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

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

final rule, with several modifications, the provisions of a proposed

rule relaxing certain quality requirements; modifying entry procedures;

revising handling requirements; reducing the reporting burden; and

establishing a new reporting period for peanuts imported into the

United States. Seven comments were received and are addressed in this

final rule. Changes to the quality and handling requirements 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 by the Agricultural Marketing Service (AMS) will improve

efficiency of the importation process, ease the reporting burden, and

provide importers with more time to meet peanut import regulation

requirements. This final rule continues safeguard measures which

prevent non-edible imported peanuts from being used in human

consumption outlets in the United States. This rule will benefit peanut

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

peanuts in the domestic marketplace comply with the same quality

standards.

EFFECTIVE DATE: January 1, 1999.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor, Marketing Specialist,

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, PO Box 96456, room 2525-S, Washington, DC 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. You may also view the marketing agreements and orders small

business compliance guide at the following website: http://

www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This final rule amends the peanut import

regulation (7 CFR 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 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 statues 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 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 finalizes several proposed changes to the

current regulation to relax quality requirements, modify entry

procedures, and relax reporting requirements. This 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.

The proposed rule was published in the Federal Register of August

31, 1998 (63 FR 46181). Over 350 copies of the proposed rule were

mailed to: (1) Embassies of exporting countries and the National

Institute for Technical Standards (NIST) which forwards such notices to

the World Trade Organization; known exporters, importers, and customs

house brokers; (2) the domestic peanut industry entities including

grower associations, handlers, manufacturers, blanchers, and warehouse

operators; and (3) Customs Service ports and headquarters offices, the

Food and Drug Administration (FDA), Federal-State Inspection Service

(inspection service) offices, and Federal and private aflatoxin

laboratories. The rule was available on the Internet at the Federal

Register website and at the homepage of AMS' Marketing Order

Administration Branch--which offered a direct link for submitting

comments electronically. Finally, AMS issued a press release announcing

the proposed rule on August 27, 1998.

A 30-day comment period was provided for interested parties to

comment on the recommended changes to quality requirements and import

procedures and on regulatory impact of the recommended changes. A 60-

day comment period was provided for interested parties to comment on

proposed changes to the reporting and recordkeeping requirements.

Comments Received

Seven comments were received on the proposed changes to importation

procedures. Six of the commenters represented major sectors of the

domestic peanut industry: the Peanut Administrative Committee, the

three grower associations, a state peanut commission, and a domestic

peanut handler association whose members also import peanuts. One

importer filed a comment. The comments generally supported the proposed

changes to the import regulation, particularly the addition of positive

lot identification requirements and changes to make the import

regulation consistent with Agreement regulations. The comments

recommended changes to, and in a few cases opposed, specific technical

and procedural requirements in the peanut regulation. The comments are

addressed below.

A growers' association representative commented on Recommendation 2

concerning the revised definition of paragraph (a)(16) Conditionally

released. He commented that the proposed definition and the wording in

proposed new paragraph (f)(3) ``may imply that imported peanuts could

be forwarded to buyers, remillers or blanchers without being inspected,

certified or positive lot identified.'' The commenter suggested that

the regulation be modified to require that all lots be

[[Page 71347]]

sampled before conditional release by the Customs Service.

While AMS appreciates the commenter's concerns that imported lots

could be sent to buyers, remillers or blanchers before inspection, AMS

does not believe that sampling before conditional release, in and of

itself, will guarantee that all lots are inspected. The stamp-and-fax

procedure--which occurs before the sampling process--is the procedure

which helps guarantee notification of the inspection service and

assures subsequent sampling and inspection of the peanuts.

Requiring sampling before conditional release by the Customs

Service could result in overflow situations at ports when quotas open.

It also could substantially increase inspection costs for some

importers. For instance, at quota opening, a port facility may not be

able to hold the large number of containers that have been landed at

the port. Experience from 1997 shows that some containers waited for

several days at dockside, exposed to the weather, while various

government clearances were issued. AMS does not want its sampling and

inspection requirements to delay onward movement of peanuts.

Further, importers ship the conditionally released peanuts inland

for inspection, or ship the lots to Customs bonded warehouses that are

closer to inspection offices. Among other things, this lowers

inspection costs. The stamp-and-fax process enables this movement with

the assurance that the inspection service has been notified and will

follow up with an inspection.

The commenter does raise an important point that should be

incorporated into the final rule. The commenter suggested that the

proposed conditional release definition implies that peanuts may be

sent directly to remilling or blanching facilities without first being

inspected and positive lot identified (PLI). However, the Agreement

regulations specify that any lots moved to a remiller or blanching

operation must be accompanied by a valid grade certificate (with PLI).

This requirement was not established in Part 999.600 because AMS did

not contemplate that importers would risk the costs involved in

shipping peanuts to the U.S. unless they were reasonably certain that

the peanuts would meet outgoing quality requirements.

However, it is possible that some imported peanuts may not be of

the highest quality or may deteriorate while in storage--before initial

inspection is conducted. In such cases, the importer may be inclined to

send the stored lot directly to reconditioning before obtaining an

initial inspection, thus, avoiding initial inspection costs. Indeed,

since publication of the proposed rule, two instances of this practice

have come to the attention of AMS.

After review of the comment, AMS concurs with the commenter's

suggestion for two reasons. First, movement of an uninspected lot from

a storage facility directly to a remiller or blancher is movement that

is likely not under Customs Service bond (as was the initial shipment

to the bonded warehouse). Secondly, AMS compliance monitoring and

oversight is more difficult to maintain because there is no valid

paperwork to tie the reconditioned lot directly back to a container or

lot specified on a stamp-and-fax entry. Initial inspection and PLI

establishes needed lot identity, and should be carried out before the

lot is broken down into two or more parts during reconditioning.

Therefore, to assure that imported peanuts are inspected prior to

reconditioning, this final rule removes the phrase ``* * * and, if

necessary, reconditioning.'' from the proposed definition of

Conditionally released in paragraph (a)(16). The definition will now

read ``Conditionally released means released from U.S. Customs Service

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

or storage.'' For further clarification, the following sentence will be

inserted as the new fourth sentence in new paragraph (d)(4) on Positive

Lot Identification: ``All lots forwarded to a reconditioning facility

must be accompanied by valid PLI certification.''

The manager of the Peanut Administrative Committee (Committee--

responsible for daily oversight of the domestic Agreement program)

filed a comment on Recommendation 5 requesting a minor change in the

grade requirements of the revised ``Minimum Grade Requirements'' table

proposed in paragraph (c)(1). He requested the modification to make the

import requirements consistent with domestic industry practice. The

manager acknowledged that when the Committee recommended, for the

domestic program, removing Table 2 and incorporating the last three

categories (Runner, Virginia and Spanish/Valencia ``splits with not

more than 15 percent sound splits'') into Table 1, the Committee

``inadvertently'' failed to recommend modification of the tolerance for

Foreign Material in the three categories which are moved. The foreign

material content in the three moved categories was .10 percent in old

Table 2 but should be relaxed to .20 percent to be consistent with the

foreign material contents of the other peanut categories already listed

in the Minimum Grade Requirements table. The manager commented that the

foreign material content for all categories in the revised table should

be the same, i.e., .20 percent. It is our understanding that this

matter will be reviewed by the Committee and considered at its next

meeting. If recommended and implemented for the domestic program, a

corresponding change would be made in the import regulation. Further,

this change was not proposed for comment in this proposed rulemaking

action.

Two commenters addressed Recommendation 7 that proposed a maximum

size for farmers stock lots. The commenters correctly stated that the

proposed maximum size of 24,000 pounds was based on dryer wagons used

in the domestic industry to move farmers stock peanuts from fields to

buying points. They pointed out that proposed size is, indeed, too

small for semi-trailer trucks used to transport farmers stock peanuts

from Mexico. They suggested that the maximum size should be 50,000

pounds, which is the approximate load capacity of a semi-trailer. One

commenter stated that, when collecting farmers stock samples from the

semi-trailers at incoming inspection, the inspection service uses

different probe patterns specifically for the larger volume trailers.

After review and consultation with the inspection service, AMS

agrees that the 24,000 pound maximum weight is incorrect. AMS concurs

with the recommendation from the two commenters that the maximum size

of farmers stock lots should be 50,000 pounds (22,680 kilograms). This

change is made to the proposed new second sentence added to paragraph

(d)(3)(C)(ii).

Two commenters questioned the accuracy of a statement in the

discussion of Recommendation 8 on positive lot identification. Page

46184 of the preamble reads, in part:

``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.''

The accuracy of this statement has been confirmed. Reconditioned lots

must receive both grade and aflatoxin

[[Page 71348]]

certifications. This is a requirement of the Agreement program. No

regulatory text needs to be changed.

Two commenters requested a modification of the ``source'' documents

proposal added to paragraph (f)(2) in Recommendation 17. The proposal

would have required that ``source'' documents be used to prove

disposition of failing peanuts to non-edible outlets. Source documents

are documents originating from the business entity carrying out the

actual disposition of the peanuts. One commenter stated: ``* * * trying

to obtain documents from entities not associated with the normal

activities of the peanut business will be difficult and in some cases

impossible.'' The commenters pointed out that bills-of-lading filed by

Committee-approved blanchers and remillers are acceptable to the

Committee as sufficient proof of proper non-edible disposition (most

often to oilmills). The commenters also pointed out that the same

standard should be applied to importers under the import regulation.

This change will not alter the volume of reports required under the

information collection burden, but it can ease the difficulty importers

might have had in obtaining the information to be reported.

Committee-approved blanchers and remillers are: American Blanching

in Fitzgerald, GA; Cargill Peanut Products in Dawson, GA; Clint

Williams Co. in Madill, OK; Coastal Cold Storage in Albany and

Donalsonville, GA; Doster Warehouse, Inc. in Rochelle, GA; Peanut

Processors, Inc. in Dublin NC and Sherman, TX; Seabrook Enterprises,

Inc. in Edenton, NC and Sylvester, GA; Tidewater Blanching Corp. in

Suffolk, VA; Tom's Foods, Inc. in Columbus, GA; and Universal Blanchers

in Blakely, GA, Ozark, AL, and Dublin, TX. In addition, any domestic

peanut sheller may be contracted to remill imported peanuts, provided

that sheller agree to comply with import program reporting

requirements, including certification as to the disposition of residual

peanuts from the remilling operation.

After careful review, AMS concurs with the comments filed on this

proposal. Committee-approved blanchers and remillers are the same

entities used by importers. Experience shows that they are the primary,

if not the only, entities filing bills-of-lading on imported peanuts

sent to oilmills. The importer is responsible for assuring the filing

of bills-of-lading by any blancher or remiller used by the importer.

The receiving entity, such as an oilmill or feedlot, would not have to

file proof of crushing or feed use.

Likewise, bills-of-lading filed by the importers and other

entities, such as bonded warehouses, also are acceptable as valid

certification of non-edible disposition. The regulation provides a

safeguard against edible use by requiring that shipments of non-edible

peanuts be positive lot identified and red tagged for non-edible use

only. The bill-of-lading must also show the weight of the non-edible

peanuts, the name and location of the entity receiving the peanuts, and

transfer certificates or inspection certificate numbers which tie the

residuals back to failing lots. When applicable, the volume reported

must reflect residual lots commingled prior to such shipment.

Therefore, the proposed amendment to require source documents is

withdrawn in this final rule.

Two commenters opposed Recommendation 19 which proposed, in new

paragraph (f)(5), a 60-day extension of the reporting period. Both

commenters believe that lengthening the reporting period to 180 days

(Recommendation 18) should be sufficient for importers to meet program

requirements. One commenter suggested that an extension of the

reporting period beyond 180 days would be necessitated by management

decisions that have nothing to do with congestion in shelling and

reconditioning facilities. The commenter's analysis is correct.

However, the extension is not offered only to alleviate congestions

that occur at remilling and blanching facilities. Domestic peanut

handlers are not restricted by reporting deadlines under the Agreement

and non-signer peanut programs. The Act specifies that, to the extent

practicable, peanut importers should be provided similar opportunities

to make appropriate management decisions regarding disposition of

imported peanuts. Extending the deadline an additional 60 days beyond

the revised 180 day reporting period should help importers in this

regard.

The original reporting time period was established at 30 days, with

an extension period of 60 days at the request of the importer. The

initial 30-day period was too short and extensions were necessary for

nearly all peanut lots imported during 1997 and 1998. Even with the new

180 day reporting period established in this rulemaking, AMS believes

that, on occasion, importers will need additional time to dispose of

some lots. AMS is not concerned that the extended reporting period will

jeopardize safeguard procedures. Importers, as well as domestic peanut

handlers, understand that the longer peanuts remain in storage the more

chance there is for deterioration of product and the higher the risk of

failure to ultimately meet quality requirements.

Also, under this rule, AMS would not automatically grant extensions

at the end of the 180-day reporting period. Extensions must be

requested in writing and provide information specific to the lot,

including proof that positive lot identification has been maintained.

AMS will not lose track of imported peanuts held in storage for

extended periods.

One of the commenters suggested that the total 240-day reporting

period is unfair because ``a domestic producer has only 24 hours to

recondition a load of peanuts * * * '' A domestic producer's submission

of farmers stock peanuts at a buying point is not comparable to

importers obtaining final, outgoing inspection on milled peanuts. The

commenter evidently is referring to the period time following

submission raw, farmers stock peanuts for grading at a buying point.

Under recently revised USDA Farm Service Agency (FSA) procedures,

farmers stock peanuts graded as less profitable Segregation 3 peanuts,

subject to certain conditions, may be cleaned by the producer and

resubmitted, as a new farmers stock lot, for Segregation determination.

The Segregation grade determines the support price that FSA will

purchase the peanuts, if so demanded by the producer. The ``24 hour

rule,'' as it is known in the domestic peanut industry, relates to FSA

procedures and may impact prices paid to producers under its peanut

price support program. Finally, domestic handlers are not subject to

some other ``24 hour rule'' when preparing Segregation 1 peanuts for

edible market. That is, the ``24 hour rule'' is not applicable to

imported farmers stock peanuts. AMS believes the 60-day extension

period, as proposed, is reasonable and necessary to maintain conformity

with the Agreement program. The comments on this issue are not adopted.

Two commenters questioned a phrase in the discussion of

Recommendation 20 regarding treatment of peanuts which are landed in

the U.S. in excess of the quota. The new paragraph states that such

peanuts may be either exported, held in bonded storage for the next

quota year, or ``entered as admittable.'' The commenters questioned the

phrase ``entered as admittable.'' This phrase was inserted to cover an

importer's option to pay tariff charges on the peanuts entered in

excess of the quota. The Department believes that the discussion of new

paragraph (f)(6) should be clarified by restating that peanuts which

are landed in the U.S. in excess of the quota may be either

[[Page 71349]]

exported, held in bonded storage for the next quota year, or entered

under tariff charges. Peanuts entered under tariff charges are subject

to the stamp-and-fax procedure and inspection requirements--as are all

peanuts entered for consumption.

The importer commented that incoming inspection of imported farmers

stock peanuts should be sufficient for meeting import quality

requirements. AMS already has established that imported peanuts

intended for edible consumption must be certified as meeting outgoing

quality requirements and contain not more than 15 ppb aflatoxin

content.

The importer suggested that country of origin designation should

not be included on outgoing certificates of lots originating from

imported farmers stock. The inspection service enters the country of

origin on the inspection certificates, so there is no additional burden

on importers. AMS already has established that country of origin

designation enables AMS to carry out its compliance responsibilities.

Customs Service requirements also apply.

The importer commented on farmers stock peanuts imported under bond

as non-quota peanuts for the purposes of shelling and re-export. The

importer complained that the ``shells, foreign material, and oilstock''

from such shelling should not have to be re-exported with the shelled

peanuts. AMS believes the commenter is referring to merchandise that is

entered as Temporary Importation Under Bond, found in Customs Service

regulations 19 CFR 10.31 through 10.40. This, however, is not an AMS

requirement.

Two commenters questioned the last sentence in redesignated

paragraph (f)(8) Early arrival and storage, pursuant to which the

Secretary may require reinspection of a lot at the time the lot is

declared for entry. This requirement was already in the regulation. The

commenters appear to interpret this statement as a requirement that

lots held in storage for more than one month prior to quota opening

must be reinspected at the time of entry declaration. This is not the

case. The intent of paragraph (f)(8) is just the opposite--inspection

certificates on lots held in storage for more than one month prior to

quota opening are good at the time of entry. The sentence questioned by

the commenters simply refers to provisions in the preceding paragraph

that USDA (the Secretary) has the right to require reinspection on any

imported lot at any time during the importation process. In the case of

lots held in storage for long periods before quota opening, AMS thought

it appropriate to remind importers that such lots, with cause, may be

required to be re-inspected.

Finally, no comments were received that addressed the proposed

rule's Regulatory Flexibility Analysis on the impact on small business

or the reduction in the Reporting and Recordkeeping Burden.

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 proposed

additional modifications to the import regulation to increase the

efficiency of the importation procedure and relax reporting

requirements.

Based on the comments received and discussed above, this rulemaking

action finalizes the following modifications to Sec. 999.600.

(1) This action removes 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 removed because that action level is no longer used for

non-edible peanuts. This revision makes 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 was

referred to as the Peanut Marketing Agreement No. 146. The word

``peanut'' is not a part of the title of the Agreement and is removed

from the definition to make it technically correct.

(2) This final rule changes the definition of Conditionally

released in Sec. 999.600, paragraph (a)(16), to conform with Customs

Service terminology. The previous definition stated that peanuts were

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

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

terminology and should be removed to avoid confusion. This rule defines

conditionally released as ``released from U.S. Customs Service custody

for further handling, sampling, inspection, chemical analysis, and

storage.'' 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 shall be

conditionally released for such inspection and needed reconditioning.

Conditional release provides more time for importers to obtain

inspection certifications and to report compliance with the import

regulation.

The definition in the proposed rule included an ending phrase

``and, if necessary, reconditioning.'' Based on comments received and

discussed under the ``Comments'' section, above, this phrase is removed

from the definition.

(3) This rule removes a redundant sentence in paragraph (b)(1) of

Sec. 999.600. The second sentence stated 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 Sec. 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 is amended by removing the

words ``ship or otherwise.'' This change makes the text consistent with

the

[[Page 71350]]

revised text of corresponding paragraph (a) of Sec. 998.200 of the

Agreement regulations.

This modification has the effect of removing text which allowed

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 will not

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 ``Other Edible Quality'' table, this final rule relaxes

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)(l)(i). The new

requirement now matches the tolerance for ``Unshelled and damaged

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

shows the current tolerance for unshelled and damaged kernels as 1.50

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

will 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

will reduce the number of imported peanut lots that need to be

reconditioned to meet outgoing quality requirements. This will save

importers reconditioning costs and storage costs. This relaxation

already has been made effective for domestically-produced peanuts.

(6) This modification removed 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 are 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'' are

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 are 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 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 changes are not expected to delay shipments

or negatively affect the handling of imported peanuts.

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

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

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

deleted from the regulation, and the last three grade categories are

moved to the table in paragraph (c)(1)(i). Paragraph (c)(1)(iii) is

redesignated as paragraph (c)(l)(ii) and a conforming change is 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 is deleted, it is not necessary to

refer to the ``Minimum Grade Requirements'' table as Table 1.

Conforming changes are made in paragraph (c)(1)(i), introductory

paragraph (e), and in paragraph (e)(3).

(7) Paragraph (d)(3)(ii) is 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 that is the standard size

of wagons used to transport domestically produced farmers stock peanuts

from the field to buying points. Peanuts in this form 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

inspection by reducing sampling variability and increasing the

likelihood 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.

The proposed rule suggested the maximum farmers stock lot size to

be 24,000 pounds. However, two comments requested that the maximum lot

size for farmers stock peanuts be increased to 50,000 pounds. Their

argument is included in the ``Comments'' section above. AMS believes

this change has merit. Therefore, under this final rule, foreign-

produced peanuts imported in farmers stock form will be inspected in

single conveyances or combined conveyances not exceeding a total of

50,000 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 will help

exporters plan their shipments and will not have a negative impact on

future imports of farmers stock peanuts. For these reasons, the second

sentence of paragraph (d)(3)(ii) is modified to provide a maximum lot

size of 50,000 pounds (22,680 kilos) for farmers stock peanuts.

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

inspection office in Yuma, Arizona. The introductory sentence in

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

sampling service provided by some inspection service offices.

(8) This final rule strengthens the lot identification requirements

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

regulation. The Agreement regulation requires Positive Lot

[[Page 71351]]

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

previous import regulation did not require PLI tags sewn at the time of

first inspection when several hundred thousand pounds of peanuts

arrived 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.

This rule provides a more reliable PLI to be applied to shelled

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

include: (1) 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 cannot be opened without breaking the

seal; or (5) other methods acceptable to the inspection service that

clearly identify 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 do not require

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

Increased costs to the importer will 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 may 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 benefit from improved lot identity if they request an appeal

inspection on the lot or if the Customs Service demands redelivery of

the lot.

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 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, must 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 are consistent with practices currently used by the

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

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

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

which show evidence of tampering or PLI violation, will not be eligible

for an appeal inspection.

These PLI methods will 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 are updated in this

final rule 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 are positive lot identified by sealing the conveyance and, if

in other containers, sealed by means acceptable to the inspection

service. This rule ensures 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, will 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 are established in the import

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

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)

are amended to read ``Positive Lot Identification.''

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

failing lot that is reconditioned must be

[[Page 71352]]

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.

Comments received indicate some confusion among handlers with the

accuracy of this paragraph. As discussed previously in the Comments

Received section, above, the paragraph does conform with the

requirements of the Agreement, and, in general, FSA limitations can

apply in some cases. A clarification is included in the Comments

Received section, above.

A minor clarification is 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 is added to paragraphs

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

It should also be noted 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 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 a separate peanut lot. 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.

Four of the seven comments received agreed with implementation of

positive lot identification procedures.

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

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

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

sentence is duplicative of provisions in original paragraph (d)(4)(v).

Thus, this rule removes the second to last sentence of original

paragraph (d)(4)(iii).

(10) Several changes in the regulatory text are made regarding

reporting of aflatoxin certifications to AMS. Original 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) is revised to state that importers

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

analyses.

Original paragraph (d)(4)(v) is revised to include the requirement

that importers ``shall cause'' aflatoxin certifications to be reported

to AMS. The last sentence in original paragraph (d)(4)(v)(B) is 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 original

paragraph (d)(4)(iv)(A) is 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 is dropped from the list as that laboratory no

longer certifies the aflatoxin content of peanut lots. 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.

Since publication of the proposed rule, AMS has been notified of a

location change and two new laboratories. The Pert laboratory in

Sylvester, Georgia has moved to Colquitt, Georgia. A Pert laboratory

has been opened in Blakely, Georgia and a Leek laboratory has been

opened in Headland, Alabama. Contact information for these laboratories

is added to paragraph (d)(4)(iv)(A). In addition, area code numbers

have been updated in this paragraph and in inspection offices in

paragraph (d)(3)(i)(A).

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 provides 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 rule

adds peanut lots failing ``fall through'' requirements to those lots

that can be reconditioned by blanching. After blanching, all such lots

must to be sampled and certified as meeting minimum ``fall through''

requirements prior to disposition to edible peanut outlets.

This change is made in paragraph (e) of Sec. 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 is revised to include

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

consumption.

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

prescribes 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 must be sampled and assayed for

aflatoxin content, and, if meeting

[[Page 71353]]

aflatoxin requirements (15 ppb or less), may be disposed of to human

consumption outlets. The lot does not have to be re-inspected for grade

quality because the lot will have already met grade requirements. This

modification is a relaxation of requirements and is an optional process

for importers who intend to roast imported peanuts. It will 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 positive 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 rule will add a new

paragraph (e)(4) in Sec. 999.600. Original paragraph (e)(4) would be

redesignated as (e)(5).

Paragraph (f) Safeguard procedures of Sec. 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 modifies or removes

several requirements of the original 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 were proposed after AMS' review

of the peanut importation process during the 1997 and 1998 quota

periods. Where applicable, the changes are made with 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) is 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-fax entry document.

(15) This final rule revises paragraph (f)(1) to change the

information that was originally required on the stamp-and-fax document.

This rule adds 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 original 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 previous provision specified 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 establishes that the information required on

stamp-and-fax documents include: the Customs Service entry number; the

container number or other identification of the lot; the volume

(weight) of peanuts in each lot; and the location, contact name and

number where the lot will be in storage or made available for

inspection. Paragraph (f)(1) is changed accordingly.

(16) The ``stamp-and-fax'' process is 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 is 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 is 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 is 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 for which those offices have authorized

entry by stamp-and-fax. However, the provision could have been

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

[[Page 71354]]

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), therefore, is 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 is revised

to conform with this clarification.

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

in paragraph (f)(2) of Sec. 999.600. 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 AMS laboratory aflatoxin certifications on lots which meet

requirements. Those certifications can be provided to MOAB 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 will 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 revises paragraph

(f)(2) of Sec. 999.600 to provide that importers file with AMS only

certificates of imported peanut lots failing quality or aflatoxin

requirements.

This rulemaking action updates the kind of information required to

be filed by importers, or others on behalf of importers.

Importers who choose to use PAC-approved 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) is 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'' enables

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

importer.

This optional reporting procedure reduces importers' direct

reporting burdens because they do not have to file the certificates

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

AMS is included in the cost of testing. Thus, while importers are

responsible for the reporting charges, the additional reporting costs

should be less than the costs of individual importers filing the

certificates themselves. The certifications do not have to be reported

individually or on a scheduled basis, but do have to be filed by the

reporting deadline relevant to each imported lot. A laboratory may file

certificates from many importers in one mailing.

As noted above, this rulemaking continues importers' responsibility

for reporting, or causing the reporting of, final disposition of all

failing peanut lots. Proper disposition of a failing peanut lot

includes: (1) Edible certification through an appeal inspection; (2)

edible certification after reconditioning; (3) disposition to a non-

edible peanut outlet such as crushing, animal feed, or seed use; (4)

dumping in a landfill or otherwise destroying the peanuts; or (5) re-

exportation to another country.

The proposed rule recommended that paragraph (f)(2) be modified to

require ``source'' documents as proof of non-edible disposition. As

discussed above in the Comments Received section, two commenters

pointed out: (1) The difficulty of obtaining source documents from

entities not directly regulated by the import regulation, and (2) that

the Agreement regulation does not require source documents, but accepts

bills-of-lading from Committee-approved blanchers and remillers as

proof of non-edible disposition. After reviewing the reporting

requirements under the Agreement, AMS believes the comments have merit.

Thus, entities such as remillers, blanchers, and bonded warehouses may

file, on behalf of importers, bills-of-lading certifying that failing

quality peanuts were shipped to a non-edible peanut outlet.

Documentation filed showing disposition to animal feed must include, as

required by paragraph (e)(2)(ii), an aflatoxin certificate showing that

the peanuts do not exceed 300 ppb aflatoxin content. Failing lots and

commingled residuals that are re-exported must be documented with a

completed Customs Service form, specific to the peanuts being shipped,

verifying exportation from the U.S.

Thus, the third sentence of proposed new paragraph (f)(2) is

modified in this final rule to read as follows: ``Proof of non-edible

disposition may include bills-of-lading, transfer certificates, and

other documentation showing shipment from the importer, blancher,

remiller, warehouse, or other entity, to 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.''

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 71355]]

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 shipment (such as a bill-of-lading) of

the non-edible residuals to an oilmill or to a port facility (with

Customs documentation showing actual exportation).

The volume of residual peanuts may not exactly equal the difference

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

reconditioning and reinspection 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 is 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 is added to the

first sentence of paragraph (f)(2).

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

paragraph (f)(2) is revised. Crushing, feed, seed, or burying are added

as examples of non-edible disposition outlets. The address to which

disposition documentation must be filed remains unchanged. Finally,

original paragraph (d)(4)(v)(B), which provided that importers file

aflatoxin certificates ``regardless of the test result'' is 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 original

reporting period was 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, original paragraph (f)(3) and the reporting period is

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, the quality inspections, and

needed reconditioning to meet requirements of the import regulation, 7

CFR 999.600.

Therefore, the period for reporting compliance with the import

regulation is extended in this rulemaking. An extended period helps

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 is 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 is established in this rule as 180 days from

the date of release of a lot by the Customs Service. Lengthening the

reporting period is accomplished by providing that all Customs Service

releases of peanuts be designated as ``conditional'' releases. The 180-

day period is 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 may be conditionally released and subject to

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

are 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 may 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 may be

conditionally released for reconditioning and reinspection.

Reconditioning and reinspection must be completed and reported to AMS

within the 180-day conditional release period. Disposition of the non-

edible, residual peanuts or pick-outs from reconditioning processes

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

identification must 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 will request the Customs Service to

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

request, the Customs Service has 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 has 30 days to

redeliver the unreported or failing peanuts to the Customs Service.

Original paragraph (f)(3) provided for a 60-day extension of the

redelivery demand period to enable an importer

[[Page 71356]]

additional time to meet a redelivery demand. That provision is removed

from paragraph (f)(3) and inserted in new paragraph (f)(5). The

preamble in the proposed rule incorrectly stated that extension was

removed, rather than redesignated to another paragraph. A conforming

change is made by removing the second sentence in paragraph (f)(4).

Original paragraph (f)(4) also is revised to restate the redelivery

demand process. The paragraph also continues 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 is significantly reduced

because of the longer reporting period proposed in this rulemaking.

However, new paragraph (f)(5) provides for extension of the reporting

period, should an importer be unable to dispose of a particular peanut

lot within 180 days. This rule establishes 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, must be specified in the extension

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

conditional release period. The extension request also must specify the

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

and current location. Requests for extension are made to AMS at the

address provided in paragraph (f)(2).

(20) This action adds 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 peanuts in excess of quota had

to be either exported to another country, held in bonded storage for

the next year's quota, or entered under tariff charges. Peanuts that

are held in bonded storage and subsequently exported from the U.S.

without a stamp-and-fax communication, need not be reported to the

inspection service or 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 the inspection

service of the export decision and provide proof of export. The

inspection service must be able to account for all lots reported on

stamp-and-faxes.

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

paragraphs (f)(5) and (f)(6) are redesignated as paragraphs (f)(7) and

(f)(8), respectively, and references to those paragraphs are changed

accordingly.

In addition, minor additions are made in paragraphs (f)(7) and (8)

to clarify the original provisions of those paragraphs. In paragraph

(f)(7), the words ``and aflatoxin'' are 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 is 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 is 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 is made to paragraph (g)(1) Additional

requirements. The second sentence stated 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. This rule changes 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'' is 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 are made to paragraph (g)(6) to

clarify and simplify provisions regarding costs incurred in meeting the

requirements of the import regulation. The changes 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 originally stated.

Applicants include customs brokers, storage warehouses, and other

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

chargeable services is modified for clarity and simplicity. PLI

certifications replace ``certifications of lot identification'' to be

in conformance with Recommendation 8, above.

The Department makes these amendments and modifications to the

peanut import regulation, Sec. 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

final rule were submitted to the Office of Management and Budget (OMB)

for approval. The information collection requirements in the original

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 Sec. 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 original 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 documents necessary to show compliance with

program requirements. There are no forms to be completed and filed. The

import program's original reporting and recordkeeping estimates were

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

[[Page 71357]]

quota has increased by approximately 21 percent since the original

burden statement was approved, savings calculated in this rule are

based on 1999 quota volumes.

The proposed rule incorrectly addressed the average time needed to

file the different documents required under the import regulation.

Stamp-and-fax documents are filed separately and, thus, are estimated

to take 5 minutes for each submission. The average reporting time for

filing individual certificates is estimated in this final rule as 3.5

minutes because importers may accumulate relevant documents and submit

them at one time. The response time, therefore, is estimated 3.5

minutes for each response. These estimates are used in the discussions

of the recommended changes immediately below.

The original reporting burden estimated 25 respondents filing 5,000

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

hours per importer. The original recordkeeping burden was estimated at

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

average of 5 recordkeeping hours per importer.

This final rule revises the original 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) reduced

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 changes reduce the AMS paperwork

reporting burden on peanut importers.

Recommendation 16: This modification removes from paragraph (f)(1)

the requirement that importers must send copies of each stamp-and-fax

document to AMS headquarters. The intent of the original requirement

was to ensure AMS headquarters has knowledge of all peanut imports for

monitoring and compliance purposes. However, this change requires 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 are sufficient documentation for AMS headquarters'

purposes. Therefore, it is not 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 is completely eliminated by this final rule. The original

burden for reporting stamp-and-fax documents was 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 will be filed. This number of responses will be saved because

AMS headquarters does not have to be notified. At 5 minutes per filing,

the estimated burden for reporting stamp-and-fax documents in 1999 will

total 44 hours.

Recommendation 17: This rule reduces the number of inspection

certificates which importers must report to AMS. Previously, importers

filed 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, this rule

establishes that importers 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 will not have to be reported by the

importers.

Recommendation 17 makes two clarifications. First, the name of the

importer will 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 rule clarifies that in such cases, the importer's

identity should be placed on the certificate. This does not increase

the reporting burden because the name is entered by the inspector, not

the importer. The second proposed recommendation would have required

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

lots. However, based on comments received and further review by AMS,

the recommendation has been withdrawn. The new, amended provision

specifies the same requirement as the original regulation, i.e., bills-

of-lading and other transport certificates to be submitted by the

importer or contractors of the importer. The provision requires that

contact information of the disposing entity be specified in the

documents filed. An adjustment in the proposed burden is not needed

because the use of source documents would not have increased the volume

of paperwork required to be reported. However, removal of the source

document requirement may ease the difficulty importers might have had

in obtaining ``source'' documents.

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

meeting program requirements, the savings in 1999 will be approximately

4,770 responses (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 is an estimated 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 in 1999 is projected to be 62 hours.

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

regulation was not effectuated, the 1999 reporting burden on importers

would have been approximately 5,830 responses filed, and, based on 5

minute reporting time per response, roughly 485 burden hours. Thus,

Recommendation 17 results in an estimated savings of 4,770 responses

and 423 burden hours in 1999.

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

original reporting burden accounts for importers filing requests for

extension of the reporting period. Recommendation 18 extends 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 alleviates the need to file

requests for extension

[[Page 71358]]

for almost all imported peanut lots. In addition, extension of the

reporting period also enables importers to collect certificates as the

lots are certified, and file all certificates on failing lots at one

time, thus saving the burden of reporting lots individually. 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 do not have to request as many extensions and they are

able to combine the failing lot certificates into fewer reports.

Savings from the reduction in the reporting burden is factored into the

estimate of Recommendation 17.

Recommendations 10, 15, and 20 clarify reporting requirements but

do not change the burden. Recommendation 10 clarifies 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 is 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 clarifies the

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

information does not increase the time needed to complete the stamp-

and-fax document or the reporting burden. Recommendation 20 clarifies

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: The modifications in this

final rule represent an annual savings of approximately 5,300 responses

and 467 reporting hours.

The savings is 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--has the following

reporting burden in 1999 (vs. the original burden estimate in

parentheses): 40 (80) stamp-and-fax notices; 0 (360) certificates on

passing lots; 80 (80) certificates on failing lots; 0 (40) deadline

extensions; total 120 (560) reports filed; 8 (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 importers no longer file grade and aflatoxin

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

and the Customs Service. The original 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 is 151 hours. With

only 15 record keepers, the average recordkeeping hours per importer is

10 hours.

Cumulative new burden: This rulemaking establishes a new total

annual reporting and recordkeeping burden for OMB number 0581-0176 of

1,590 responses and 257 hours. This compares to the original burden of

5,000 responses and 425 hours. The new burden averages 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 from the original estimate.

Comments to this amended Paperwork Reduction Act burden were

requested in the proposed rule (63 FR 46191, August 31, 1998). Comments

were to be submitted to the Desk Officer for Agriculture, Office of

Information and Regulatory Affairs, Office of Management and Budget and

to AMS. The comment period was 60 days, ending October 30, 1998. Two

comments were received on one proposed reporting requirement change

(``source'' documents) and, as previously discussed, that proposed

change has not been made to section 999.600. That one reporting

requirement remains as previously approved. This final rule does not

alter the number of responses or reporting burden hours from those in

the proposed rule. The new reporting and recordkeeping burden for OMB

No. 0581-176 has been submitted to OMB and has been approved under that

number.

Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility

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

import regulation on small entities and whether the proposed changes to

the regulation 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.

An initial regulatory flexibility analysis was prepared and

published with the proposed rule (63 FR 46191, August 31, 1998). A

comment period of 30 days was provided for comments to the proposal and

the initial regulatory flexibility analysis. No comments were received

that made specific reference to the analysis or questioned the impact

of the proposed changes on small business entities. Accordingly, AMS

has prepared the following final 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 appeared 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 under 7 CFR 999.600. Analysis of

the regulatory impact of the regulation is

[[Page 71359]]

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 amendments to the import regulation effectuated by this

rulemaking action were recommended for the following reasons. Five

changes conform with changing Agreement requirements (relaxing

tolerances for unshelled and damaged kernels; removing grade

requirements for certain peanut categories: allowing lots with

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

lots to be roasted during blanching without requiring grade

reinspection). Seventeen changes recommended by AMS 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. This final rule improves

oversight of imported peanut lots, increases quality assurance, and

corrects misunderstandings of importation procedures.

All of the changes in this rule 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 should have

the following regulatory impact on importers.

Recommendation 1 makes two changes in definitions. The first change

removes 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 removes 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 changes 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. This change does not alter

the intent or meaning of the definition. There is no regulatory impact

on importers.

Also, the phrase ``and, if necessary, reconditioning.'' is removed

from the definition, based on comments received. The effect is to

require that imported lots be inspected and PLI prior to

reconditioning. AMS is aware of only a few instances during 1997 and

1998 (over 4,000 lots imported) when an importer requested

reconditioning before knowing the results of grade and aflatoxin

inspections. While, in these very few instances, this change requires

inspection of peanuts when the importer may not want inspection, it is

a safeguard measure that helps assure positive lot identity for AMS and

Customs Service purposes, and improves AMS monitoring ability. It also

is in the best interest of the importer.

Recommendation 3 removes a redundant sentence in paragraph (b)(1)

relating to use of Segregation 1 peanuts for human consumption only.

This reference appears twice in the same paragraph.

Recommendations 4 and 6 are inter-related and 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 removes Table 2, Superior Quality

Requirements--Peanuts for Human Consumption from paragraph (c)(1)(ii).

Previously, peanut lots meeting the higher quality requirements of

Table 2 could be shipped to buyers prior to receiving aflatoxin

analyses on the lots. Recommendation 4 is a conforming change that has

the effect of requiring importers to receive aflatoxin analyses on all

lots prior to forwarding the peanuts to buyers. While these changes can

represent a tightening of handling requirements, the effect on

importers is minimal. Under limited circumstances, the provisions may

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 the changes had they been in effect for the last

two quota seasons. AMS also does not have financial data on storage

costs and has no information on whether those costs are applied 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 overnight mail and

facsimile services, 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 changes

are expected to be negligible.

Not all categories of peanuts are removed from Table 2. Three

``with split'' categories of peanuts are 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 included in this regulation to

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

it will allow lots with higher split kernel content to continue to be

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

were imported under the ``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 relaxes 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 reduces the number of lots that must be reconditioned

to meet edible quality requirements. Reconditioning a lot to remove

excessive damaged kernels 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 sets the maximum limit on the volume of farmers

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

modified. The 24,000 pound volume limit in the proposed rule was based

on the size of dryer wagons used to transport domestic farmers stock

peanuts. The proposed rule's RFA incorrectly stated that the 24,000

pound limit approximates the volume of farmers stock peanuts

transported in semi-trailer trucks. This is not correct. Based on

comments received from an importer, and after review, AMS is amending

the proposal

[[Page 71360]]

by increasing the maximum lot size for imported farmers stock peanuts

to 50,000 pounds. This volume more accurately reflects the weight of

farmers stock peanuts in standard sized semi-trailer trucks. The

inspection service adjusts incoming inspection probe patters when

collecting samples from the larger sized trucks. Only a small

percentage of imported peanuts were in farmers stock form during 1997

and 1998 and all were within this maximum lot size. The impact of

Recommendation 7, as now modified, would be positive for peanut

importers.

Recommendation 8 adds 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 will not be

significant. Additional inspection time will 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 may 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 and from the

inspection. Any increased costs to importers will be proportionate to

the number of lots inspected and is not expected to unfairly affect

small importers.

The modified PLI methods 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 that the modified PLI methods may

entail.

Recommendation 9 removes a redundant sentence in paragraph

(d)(4)(iii) which provided 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 makes 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 is 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 amends 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 adds a new sentence to introductory paragraph (e)

to provide a blanching option for shelled peanuts failing quality

requirements because of excessive ``fall through.'' The change is

consistent with an amendment of the Agreement regulations. The change

represents a relaxation in imported requirements by providing more

opportunities for reconditioning certain failing peanut lots.

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. AMS does not have data on the possible positive impact

had this relaxation been in effect under previous quotas. The future

impact will be relative to the quality of imported peanuts--which is

not possible to reliably predict.

Recommendation 13 also relaxes requirements by adding a new

paragraph (e)(4), pursuant to the same change in Agreement regulations.

The modification allows lots meeting grade, 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 the buyer wants roasted.

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 is recognized and the only additional inspection

charges will 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 relax requirements relating to the

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

removes 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 amends paragraph (f)(1) by

reducing slightly, the information required on stamp-and-fax documents.

Information on subsequent inspections 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

added. 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 original paragraph (f)(1). Recommendation 16

removes 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 make the

entry procedure consistent with the reporting needs of AMS. The

regulatory impact is minimal but does reduce requirements on importers.

Recommendation 17 reduces 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 should not

have to be reported to AMS headquarters. This should save an estimated

398 reporting hours. The revision is in paragraph (f)(2).

Recommendation 18 extends 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, sold

at substantially lower costs, 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. This should 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

[[Page 71361]]

some time limit for importers to obtain clearances on failing lots and

report to AMS. A total 240-day reporting period represents a compromise

between the open-ended domestic requirements and Customs Service

liquidation schedules. The impact of this requirement will be minimal,

as continued storage costs or successive reconditioning attempts

eventually reduce profit margins and force business decisions on lots

pending eight months after conditional entry. A new paragraph (f)(5) is

added.

Recommendations 20, 21, and 22 make minor changes that will have no

regulatory impact on importers. Recommendation 20 clarifies that if a

container or shipment is re-exported without conditional entry by the

Custom 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 the entities 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 original

provisions and do not change the regulatory aspects of the rule or the

reporting burden already authorized by OMB.

The changes established in this final rule should result in an

overall reduction in the information reporting burden of the peanut

import regulation, currently assigned as OMB number 0581-0176. The most

significant reduction in the reporting burden provides that importers

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 should reduce that

reporting requirement by as much as 90 percent. The recordkeeping

requirement is increased by an estimated 21 percent because the 1999

duty-free tariff quota is 21 percent higher than the 1997 quota on

which the original recordkeeping burden was based. Thus, this final

rule establishes an annual reporting and recordkeeping burden of 1,590

responses and 257 hours. This is a reduction from the original 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 final 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 final rule imposes very minimal additional costs

on affected importers, but should save considerable reconditioning,

storage, and reporting expenses. The benefits of maintaining a high

quality product should exceed any additional costs which may be

incurred in meeting these requirements. On balance, the proposed

changes are expected to reduce program costs incurred by importers.

The proposed rule concerning this action was published in Federal

Register (63 FR 46181) on August 31, 1998. Copies of the rule were

mailed to over 350 foreign and domestic peanut entities. A press

release was issued and the proposal was made available through the

Internet. The proposed rule provided for 30-day comment period which

ended September 30, 1998. Seven comments were received and are

addressed above. Several proposed changes have been modified in this

final rule.

After consideration of all relevant material presented, it is found

that finalizing the proposed rule as published in the Federal Register

(63 FR 46181, August 31, 1998), with appropriate modifications, will

tend to effectuate the declared policy of the Act.

It is also found that good cause exists for not postponing the

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

Federal Reigister because: (1) The changes need to be effective when

the 1999 Mexican peanut import quota opens on January 1, 1999, so that

all peanut importers are treated equally during 1999, as required by

international trade agreements; (2) the rule relaxes requirements

currently in place; (3) all known peanut importers and related industry

sectors were sent copies of the proposed rule and they, as well as all

other interested persons, were given 30 days to file comments on the

recommended changes; and (4) all comments received have been considered

and no changes have been made to increase the requirements proposed.

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

follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

1. The authority citation for 7 CFR part 999 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

[[Page 71362]]

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 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, and storage.

(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:

BILLING CODE 3410-02-P

[[Page 71363]]

[GRAPHIC] [TIFF OMITTED] TR24DE98.000

BILLING CODE 3410-02-C

[[Page 71364]]

(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. (l) 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: (252) 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.

(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, PO Box 96456,

room 2049-S, Fruit and Vegetable Programs, AMS, USDA, Washington, DC,

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 50,000 pounds (22,680 kilograms).

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

[[Page 71365]]

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. All lots forwarded to a reconditioning

facility must be accompanied by valid PLI 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, (PO Box 272), Tel: (912) 995-7257, Fax: (912) 995-3268

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, (PO Box 1368, zip 36302)), Tel: (334) 792-5185,

Fax: (334) 671-7984

Federal-State Inspection Service Laboratory, 201 Broad St.,

Headland, AL 36345, (PO Box 447, zip 36345-0447), Tel: (334) 693-

2729, Fax: (334) 693-2183

Federal-State Inspection Service Laboratory, 103 Greenville Ave.,

Goshen, AL 36035, (PO Box 204), Tel: (334) 484-3340, Fax: (334) 484-

3340

Federal-State Inspection Service Laboratory, 805 North Main St.,

Enterprise, AL 36330, (PO 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., 1200 Wyandotte, Albany, GA 31705, (PO 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 SE 3rd Street, Anadarko, OK 73005,

Tel: (405) 247-3266, Fax: (405) 247-3270

J. Leek Associates, Inc., PO Box 475, Blakely, GA 31723, Tel: (912)

723-9155, Fax: (912) 723-2980

J. Leek Associates, Inc., 502 West Navarro St., DeLeon, TX 76444,

(PO Box 6), Tel: (817) 893-3653, Fax: (817) 893-3640

J. Leek Associates, Inc., PO Box 333, Headland, AL 36345, Tel: (334)

693-9320, Fax: (334) 693-0491

Pert Laboratory South, 721 East Pine Street, Colquitt, GA 31737, (PO

Box 396), Tel: (912) 758-9293, Fax: (912) 758-8286

Pert Laboratories, 145 Peanut Drive, Edenton, NC 27932, (PO Box

267), Tel: (252) 482-4456, Fax: (252) 482-5370

Southern Cotton Oil Company, 600 E. Nelson Street, Quanah, TX 79252,

(PO Box 180), Tel: (940) 663-5323, Fax: (940) 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, PO 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

[[Page 71366]]

certified as meeting edible quality grade requirements. Such lots shall

be certified as ``Meets U.S. import requirements for edible peanuts

under Sec. 999.600 with regard to aflatoxin.''

(B) Lots containing more than 15 ppb aflatoxin content shall be

certified as ``Fails to meet U.S. import requirements for edible

peanuts under Section Sec. 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

prescribed 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 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 in

storage or made available for inspection; and a contact name or

telephone number at that 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 may include bills-of-lading, transfer certificates, and

other documentation showing shipment from the importer, blancher,

remiller, warehouse, or other entity, to 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 re-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, DC, 20250,

Attn: Report of Imported Peanuts. Regular mail should be sent to FV,

AMS, USDA, PO Box 96456, Room

[[Page 71367]]

2525-S, Washington, DC 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 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 141.20 and 141.113: 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 this

section. 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: December 16, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-33933 Filed 12-23-98; 8:45 am]

BILLING CODE 3410-02-P