible quality grade

requirements. Such lots shall be certified as ``Meets U.S. import

requirements for edible peanuts under Section 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 Section 999.600 with regard to aflatoxin.'' The

certificate of any non-edible peanut lot also shall specify the

aflatoxin count in ppb.

(6) 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. Lots that show evidence of PLI violation or

tampering, as determined by the inspection service, are not eligible

for appeal inspection.

(e) Disposition of peanuts failing edible quality requirements.

Peanuts shelled, sized, and sorted in another country prior to arrival

in the U.S. and shelled peanuts which originated from imported

Segregation 1 peanuts that fail minimum grade requirements specified in

the table in paragraph (c)(1)(i) of this section (excessive damage,

minor defects, moisture, or foreign material) or are positive to

aflatoxin may be reconditioned by remilling and/or blanching. Peanuts

that fail minimum grade requirements because of excessive ``fall

through'' may be blanched. After such reconditioning, peanuts meeting

the minimum grade requirements in the table, including minimum ``fall

through'' requirements, and which are negative to aflatoxin (15 ppb or

less), may be disposed for edible use. Residual peanuts resulting from

milling or reconditioning of such lots shall be disposed of as follows:

(1) Failing peanut lots may be disposed for non-human consumption

uses (such as livestock feed, wild animal feed, rodent bait, seed,

etc.) which are not otherwise regulated by this section; Provided, That

each such lot is Positive Lot Identified and certified as to aflatoxin

content (actual numerical count). On the shipping papers covering the

disposition of each such lot, the importer shall cause the following

statement to be shown: ``The peanuts covered by this bill of lading (or

invoice) are not to be used for human consumption.''

(2) Peanuts, and portions of peanuts which are separated from

edible quality peanuts by screening or sorting or other means during

the milling process (``sheller oilstock residuals''), may be sent to

non-edible peanut markets pursuant to paragraph (e)(1) of this section,

crushed or exported. Such peanuts may be commingled with other milled

residuals. Such peanuts shall be positive lot identified, red tagged in

bulk or bags or other suitable containers.

(i) If such peanuts have not been certified as to aflatoxin

content, as prescribed in paragraph (d) of this section, disposition is

limited to crushing and the importer shall cause the following

statement to be shown on the shipping papers: ``The peanuts covered by

this bill of lading (or invoice, etc.) are limited to crushing only and

may contain aflatoxin.''

(ii) If the peanuts are certified as 301 ppb or more aflatoxin

content, disposition shall be limited to crushing or export.

(3) Shelled peanuts which originated from Segregation 1 peanuts

that fail minimum grade requirements specified in the table in

paragraph (c)(1)(i) of this section, peanuts derived from the milling

for seed of Segregation 2 and 3 farmers stock peanuts, and peanuts

which are positive to aflatoxin, may be remilled or blanched. Residuals

of remilled and/or blanched peanuts which continue to fail minimum

grade requirements in the table shall be disposed pursuant to

paragraphs (e)(1) or (2) of this section.

(4) Shelled peanuts that are certified as meeting minimum grade

requirements specified in the table in paragraph (c)(1)(i) of this

section and which are positive to aflatoxin may be roasted during

blanching. After roasting, such peanuts certified as meeting aflatoxin

requirements (15 ppb or less), and which are positive lot identified,

may be disposed to human consumption outlets without further grade

analysis. The residual peanuts, excluding skins and hearts, resulting

from roasting process, shall be red tagged and disposed of to non-

edible outlets pursuant to paragraphs (e)(1) or (2) of this section.

(5) All certifications, lot identifications, and movement to non-

edible dispositions, sufficient to account for all peanuts in each

consumption entry, shall be reported to the Secretary

[[Page 46199]]

by the importer pursuant to paragraphs (f)(2) and (f)(3) of this

section.

(f) Safeguard procedures. (l) Prior to, or upon, 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: the Customs Service entry number; the container number(s) or

other identification of the lot(s); the volume of peanuts in each lot

being entered; the inland shipment destination where the lot will be

made available for inspection; and a contact name or telephone number

at the destination. The inspection office shall sign, stamp, and return

the entry document to the importer. The importer shall cause a copy of

the relevant entry documentation to accompany each peanut lot and be

presented to the inspection service at the time of sampling.

(2) The importer shall file, of cause to have filed, with the

Secretary, copies of failing grade and aflatoxin certificates and non-

edible disposition documents which identify the importer and the

disposition outlet for failing quality peanuts. Such reports shall be

sufficient to account for all peanuts failing quality requirements of

this section: Provided That: importers shall cause all certificates of

peanuts meeting aflatoxin requirements issued by PAC-approved

laboratories to be filed with the Secretary. Proof of non-edible

disposition must include documentation from the disposing entity or

other entity on behalf of the importer, certifying to the crushing,

feed or seed use, burying, or other non-edible disposition. Such

documentation must include the weight of peanuts being disposed and the

name and telephone number of the disposing entity. Proof of export must

include U.S. Customs Service documentation showing exportation from the

United States. These documents 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) 205-6623. Overnight and express mail deliveries should

be addressed to USDA, AMS, FV, Marketing Order Administration Branch,

1400 Independence Avenue, SW, Room: 2525-S, Washington, D.C., 20250,

Attn: Report of Imported Peanuts. Regular mail should be sent to FV,

AMS, USDA, P.O. Box 96456, Room 2525-S, Washington, D.C. 20090-6456,

Attn: Report of Imported Peanuts.

(3) All peanuts imported into the United States subject to this

part shall be conditionally released by the U.S. Customs Service for a

period of 180 days following the date of Customs Service release, for

the purpose of determining whether such peanuts meet the quality

requirements for human consumption or non-edible disposition and

reporting such certification or non-edible disposition to the

Secretary.

(4) If the Secretary finds during, or upon termination, of the

conditional release period that a lot of peanuts is not entitled to

admission into the commerce of the United States, the Secretary shall

request the Customs Service, within 30 days after close of the

conditional release period, to demand return of said lot of peanuts to

Customs Service custody. Failure to comply with a redelivery demand

within 30 days of the date of the redelivery demand, may result in the

assessment against the importer of record and surety, jointly and

severally of liquidated damages equal to the value of the peanuts

involved. 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.

(5) An extension of the 180-day conditional release period may be

granted by the Secretary upon request of the importer. Extension shall

not exceed an additional 60 calendar days. Requests for extension shall

be specific to each peanut lot and shall include the lot's Customs

Service entry number, the positive lot identification, weight or

volume, and current storage location. Requests for extension of the

conditional release period shall be made in writing pursuant to

paragraph (f)(2) of this section.

(6) Peanuts for which an import application is filed with the

Customs Service but which are subsequently exported without sampling or

inspection by the inspection service, need not be reported to the

Secretary.

(7) Reinspection. 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 and aflatoxin

certificates and require the importer to have the peanuts reinspected

to establish whether or not such peanuts may be disposed of for human

consumption.

(8) Early arrival and storage. Peanut lots sampled and inspected

upon arrival in the United States, but placed in storage for more than

one month prior to beginning of the quota year for which the peanuts

will be entered, must be reported to AMS at the time of inspection. The

importer shall file copies of the Customs Service documentation showing

the volume of peanuts placed in storage and the storage location,

including any identifying number of the storage warehouse. Such peanuts

should be stored in clean, dry warehouses and under cold storage

conditions consistent with industry standards. Pursuant to paragraph

(f)(7) of this section, the Secretary may require reinspection of the

lot at the time the lot is declared for entry with the Customs Service.

(g) 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

peanuts eligible for importation into the United States. However, all

peanuts intended for human consumption use must be certified as meeting

the quality requirements specified in paragraph (c) of this section,

prior to such disposition.

(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 (f)(2) and (f)(3) 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 in this section. 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)(5) of

this section, respectively.

(4) Imported peanut lots sampled and inspected at the port-of-

entry, or at other locations, shall meet the quality

[[Page 46200]]

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 141.113 and 141.20: Provided further, That such peanuts must be

certified and reported to the Secretary pursuant to paragraphs (f)(2)

and (f)(3) of this section.

(6) Payment of the cost of transportation, sampling, inspection,

certification, chemical analysis, and Positive Lot Identification, as

well as remilling and blanching, and further inspection of remilled and

blanched lots, and disposition of failing peanuts, shall be the

responsibility of the importer. Whenever an applicant presents peanuts

for inspection, the applicant shall furnish any labor and pay any costs

incurred in moving, opening containers for sampling, and the shipment

of samples as may be necessary for proper sampling and inspection. The

inspection service shall bill the applicant for fees covering quality

inspections and other certifications as may be necessary to certify

edible quality or non-edible disposition. USDA and PAC-approved

laboratories shall bill the applicant separately for aflatoxin assay

fees. The importer also shall pay Customs Service costs as required by

that agency.

(7) Each person subject to this section shall maintain true and

complete records of activities and transactions specified in these

regulations. 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: August 24, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-23230 Filed 8-28-98; 8:45 am]

BILLING CODE 3410-02-P