[Federal Register Volume 61, Number 22 (Thursday, February 1, 1996)]
[Proposed Rules]
[Pages 3605-3618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1667]



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[[Page 3606]]



DEPARTMENT OF AGRICULTURE
7 CFR Part 999

[Docket No. FV94-999-2PR]


Specialty Crops; Import Regulations; Peanut Import Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish minimum quality, 
identification, certification and safeguard requirements for imported 
farmers stock, shelled, and cleaned-inshell peanuts. The rule is issued 
under section 108B(f)(2) of the Agricultural Act of 1949, as amended. 
The provisions of paragraph (f)(2) require all peanuts in the domestic 
market to fully comply with all quality standards under Peanut 
Marketing Agreement No. 146 (Agreement). Thus, this rule would 
establish the same quality requirements and handling procedures for 
imported peanuts as those in effect for domestically produced peanuts. 
This action would benefit peanut handlers, importers and consumers by 
helping to ensure that all peanuts in the marketplace comply with the 
same quality standards.

DATES: Comments must be received by March 4, 1996. Pursuant to the 
Paperwork Reduction Act, comments to the information collection burden 
must be received by April 1, 1996.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this action. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, 
room 2523-S, Washington, DC 20090-6456; fax 202-720-5698. Comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register and will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor or Rick Lower, Marketing 
Specialists, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-
6456; tel: (202) 720-6862 or (202) 720-2020; fax (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under paragraph 
(f)(2) of section 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c-
3), as amended November 28, 1990; Pub. L. 101-624, hereinafter referred 
to as the Act. Paragraph (f)(2) of section 108B of the Act provides 
that the Secretary of Agriculture (Secretary) shall require that all 
peanuts in the domestic market fully comply with all quality standards 
under Marketing Agreement No. 146 (7 CFR part 998), issued pursuant to 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674).
    This proposed rule would add a new Sec. 999.600 governing the 
importation of peanuts'' under 7 CFR part 999--Specialty Crops; Import 
Regulations. Proposed Sec. 999.600 establishes minimum quality, 
identification, certification and safeguard requirements for foreign 
produced farmers stock, shelled and cleaned-inshell peanuts presented 
for importation into the United States. The quality requirements are 
the same as those specified in Sec. 998.100 Incoming quality regulation 
and Sec. 998.200 Outgoing quality regulation established pursuant to 
the Agreement. Whenever the regulations specified in the Agreement are 
changed, the regulations in Sec. 999.600 would be changed accordingly. 
Safeguard procedures enable the Department to monitor and assure 
importers' compliance with the requirements of this regulation.
    The intent of paragraph (f)(2) of section 108B of the Act is to 
ensure that all peanuts in the domestic marketplace comply with the 
same quality standards.
    The U.S. Department of Agriculture (Department or USDA) is issuing 
this rule in accordance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform, and is not intended to have retroactive effect. 
This rule would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule. There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of this rule.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this proposed rule on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Small agricultural 
service firms, which include importers, have been defined by the Small 
Business Administration (13 CFR 121.601) as those whose annual receipts 
are less than $5 million. This proposed import regulation is based on 
regulations established under the Agreement, which regulates the 
quality of domestically produced peanuts. The majority of entities that 
are signers of the Agreement cannot be classified as small businesses, 
and it is anticipated that peanut importers affected by this regulation 
will be comprised primarily of signatories to the Agreement. Although 
small business entities may incur additional costs in meeting these 
proposed import regulations, the benefits accrued from the assurance of 
good quality peanuts should outweigh any additional costs to such 
entities. Inspection and testing fees would be uniformly applied to 
importers, regardless of size. Finally, this action is required by 
statute.
    The Department is unable to estimate, at this time, the number or 
size of importers, or domestic peanut handlers acting as importers, who 
may choose to import peanuts under the relaxed quota. The Department 
estimates that there are as many as 50 domestic peanut handlers with 
storage and milling facilities that can be used to prepare peanuts for 
human consumption markets.
    In the past, the importation of peanuts has been limited to 1.71 
million pounds annually. However, the Schedule of the United States 
annexed to the North American Free Trade Agreement (NAFTA), implemented 
on January 1, 1994, provided duty free entry for up to approximately 
7.43 million pounds of qualifying peanuts from Mexico. For 1995, the 
duty-free access increased to approximately 7.65 million pounds. By 
calendar year 2008, access will be unlimited. In addition, the United 
States Schedule to the Uruguay Round Agreements negotiated under the 
General Agreement on Tariffs and Trade (GATT) relaxes the peanut import 
quota to 74.5 million pounds in 1995, with additional annual increases 
to 124 million pounds by the year 2000.
    Various qualities of peanuts are entered into the United States 
from countries such as Argentina, Mexico, Nicaragua, India, and the 
People's Republic of China. However, until the People's Republic of 
China accedes to the World Trade Organization, no benefits of the 
increased access will be available to it. Foreign produced peanuts are 
produced under varying weather conditions and using different cultural 
practices. Consistent with the Agreement's regulatory provisions, each 
lot of peanuts entered into the U.S. would be required to be officially 
sampled and graded by the Federal or Federal-State Inspection Service 
(inspection service). Incoming inspection for farmers stock peanuts and 
outgoing inspection for edible quality shelled peanuts and cleaned-
inshell peanuts would be required for imported peanuts. A list of 
inspection service 

[[Page 3607]]
offices is provided in paragraph (d)(2)(i) of this regulation.
    Some peanuts contain defects or other damage which cause them to be 
of low quality or have poor taste which could affect the demand for 
peanuts. Producers, handlers and manufacturers in the domestic peanut 
industry believe that even an isolated quality problem could adversely 
affect consumer confidence, which would be detrimental to the domestic 
peanut industry.
    The Agreement imposes quality standards for domestically produced 
inshell and shelled peanuts. Peanut lots are graded based on the 
percentage of unshelled peanuts, percentage of kernels with damage and 
minor defects, percentage of loose shelled kernels, percentage of 
foreign material, and percentage of moisture content. In addition, an 
integral part of these quality standards is the extent of the presence 
of Aspergillus flavus mold (the principal cause of aflatoxin, which is 
a carcinogen). This mold is more likely to be found on damaged or 
defective kernels than on sound, whole, good quality kernels. A 
chemical analysis for aflatoxin is required on shelled peanut lots not 
meeting superior quality requirements. Shelled lots that exceed certain 
superior quality requirements are exempt from the aflatoxin chemical 
analysis requirements.
    U.S. Customs Service requirements and USDA safeguard procedures: 
Importer obligations would include filing documents notifying the U.S. 
Customs Service (Customs Service) and the USDA of different actions 
taken concerning foreign produced inshell and shelled peanuts. Customs 
Service importation procedures and requirements are set out in title 19 
of the Code of Federal Regulations (19 CFR). The Customs Service 
regulations applicable to peanut handling and processing include, but 
are not be limited to: bond requirements (19 CFR part 113); transfer 
from port of entry to another Customs Service office location (19 CFR 
part 112); entry of merchandise for consumption (19 CFR part 141); 
warehouse entry, and withdrawal from warehouse for consumption (19 CFR 
part 144); establishment of bonded warehouses (19 CFR parts 19.13 and 
19.2); and manipulation in bonded warehouses (19 CFR part 19.11); 
transfer of ownership (19 CFR parts 141.113 and 141.20); failure to 
recondition (19 CFR part 113.62(e); and redelivery of merchandise 19 
CFR part 113.62(d). For Customs Service purposes, the term 
``consumption'' means ``use in the United States.'' Customs Service 
entry procedures would not be superseded by this import regulation.
    When arriving at a port of entry, foreign produced peanuts may be 
entered for ``warehouse'' or entered for ``consumption,'' or may be 
transported to another Customs Service port of entry to be entered 
there for warehouse or consumption. Peanuts transported from one 
Customs Service port of entry to another Customs Service port of entry 
must be transported by a carrier designated by the Customs Service 
under 19 U.S.C. 1551. Peanuts entered for warehouse are stored in a 
Customs Service bonded warehouse. Such peanuts remain in Customs 
Service custody until they are withdrawn from warehouse, entered for 
consumption, or released from Customs Service custody. Peanuts entered 
for consumption, and peanuts withdrawn from warehouse for consumption, 
are released from Customs Service custody for edible or non-edible use. 
Release of peanuts, in both cases, would be a conditional release, 
pending certification that the peanuts conform to Customs Service entry 
requirements and meet the handling and quality requirements of this 
proposed regulation. The Customs Service can demand redelivery of 
peanuts that are subsequently determined to be inadmissible.
    The importer, or import broker acting on behalf of the importer, 
would be required to file with the Customs Service required entry 
documentation for each foreign produced peanut lot to be entered. Under 
USDA safeguard procedures established in this proposed rule, each 
importer would also be required to file completed entry documentation 
(Customs Service Form 3461 or other equivalent form) with the 
inspection service office that would perform the sampling of the lot 
for inspection to provide that office with advanced notice of requested 
inspection. The entry documentation would be filed by mail or facsimile 
transmission (fax). The filing would occur prior to arrival of the 
shipment at the port of entry in order to expedite entry procedures. 
The inspection service office would stamp, sign, and date the entry 
document and return it to the importer or broker by fax or mail. The 
importer/broker would then submit the stamped copy to the Customs 
Service. This ``stamp-and-fax'' procedure is similar to a procedure in 
place for other imported agricultural commodities under AMS 
jurisdiction. Failure to file with the Customs Service a copy of the 
entry documentation stamped by the inspection service would result in a 
delay or denial of entry. The importer/broker would also send a 
completed copy of the document to the AMS to initiate USDA's monitoring 
process.
    The names, addresses and contact numbers of inspection service 
offices that perform peanut sampling and/or grade inspections are 
provided in paragraph (d)(3) of this proposed rule. Inspection service 
offices at other locations may be contacted to sample the imported 
peanut lot. In such cases, the collected peanut samples would be 
shipped to an inspection service office with equipment and personnel 
qualified to a perform grade inspection. Samples of lots meeting 
minimum grade requirements would also be sent to an approved laboratory 
(listed in paragraph (d)(4) of this rule) for aflatoxin analysis. The 
lot would have to remain in storage pending grade and aflatoxin 
certification.
    It would then be the importer's responsibility to provide, in the 
mailed or faxed documentation, sufficient information to identify the 
peanut lot being entered and to ensure that arrangements are made for 
sampling and inspection. The information would include the container 
identification, weight of the peanut lot, the city, street address, and 
building number (if known) receiving the peanut lot, the requested date 
and time of inspection, and a contact name or number at the 
destination. If the destination is changed from that listed on the 
stamp-and-fax document, it would be the importer's responsibility to 
immediately advise inspection service offices at both the original 
destination and the new destination of such change. Shipments which are 
not made available pursuant to the entry document, or are not properly 
displayed for sampling purposes, would be reported to the Customs 
Service.
    Falsification of reports submitted to the AMS is a violation of 
Federal law punishable by fine or imprisonment, or both.
    A bond secured by surety or U.S. Treasury obligations is required 
to be posted by the importer with the Customs Service to guarantee the 
importer's performance. Peanuts would be determined inadmissible 
because the importer failed to follow Customs Service importation 
procedures, the peanuts failed to meet quality requirements, or because 
the handling procedures (including lot identification and 
certification) specified in these proposed regulations were not 
followed.
    Redelivery could be demanded for failure to comply with the 
quality, handling, and reporting requirements of this import 
regulation, including: arrival at the inland destination with a broken 
Customs Service or inspection service 

[[Page 3608]]
seal; failure to maintain lot identity; failure to receive required 
inspection; commingling of peanut lots not of like quality or 
condition; disposition of non-edible peanuts to an edible peanut outlet 
or an improper, non-edible peanut outlet; and failure to fully report 
the disposition of foreign produced peanuts. Disposition reports would 
include grade, aflatoxin, and identification certifications and bills 
of lading, sales receipts, and other documentation showing the peanuts 
were disposed to a non-edible peanut outlet, exported, or destroyed.
    A redelivery demand must be made by the Customs Service within 30 
days of release of the peanuts. Redelivery to the port of entry is 
normally required within 30 days after the redelivery demand is issued. 
The Customs Service may authorize a longer redelivery period and may 
authorize an appropriate extension of the redelivery period for good 
cause.
    Because the Customs Service requires one week to prepare and issue 
a redelivery demand notice, this proposed import rule would establish 
that importers must report disposition of lots of peanuts to the AMS 
within 23 calendar days of the date of release. Although a 23-day 
deadline may be considered burdensome by some, this deadline is 
necessary because of the Customs Service 30-day requirement. Thus, the 
importer would have 23 days to perform necessary shelling, cleaning, 
sorting, sizing or other handling functions necessary to obtain edible 
certification or to dispose of the peanuts to a non-edible peanut 
outlet. If the AMS did not receive certification of the lot's edible 
quality or non-edible disposition by the 23rd calendar day, or if the 
importer fails to comply with quality or handling requirements of this 
import regulation, the AMS would notify the Customs Service. The 
Customs Service would then demand redelivery of the lot. Peanuts 
entered for warehouse (and which remain in Customs Service custody in a 
bonded warehouse) would not be subject to these time constraints until 
they are withdrawn for consumption. If notified by the importer, AMS 
would extend a deadline to correspond with an extension granted to the 
importer by the Customs Service.
    The importer would cause a copy of the entry documentation 
applicable to each peanut lot to be forwarded with the peanuts to the 
lot's inland destination. If the shipment is sealed by Customs Service 
or the inspection service, the seal must remain intact and would be 
broken only by an authorized official at the destination point.
    The identification requirements in this proposed regulation are 
similar to the Agreement's lot identification requirements. Lot size 
would be limited to 200,000 pounds to comply with Agreement 
requirements and random sampling provisions of the inspection service. 
Boatload shipments exceeding 200,000 pounds would be entered under two 
or more Customs Service entry documents. For instance, five containers 
averaging 40,000 pounds each (the industry standard) would be entered 
on one entry document. Lot size and identification arrangements would 
be made consistent with the port of entry inspection service office and 
would be established cooperatively between the inspection service, 
Customs Service offices and the importer at the port of entry. This 
would facilitate subsequent lot identification, inspection, and 
reporting of large imported shipments.
    Foreign produced peanuts placed in storage could be commingled only 
with like-quality, foreign produced peanuts belonging to the same 
importer. Similarly, failing quality peanuts could be commingled with 
other such foreign produced peanuts prior to clean up or non-edible 
disposition. However, reports concerning commingled lots would have to 
be reported within the 23-day reporting period of the earliest-entered 
lot commingled. For example, if two 100,000 pound shipments were 
released for consumption entries on consecutive Mondays, and commingled 
in storage prior to outgoing inspection, at least 100,000 pounds from 
the commingled lot would have to be withdrawn from storage, inspected 
and reported as meeting edible or non-edible disposition requirements 
of this proposed rule within 23 days of the first lot's consumption 
entry date. Further, the remaining commingled peanuts would have to be 
withdrawn, inspected, properly disposed and reported within the next 
week--before the end of the second lot's 23 day reporting period.
    The objective of the lot identification requirements is to help 
ensure that individual peanut lots would be disposed as required and 
that defects in poor quality peanut lots would not be blended out by 
commingling poor quality peanuts with higher quality peanuts. The lot 
identification requirements in this proposed import regulation are the 
same as those specified for domestically produced peanuts.
    All USDA required sampling, quality certification, and lot 
identification would be conducted by the inspection service. Chemical 
analysis would be conducted by USDA or approved laboratories. Foreign 
produced peanuts stored in bonded warehouses are subject to Customs 
Service audits. Importers would reimburse the inspection service, 
laboratories, and the Customs Service for services provided and costs 
incurred with regard to the importation of the importer's peanuts.
    Release for importation:
    Depending on condition (shelled or inshell) and containerization, 
foreign produced peanuts could be either: (1) Sampled, inspected, and 
held at the port of entry until certified by the inspection service as 
meeting the edible quality requirements of this rule; or (2) 
conditionally released at the port of entry and entered under Customs 
Service entry procedures for later inspection and certification.
    Under option (1), foreign produced shelled or cleaned-inshell 
peanuts which are cleaned, sorted, sized, and otherwise prepared for 
edible consumption prior to entry, could be sampled and inspected at 
the port of entry. The importer would present such peanuts in 
containers or bags that would allow appropriate sampling of the lot 
pursuant to inspection service requirements. After sampling, such lots 
would be held at the port of entry, under lot identification 
requirements of the inspection service, pending results of the 
inspection and chemical analysis. If determined to meet the applicable 
edible quality requirements in paragraph (c) of this proposed rule, the 
shelled or cleaned-inshell peanuts could be entered for consumption 
without further inspection. Reports of such entries would not have to 
be filed with AMS.
    Shelled or cleaned-inshell peanuts, sampled and held at the port of 
entry, which fail edible quality requirements would, at the importer's 
discretion, be: (1) exported; (2) entered for clean up, and if 
satisfactorily remilled or blanched, used for edible consumption; or 
(3) entered for non-edible consumption. Failing peanuts that are 
exported would not have be reported to AMS because the peanuts were not 
entered into the U.S. The importer would fully report all actions taken 
on each lot entered for clean up or non-edible disposition within 23 
days of the lot's consumption entry filing date.
    Under option (2), foreign produced shelled or cleaned-inshell 
peanuts which are cleaned, sorted, sized, and otherwise prepared for 
edible consumption prior to entry, would be conditionally released at 
the port of entry and transported inland for sampling, inspection, and 
certification. Farmers stock peanuts would have to be shipped inland 
for sampling and inspection because specialized sampling 

[[Page 3609]]
facilities are not available at ports of entry.
    Categories of peanuts submitted for importation:
    Farmers stock peanuts. Such peanuts would be required to undergo 
incoming inspection at a prearranged buying point prior to arrival at a 
shelling or storage destination. All required inspections, shelling, 
and dispositions of released farmers stock peanuts would be completed 
and reported within the required 23 day reporting deadline.
    Foreign produced farmers stock peanut lots could not be commingled 
with other peanut lots prior to incoming inspection. Incoming 
inspection determines the quality of the farmers stock peanuts based on 
moisture content, foreign material, damage, loose shelled kernels, and 
visible Aspergillus flavus mold. The inspection service would issue 
USDA form CFSA-1007, ``Inspection Certificate and Sales Memorandum'' 
(formerly ASCS-1007) designating the lot as either Segregation 1, 2, or 
3 quality.
    Only Segregation 1 peanut lots could be prepared for human 
consumption use. Such peanuts would be shelled or prepared for cleaned-
inshell use, and certified for disposition within 23 days of the lot's 
release. If Segregation 1 lots imported on successive days were 
commingled, each imported lot would still have to comply with the 23-
day reporting period. For quality control and reporting purposes, 
Segregation 1 lots intended for human consumption outlet could be 
commingled only with other like quality peanuts of the same importer. A 
Segregation 1 lot commingled with Segregation 2 or 3 peanuts would 
assume the lower Segregation 2 or 3 quality and would be disposed as 
non-edible quality peanuts.
    Foreign produced farmer stock peanuts received by importers and 
determined at incoming inspection to be Segregation 2 and 3 quality 
peanuts could be disposed only as non-edible peanuts. Segregation 3 and 
commingled Segregation 2 and 3 farmers stock peanuts could be exported 
inshell or shelled and fragmented prior to export. Segregation 2 and 3 
peanuts could also be destroyed by burying (under inspection service 
supervision) or exported (certified by Customs Service). The importer 
would report non-edible disposition by providing a copy of the incoming 
inspection certificate, bills of lading and sales receipts, or other 
official certifications as proof of disposition to crushing or 
exportation, or to other non-edible outlets or burying. Exported 
peanuts would be lot identified by the inspection service and that 
certification would be filed with the Secretary within the 23 day 
reporting period and applicable Customs Service re-export procedures 
would be followed.
    Foreign produced Segregation 2 and 3 quality peanuts could be 
shelled by a custom seed sheller for seed use and dyed or chemically 
treated so as to be unfit for human or animal consumption. Domestically 
produced Segregation 2 and 3 peanuts shelled for seed need not be dyed 
or treated but must be produced under the auspices of a State agency, 
shelled by a custom seed sheller, and subject to the Peanut 
Administrative Committee (PAC) oversight. Measures such as these are 
necessary to ensure that peanuts used for human consumption are safe 
and wholesome. Proof of dyeing or chemical treatment of foreign 
produced peanuts would be filed with the Secretary within the 23 day 
reporting period.
    Foreign produced farmers stock peanuts do not qualify for the 
support program administered by the Farm Service Agency, formerly the 
Agricultural Stabilization and Conservation Service (ASCS).
    Shelled peanuts: Foreign produced shelled peanuts could: (1) 
Originate from foreign produced Segregation 1 farmers stock milled at 
facilities in the U.S., or (2) be peanuts produced and milled in 
another country which are conditionally released at the port-of-entry 
for inland sampling and inspection. Both categories of shelled peanuts 
would be sampled and inspected against outgoing quality requirements 
specified in paragraph (c) of this regulation.
    Domestically produced shelled peanuts intended for edible markets 
must originate from farmers stock peanuts which have undergone incoming 
inspection and are determined to be of Segregation 1 quality. The AMS 
cannot determine whether shelled peanuts produced and milled in a 
foreign country originated from Segregation 1 quality peanuts prior to 
milling. However, because outgoing inspection is more reliable and 
precise in determining aflatoxin content in peanut kernels, this 
proposed import regulation provides that peanuts shelled prior to entry 
would be exempt from incoming inspection before delivery for outgoing 
inspection. Such shelled peanuts would be sampled and tested against 
outgoing quality requirements prior to disposition to edible outlets.
    Two grade levels for shelled peanuts are in effect under the 
Agreement and would be established in this import regulation. The 
Agreement provides that shelled peanut lots meeting the quality 
requirements specified in a table entitled ``Other Edible Quality,'' 
under paragraph (a) of Sec. 998.200, must be chemically analyzed for 
aflatoxin content prior to disposition to edible outlets. The quality 
requirements specified in the Other Edible Quality table are duplicated 
in ``Table 1, Minimum Grade Requirements--Peanuts for Human 
Consumption'' of this proposed import regulation. The outgoing quality 
requirements would also include a parts-per-billion tolerance for 
aflatoxin, determined by chemical analysis.
    Aflatoxin appears most frequently in damaged, stressed, under-
developed and malformed kernels. Domestic lots with fewer poor quality 
kernels are less likely to be contaminated and, thus, do not have to be 
chemically tested. The Agreement's ``Indemnifiable Grades'' table in 
paragraph (a) of Sec. 998.200, provides for a superior quality level 
with more rigorous percentage tolerances than those found in the Other 
Edible Quality table. Thus, foreign produced shelled lots meeting the 
superior quality standards would be exempt from chemical analysis. The 
quality requirements specified in the ``Indemnifiable Grades'' table 
are duplicated in ``Table 2 Superior Quality Requirements--Peanuts for 
Human Consumption'' of this proposed regulation.
    Currently, in paragraph (c)(4) of Sec. 998.200, peanuts are 
considered edible quality if the chemical assay shows the lot contains 
15 ppb or less of aflatoxin. Thus, the level of aflatoxin in foreign 
produced peanut lots intended for edible peanut markets could not 
exceed 15 ppb. Consistent with paragraphs (c)(4) and (g)(3) of 
Sec. 998.200, non-edible quality peanut lots with 25 ppb or less could 
be disposed to certain non-edible peanut outlets. Non-edible quality 
peanut lots with aflatoxin exceeding 25 ppb would be further restricted 
to certain other non-edible peanut outlets. The sampling, testing, 
certification and identification of foreign produced peanuts lots would 
be performed in accordance with paragraph (d)(4) of this proposed 
regulation.
    Chemical testing would be performed by an AMS, Science and 
Technology Division laboratory or a laboratory approved by the PAC. The 
PAC locally administers the Agreement with Department oversight. A list 
of approved laboratories is provided in paragraph (d)(4)(iv) of this 
proposed regulation. These are the same laboratories specified in the 
Agreement.
    Thus, to obtain approval for human consumption use of a foreign 
produced shelled peanut lot, the importer would present to the AMS and 
the Customs 

[[Page 3610]]
Service two certifications: (1) Quality certification Form FV-184-9A 
``Milled Peanut Inspection Certificate'' and (2) aflatoxin 
certification Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' issued by USDA laboratories, or equivalent forms issued by a 
PAC approved lab. An aflatoxin certificate would not be required if the 
lot meets the superior grade requirements, but could be required by the 
buyer. The certificates are the same as those used to report grade and 
chemical analysis results for domestically produced peanuts. If the 
required certificates were not received by the AMS within 23 days of a 
consumption entry, or a withdrawal for consumption entry, the AMS would 
request the Customs Service to initiate a redelivery demand for the 
lot.
    Cleaned-inshell peanuts: Inshell peanuts that have been cleaned, 
sorted, and prepared in another country for edible inshell peanut 
markets in the U.S. could be presented as a consumption entry at the 
port of entry. Such peanuts would be declared as cleaned-inshell 
peanuts on the Customs Service entry document and could either be 
presented for outgoing inspection at the port of entry, if delivered in 
bags, or conditionally entered for outgoing inspection at a facility 
inside the U.S. Peanuts declared as cleaned-inshell on a Customs 
Service entry document could not undergo additional cleaning, sorting, 
sizing, or drying prior to outgoing inspection at the destination point 
inside the U.S.
    Cleaned-inshell peanut lots destined for edible peanut markets 
would be required to meet certain minimum quality requirements for 
damage, moisture and foreign material. Cleaned-inshell lots containing 
more than 1 percent kernels with visible mold would have to be 
chemically tested and meet aflatoxin requirements. The cleaned-inshell 
quality requirements specified in paragraph (c)(2) of this proposed 
regulation are the same as the quality requirements in paragraph (b) of 
Sec. 998.200 of the Agreement.
    Foreign produced farmers stock Segregation 1 peanuts also could be 
prepared and presented at outgoing inspection as cleaned-inshell 
peanuts. Such peanuts inspected and certified as meeting edible 
requirements for cleaned-inshell peanuts would be designated as 
imported peanuts on inspection service form FV-184-9A. The importer 
would file form FV-184-9A with the AMS for each lot of foreign produced 
cleaned-inshell peanuts meeting edible quality requirements for 
cleaned-inshell peanuts.
    Imported peanuts certified as meeting edible requirements could be 
used any way desired. Only after shelled and cleaned-inshell peanuts 
are certified as meeting applicable requirements could such peanuts be 
commingled with imported lots of other importers or domestically 
produced peanuts also certified for human consumption.

Disposition of Failing Peanuts

    The following peanuts could not be used for human consumption: (1) 
Farmers stock peanuts that grade either Segregation 2 or Segregation 3; 
(2) cleaned-inshell and shelled peanuts that fail outgoing quality and/
or aflatoxin requirements and were not reconditioned or reworked (the 
removal of defective kernels); and (3) below grade residue from any 
shelling, milling or blanching operations.
    Cleaned-inshell lots that fail outgoing inspection requirements of 
paragraph (c)(2) could be reconditioned by remilling the peanuts, which 
could include shelling. If shelled, the peanuts would have to meet 
outgoing requirements of proposed paragraph (c)(1) for shelled peanuts.
    Failing shelled lots, which originated from Segregation 1 peanuts, 
could be reconditioned following procedures established in paragraph 
(f) of this proposed rule. These provisions are the same as those 
established under various provisions of the Agreement. Segregation 1 
shelled peanuts failing quality requirements in table 1 and/or 
exceeding 15 ppb aflatoxin content could be reconditioned by remilling 
and/or blanching and, when subsequently reinspected and certified as 
meeting edible quality and aflatoxin requirements, could be disposed to 
edible peanut outlets. If not reconditioned, failing Segregation 1 lots 
would have to be disposed to non-edible peanut outlets as unrestricted 
or restricted peanuts (below).
    Provisions controlling the disposition of residue peanuts from 
inshell remilling and shelled remilling and blanching that continue to 
fail edible quality requirements are also provided in this proposed 
rule. Two categories of non-edible peanuts are specified under the 
Agreement--``unrestricted'' and ``restricted.'' The designation would 
be based on the amount of aflatoxin detected in the lot. 
``Unrestricted'' peanuts would be peanuts which fail one or more 
quality requirements and, when chemically assayed, contain more than 15 
ppb but 25 ppb or less aflatoxin. While such peanuts would not be 
edible quality, they could be crushed for oil, exported or used in 
animal feed, provided that certain handling and container labeling 
requirements were followed. Unrestricted peanuts also could be used for 
seed (if dyed or treated to prevent edible use), crushed for oil, 
exported, or buried. Meal resulting from the crushing of unrestricted 
peanuts would not have to be tested a second time for aflatoxin 
content. Disposition of meal resulting from the crushing of peanuts is 
not regulated under the Agreement or this proposed regulation.
    Peanuts containing more than 25 ppb aflatoxin would be considered 
``positive'' to aflatoxin and would be designated as ``restricted'' 
peanuts. Restricted peanut lots may or may not meet quality 
requirements of table 1. At the direction of the importer, restricted 
peanut lots would be used either for seed (if dyed or treated), crushed 
for oil, destroyed by burying, or exported. Meal resulting from the 
crushing of restricted peanuts would be certified as to aflatoxin 
content and such certification would accompany the meal into the 
channels of commerce.
    The importer could dispose of a failing peanut lot directly to a 
non-edible peanut outlet or set aside and commingle several failing 
lots for eventual disposition to one or more non-edible outlets. 
Commingled failing quality peanuts would be held separate and apart 
from edible peanuts and identified with red tags indicating non-edible 
peanuts. Eventual disposition would be to non-edible peanut outlets 
consistent with the failing quality of the peanuts, pursuant to 
paragraph (e) of this proposed rule.
    If an importer chose to destroy by burying or export unrestricted 
or restricted peanuts, the peanuts would be lot identified and proof of 
burying or exportation would be provided by the importer to the AMS. 
Customs Service procedures controlling re-exported merchandise would 
also be followed by the importer. Burying and exportation expenses 
would be borne by the importer.
    It would be the importer's responsibility to file inspection 
certificates and other documentation sufficient to account for 
disposition of all failing quality peanuts acquired by the importer. 
Such proof could consist of copies of bills of lading and sales 
receipts between the importer and non-edible peanut outlet receivers. 
The documentation would contain identifying information, such as 
container or lot numbers, that tie the peanuts reported on the 
documents to failing quality peanuts on inspection service or aflatoxin 
certificates. The name and address of the non-edible peanut receiver 
and valid contact information would also be specified on the 
documentation. 

[[Page 3611]]

    Disposition of unrestricted and restricted peanut lots would be 
reported to the AMS within 23 days of filing for a consumption entry, 
or a withdrawal for consumption entry, with the Customs Service.
    The inspection service would identify imported peanuts as peanuts 
of foreign origin on the inspection certificate to assist in lot 
identification (and help prevent unintended commingling with 
domestically produced peanuts prior to certification). Foreign origin 
designations also would help importers and the AMS meet its monitoring 
responsibilities.
    From time to time, the PAC may recommend to the Secretary that 
quality requirements or handling procedures specified in the Agreement 
be revised. If such changes are approved by the Secretary and 
implemented for the domestic peanut industry in 7 CFR Part 998, 
corresponding changes would be made in Sec. 999.600. Changes in 
regulations for domestically produced peanuts are generally made 
effective July 1. Thus, corresponding changes to the import regulation 
would be made effective on that date, unless otherwise specified in the 
regulation. Quality requirements in effect on the date of inspection of 
a foreign produced lot would be applied to the inspected lot.
    Safeguard procedures: This proposed rule would establish a 
procedure to verify importers' compliance with import requirements. The 
safeguard procedures would provide for monitoring of peanut lots from 
entry to final disposition. The purpose of these procedures would be to 
ensure that foreign produced peanuts either meet edible requirements or 
are appropriately disposed to non-edible peanut outlets, exported or 
destroyed. The proposed safeguard procedures are similar to safeguard 
procedures already in place for other imported commodities and are 
consistent with the inspection, identification and certification 
requirements applied to domestically produced peanuts under the 
Agreement.
    The safeguard process would include the ``stamp-and-fax'' entry 
procedure, described above, whereby the importer provides the Customs 
Service with an entry document stamped by the inspection service. The 
importer also would file a copy of the entry document with the AMS and 
forward a copy, with the released lot, to the inland destination where 
the lot would be inspected or warehoused. Edible certification and non-
edible disposition would be reported by filing with the AMS copies of 
all grade certificates, aflatoxin certificates, and proof of non-edible 
disposition. Such certifications would be filed within 23 days of 
filing a consumption entry or a withdrawal from warehouse for 
consumption entry.
    Receipt of required certificates and other documentation within the 
23-day deadline would be essential. Failure of an importer to obtain 
edible certification--or arrange for appropriate non-edible 
disposition--on all foreign produced peanut acquisitions, and file such 
reports with the AMS within 23 days of a consumption declaration, could 
result in a redelivery demand by the Customs Service. Failure to 
redeliver the violating lot could result in liquidated damages.
    Certificates and other supplementary documentation would be sent to 
AMS, Marketing Order Administration Branch (MOAB) which oversees the 
domestic peanut program and would oversee this proposed import program. 
Facsimile or express mail deliveries could be used to ensure timely 
receipt of certificates and other required documentation. Overnight and 
express mail deliveries would be addressed to the USDA/AMS, Marketing 
Order Administration Branch, 14th and Independence Ave. SW, Room 2525, 
Washington, DC. 20250, Attn: Report of Imported Peanuts. The MOAB's fax 
number is (202) 720-5698, Attn: Report of Imported Peanuts.
    For the purposes of checking and verifying reports filed by 
importers and disposition outlets, provisions would be included in this 
proposed regulation that would allow the Secretary, through duly 
authorized agents, to have access to any premises where peanuts may be 
held and processed. Authorized agents, at any time during regular 
business hours, would be permitted to inspect any peanuts held, and any 
and all records with respect to the acquisition, holding or disposition 
of any peanuts which may be held, or which may have been disposed by 
that importer.
    USDA record retention requirements would also be established to 
require importers to retain information for at least two years beyond 
the year of applicability. Customs Service record retention 
requirements are longer.
    With regard to Customs Service reporting procedures, it is the 
importer's decision when to commence ``consumption'' entry procedures 
or when to withdraw merchandise from a warehouse for consumption. The 
importer's decision would be implemented in a manner consistent with 
Customs Service procedures and reported in accordance with normal 
Customs Service requirements. Any Customs Service reporting or 
recordkeeping requirements for disposition of imported merchandise or 
clearance of bonding requirements would not be superseded by this 
regulation.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
Chapter 35), the information and collection requirements that are 
contained in this proposed rule have been submitted to the Office of 
Management and Budget (OMB) and would be assigned a new OMB number. 
Comments should reference this proposed import regulation and the date 
and page number of this Federal Register. Comments must be received by 
April 1, 1996. Comments should be submitted to the Desk Officer for 
Agriculture, Office of Information and Regulatory Affairs, OMB, 
Washington, D.C., 20503 and to the USDA in care of the Docket Clerk, 
Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room 2523-S, 
Washington, DC 20090-6456; fax 202-720-5698. A comment to OMB is best 
assured of having its full effect if OMB receives the comment within 30 
days of publication of the rule. All comments will also become a matter 
of public record.
    Comments are invited on: (1) Whether the proposed collection of 
information is necessary for USDA's oversight of imported peanuts; (2) 
the accuracy of the collection burden estimate and the validity of 
methodology and assumptions used in estimating the burden on 
respondents; (3) ways to enhance the quality, utility, and clarity of 
the information requested; and (4) ways to minimize the burden, 
including use of automated or electronic technologies.
    The reporting and recordkeeping burdens imposed under this proposed 
rule are designed to be minimal on importers and customs brokers. No 
new forms would be required to be completed by importers or customs 
brokers. However, various documentation obtained during the importation 
process--incoming and outgoing inspection certificates, lot 
identification certificates, aflatoxin laboratory analyses, Custom 
Service documentation, bills of lading, etc. would be photocopied and 
mailed to the Secretary. The information collected would be used for 
compliance purposes only and would be held confidential by the 
Department. The information collected would not be compiled for 
dissemination in any public report.
    Estimate of Burden: Public reporting burden for this proposed 
collection of information is estimated to average 5 minutes (0.083 
hours) per response. 

[[Page 3612]]

    Respondents: Importers and customs brokers who import peanuts.
    Estimated Number of Respondents: 25.
    Estimated Number of Responses per Respondent: 85.
    Estimated Total Annual Burden on All Respondents: 177 hours (7.08 
hours per respondent).
    Without the benefit of prior experience in this subject, and for 
the purposes of complying with the Paperwork Reduction Act 
requirements, the Department makes several rough estimates as to the 
number of importers affected by this regulation, the number of peanut 
shipments imported, and the number of documents needed to be filed for 
each shipment. As many as 50 peanut handlers are capable of conducting 
handling functions on imported peanuts, but evidence from 1995 
indicates that only a handful imported peanuts. Thus, the number of 
importers is estimated at 25. While the exact amount is not yet 
determined, if the 1996 quota is established at 85 million pounds (and 
is fully subscribed), approximately 425 entries of 200,000 pound 
shipments would be entered. If allocated equally, the number of 
shipments per importer would be 17.
    It is expected that most shipments would be shelled peanuts needing 
as few as three documents filed with the Secretary--the initial Customs 
Service entry document (Form 3461, or equivalent form, filed with the 
inspection service office and AMS), a grade inspection certificate (FV-
184-9A, ``Milled Peanut Inspection Certificate'') and an aflatoxin 
assay certificate (Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' or equivalent PAC approved laboratory form). Inshell lots and 
shelled lots that fail inspection requirements (expected to be far 
fewer in number) would require additional forms for reconditioning or 
disposition of non-edible peanuts. This rule estimates that each entry 
would require an average of five documents be filed for each imported 
shipment of peanuts--resulting in an estimated 85 documents filed for 
each importer, and approximately 2,125 filings for the industry. The 
time to photocopy and mail a document, and file the document for 
recordkeeping purposes, is estimated to total 5 minutes--resulting in 
an annual burden of approximately 7 hours per importer, and a total of 
177 burden hours for the industry.
    In addition to the reporting requirements, this proposed rule would 
establish that importers and customs brokers retain copies of 
certifications and entry documentation for not less than two years 
after the calendar year of acquisition. This is a commonly accepted 
records retention period and within good business practices. The time 
for maintaining records by filing each document internally is included 
in the five minute filing estimate. The information collected would be 
used only for compliance purposes by personnel of the USDA.
    The reporting and recordkeeping requirements established in this 
proposed rule would enable the USDA to oversee the importation of 
peanuts and help the U.S. peanut industry provide only good quality, 
wholesome peanuts for edible peanut outlets. Without the quality 
requirements specified in the Agreement (7 CFR Part 998), regulations 
for non-signatory handlers (7 CFR Part 997), and these proposed 
regulations, poor quality peanuts could more easily be entered into 
edible channels, causing consumer dissatisfaction and having a negative 
impact on the market for peanuts and peanut products. Compliance with 
these standards would help the peanut industry in its efforts to expand 
markets.
    Although these proposed requirements could result in small 
additional costs for importers, the benefits from the restriction of 
low quality peanuts from edible markets could outweigh any additional 
inspection, handling, recordkeeping and reporting costs resulting from 
the requirements. The proposed requirements have been carefully 
reviewed and every effort has been made to minimize any unnecessary 
reporting and recordkeeping costs.
    Based on available information, the Administrator of the AMS has 
determined that this proposed rule could impose some additional costs 
on affected importers. However, the benefits of marketing a high 
quality product should exceed the additional costs, if any, which could 
be incurred in meeting these requirements.
    A 30 day comment period is provided to allow interested persons to 
respond to this proposal. All written comments received within the 
comment period will be considered when finalizing this proposed rule.

List of Subjects in 7 CFR Part 999

    Dates, Filberts, Food grades and standards, Imports, Nuts, Peanuts, 
Prunes, Raisins, Reporting and recordkeeping requirements, Walnuts.
    For the reasons set forth in the preamble, 7 CFR part 999 is 
proposed to be amended as follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

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

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


Sec. 999.600  Regulation governing imports of peanuts.

    (a) Definitions. (1) Peanuts means the seeds of the legume Arachis 
hypogaea and includes both inshell and shelled peanuts produced in 
countries other than the United States, other than those marketed in 
green form for consumption as boiled peanuts.
    (2) Farmers stock peanuts means picked and threshed raw peanuts 
which have not been shelled, crushed, cleaned or otherwise changed 
(except for removal of foreign material, loose shelled kernels, and 
excess moisture) from the form in which customarily marketed by 
producers.
    (3) Inshell peanuts means peanuts, the kernels or edible portions 
of which are contained in the shell.
    (4) Incoming inspection means the sampling and inspection of 
farmers stock peanuts to determine Segregation quality.
    (5) Segregation 1 peanuts, unless otherwise specified, means 
farmers stock peanuts with not more than 2.49 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.
    (6) Segregation 2 peanuts, unless otherwise specified, means 
farmers stock peanuts with more than 2.49 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.
    (7) Segregation 3 peanuts, unless otherwise specified, means 
farmers' stock peanuts with visible Aspergillus flavus mold.
    (8) Shelled peanuts means the kernels of peanuts after the shells 
are removed.
    (9) Outgoing inspection means the sampling and inspection of 
either: shelled peanuts which have been cleaned, sorted, sized and 
otherwise prepared for human consumption markets; or inshell peanuts 
which have been cleaned, sorted and otherwise prepared for inshell 
human consumption markets.
    (10) Negative aflatoxin content means 15 parts-per-billion (ppb) or 
less for peanuts which have been certified as meeting edible quality 
grade requirements, and 25 ppb or less for non-edible quality peanuts. 

[[Page 3613]]

    (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 United States Department of 
Agriculture (USDA) who is, or who may hereafter be, authorized to act 
on behalf of the Secretary.
    (13) Inspection service means the Federal or Federal-State 
Inspection Service, Fruit and Vegetable Division, Agricultural 
Marketing Service, USDA.
    (14) USDA laboratory means laboratories of the Science and 
Technology Division, Agricultural Marketing Service, USDA, that 
chemically analyze peanuts for aflatoxin content.
    (15) PAC approved laboratories means laboratories approved by the 
Peanut Administrative Committee, pursuant to Peanut Marketing Agreement 
No. 146 (7 CFR Part 998), that chemically analyze peanuts for aflatoxin 
content.
    (16) Conditionally released means released under bond by the United 
States Customs Service (Customs Service) for consumption (use in the 
United States) or withdrawal from warehouse for consumption.
    (17) Importation means the release from custody of the Customs 
Service.
    (b) Incoming regulation: (1) Farmers stock peanuts presented for 
importation must first undergo incoming inspection. Only Segregation 1 
peanuts may be used for human consumption. All foreign produced farmers 
stock peanuts for human consumption must be sampled and inspected at a 
buying point or other handling facility capable of performing incoming 
sampling and inspection. Sampling and inspection shall be conducted by 
the inspection service. Only Segregation 1 peanuts certified as meeting 
the following requirements may be used in human consumption markets:
    (i) Moisture. Except as provided under paragraph (b)(2) Seed 
peanuts, of this section, peanuts may not contain more than 10.49 
percent moisture: Provided, That peanuts of a higher moisture content 
may be received and dried to not more than 10.49 percent moisture prior 
to storage or milling.
    (ii) Foreign material. Peanuts may not contain more than 10.49 
percent foreign material, except that peanuts having a higher foreign 
material content may be held separately until milled, or moved over a 
sand-screen before storage, or shipped directly to a plant for prompt 
shelling. The term sand-screen means any type of farmers stock cleaner 
which, when in use, removes sand and dirt.
    (iii) Damage. For the purpose of determining damage, other than 
concealed damage, on farmers stock peanuts, all percentage 
determinations shall be rounded to the nearest whole number.
    (iv) Loose shelled kernels. Peanuts may not contain more than 14.49 
percent loose shelled kernels, except that peanuts having a higher 
loose shelled kernel content may be imported if held separately until 
milled or shipped directly to a shelling facility for prompt shelling. 
All percentage determinations shall be rounded to the nearest whole 
number. Kernels which ride screens with the following or larger slot 
openings may be separated from loose shelled kernels: Runner--\16/64\ x 
\3/4\ inch; Spanish and Valencia--\15/64\ x \3/4\ inch; Virginia--\15/
64\ x 1 inch. If so separated, those loose shelled kernels which ride 
the screens may be included with shelled peanuts prepared for 
inspection and sale for human consumption: Provided, That no more than 
5 percent of such loose shelled kernels are kernels which would fall 
through screens with such minimum prescribed openings. Those loose 
shelled kernels which do not ride the screens shall be removed from the 
farmers' stock peanuts and shall be held separate and apart from other 
peanuts and disposed of for non-edible use, pursuant to paragraph (e) 
of this section. If the kernels which ride the prescribed screen are 
not separated from the kernels which do not ride the prescribed screen, 
the entire amount of loose shelled kernels shall be removed from the 
farmers stock peanuts and shall be held separate and apart and disposed 
of for non-edible use, pursuant to paragraph (e) of this section.
    (2) Seed peanuts. Farmers stock peanuts determined to be 
Segregation 1 quality, and shelled peanuts certified negative to 
aflatoxin (15 ppb or less), may be imported for seed purposes. 
Disposition of such peanuts to a seed outlet must be reported to the 
Secretary by submitting a copy of the bill of lading or sales contract 
which reports the weight of the peanuts so disposed, and the name, 
address and telephone number of the receiving seed outlet. Residuals 
from the shelling of Segregation 1 seed peanuts shall be held and/or 
milled separate and apart from other peanuts, and such residuals 
meeting quality requirements specified in paragraph (c)(1) of this 
section may be disposed to human consumption channels, and any portion 
not meeting such quality requirements shall be disposed to non-edible 
peanut channels pursuant to paragraph (e) of this section. Segregation 
2 and 3 peanuts may be shelled for seed purposes but must be dyed or 
chemically treated so as to be unfit for human or animal consumption. 
All disposition of seed peanuts and residuals from seed peanuts shall 
be reported to the Secretary pursuant to paragraphs (f)(2) and (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 as provided herein. Segregation 2 and 3 
peanuts may be commingled but shall be kept separate and apart from 
edible quality peanut lots. Commingled Segregation 2 and 3 peanuts and 
Segregation 3 peanuts shall be disposed only to oilstock, exported 
inshell, or shelled and fragmented for export as provided in paragraph 
(e) of this section. Shelled peanuts and cleaned-inshell peanuts which 
fail to meet the requirements for human consumption in paragraph (b)(1) 
may be crushed for oil or exported.
    (4) Whenever the Secretary has reason to believe that peanuts may 
have been damaged or deteriorated while in storage, the Secretary may 
reject the then effective inspection certificate and may require the 
importer to have the peanuts reinspected to establish whether or not 
such peanuts may be disposed of for human consumption.
    (c) Outgoing regulation. No person shall import peanuts for human 
consumption into the United States unless such peanuts are lot 
identified and certified by the inspection service as meeting the 
following requirements:
    (1)(i) Shelled peanuts. All shelled peanuts shall at least meet the 
requirements specified in Table 1 as follows:

[[Page 3614]]


                                           Table 1.--Minimum Grade Requirements--Peanuts for Human Consumption                                          
                                                               [Whole Kernels and Splits]                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Maximum limitations                                                                  
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Excluding lots of ``splits''                                                              
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through                                                    
                                     Unshelled     peanuts,  ------------------------------------------------------------------                         
                                    peanuts and    damaged                                                                        Foreign               
      Type and grade category         damaged    kernels and                                                                     materials     Moisture 
                                      kernels       minor        Sound split and     Sound whole kernels          Total          (percent)    (percent) 
                                     (percent)     defects       broken kernels                                                                         
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner............................         1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\  x     4.00%; both screens.          .20         9.00
                                                               round screen.         \3/4\ inch; slot                                                   
                                                                                     screen.                                                            
Virginia (except No. 2)...........         1.50         2.50  3.00%; \17/64\ inch;  3.00%; \15/64\  x  1  4.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 
Spanish and Valencia..............         1.50         2.50  3.00%; \16/64\ inch;  3.00%; \15/64\  x     4.00%; both screens.          .20         9.00
                                                               round screen.         \3/4\ inch; slot                                                   
                                                                                     screen.                                                            
No. 2 Virginia....................         1.50         3.00  6.00%; \17/64\ inch;  6.00%; \15/64\  x  1  6.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Lots of ``splits''                                                                   
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner (not more than 4% sound             1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\  x     4.00%; both screens.          .20         9.00
 whole kernels).                                               round screen.         \3/4\ inch; slot                                                   
                                                                                     screen.                                                            
Virginia (not more than 90%                1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\  x  1  4.00%; both screens.          .20         9.00
 splits).                                                      round screen.         inch; slot screen.                                                 
Spanish and Valencia (not more             1.50         2.50  3.00%; \16/64\ inch;  3.00%; \13/64\  x     4.00%; both screens.          .20         9.00
 than 4% sound whole kernels).                                 round screen.         \3/4\ inch; slot                                                   
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (ii) Peanuts meeting the specifications in Table 1 must also be 
certified ``negative'' to aflatoxin content, pursuant to paragraph 
(d)(4), prior to shipment to domestic human consumption markets. 
Shelled peanuts meeting requirements specified in Table 2 may be 
imported without sampling and testing for aflatoxin.

                                         Table 2.--Superior Quality Requirements--Peanuts for Human Consumption                                         
                                                               [Whole Kernels and Splits]                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Maximum limitations                                                                  
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through                                                    
                                     Unshelled     peanuts,  ------------------------------------------------------------------                         
                                    peanuts and    damaged                                                                        Foreign               
      Type and grade category         damaged    kernels and     Sound split and                                                 materials     Moisture 
                                      kernels       minor        broken kernels      Sound whole kernels          Total          (percent)    (percent) 
                                     (percent)     defects          (percent)             (percent)                                                     
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner U.S. No. 1 and better......         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\  x     4.00%; both screens.          .10         9.00
                                                               round screen.         \3/4\ inch, slot                                                   
                                                                                     screen.                                                            
Virginia U.S. No. 1 and better....         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\  x  1  4.00%; both screens.          .10         9.00
                                                               round screen.         inch, slot screen.                                                 
Spanish and Valencia U.S. No. 1            1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\  x     4.00%; both screens.          .10         9.00
 and better.                                                   round screen.         \3/4\ inch, slot                                                   
                                                                                     screen.                                                            
Runner U.S. Splits (not more than          1.25         2.00  2.00%; \17/64\ inch,  3.00%; \14/64\  x     4.00%; both screens.          .20         9.00
 4% sound, whole kernels).                                     round screen.         \3/4\ inch, slot                                                   
                                                                                     screen.                                                            
Virginia U.S. Splits (not less             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \14/64\  x  1  4.00%; both screens.          .20         9.00
 than 90% splits and not more than                             round screen.         inch, slot screen.                                                 
 3.00% sound whole kernels and                                                                                                                          
 portions passing through \20/64\                                                                                                                       
 inch round screen).                                                                                                                                    

[[Page 3615]]
                                                                                                                                                        
Spanish and Valencia U.S. Splits           1.25         2.00  2.00%; \16/64\ inch,  3.00%; \13/64\  x     4.00%; both screens.          .20         9.00
 (not more than 4% sound, whole                                round screen.         \3/4\ inch, slot                                                   
 kernels).                                                                           screen.                                                            
Runner with splits (not more than          1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\  x     4.00%; both screens.          .10         9.00
 15% sound splits).                                            round screen.         \3/4\ inch, slot                                                   
                                                                                     screen.                                                            
Virginia with splits (not more             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\  x  1  4.00%; both screens.          .10         9.00
 than 15% sound splits).                                       round screen.         inch, slot screen.                                                 
Spanish and Valencia with splits           1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\  x     4.00%; both screens.          .10         9.00
 (not more than 15% sound splits).                             round screen.         \3/4\ inch, slot                                                   
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------


    (2) Cleaned-inshell peanuts. Peanuts declared as cleaned-inshell 
peanuts may be presented for sampling and inspection in bags at the 
port of entry. Alternatively, peanuts may be conditionally released as 
cleaned-inshell peanuts but shall not subsequently undergo any 
cleaning, sorting, sizing or drying process prior to presentation for 
outgoing inspection as cleaned-inshell peanuts. Cleaned-inshell peanuts 
intended for human consumption may not contain more than:
    (i) 1.00 percent kernels with mold present, unless a sample of such 
peanuts is drawn by the inspection service and analyzed chemically by a 
USDA or PAC approved laboratory and certified ``negative'' as to 
aflatoxin.
    (ii) 2.00 percent peanuts with damaged kernels;
    (iii) 10.00 percent moisture (carried to the hundredths place); and
    (iv) 0.50 percent foreign material.
    (3) Reconditioned peanuts. Peanuts shelled, sized and sorted in 
another country prior to arrival in the U.S. and shelled peanuts which 
originated from Segregation 1 peanuts that fail quality requirements of 
Table 1 (excessive damage, minor defects, moisture, or foreign 
material) or are positive to aflatoxin may be reconditioned by 
remilling and/or blanching. After such reconditioning, peanuts meeting 
the quality requirements of Table 1 and which are negative to aflatoxin 
(15 ppb or less) may be disposed for edible peanut use.
    (d) Sampling and inspection. (1) All sampling and inspection, 
quality certification, chemical analysis, and lot identification, 
required under this section, shall be done by the inspection service, a 
USDA laboratory, or a PAC-approved laboratory, as applicable, in 
accordance with the procedures specified herein. The importer shall 
make arrangements with the inspection service for sampling, inspection, 
identification and certification of all peanuts accumulated by the 
importer. The importer also shall make arrangements for the appropriate 
disposition of peanuts failing edible quality requirements of this 
section. All costs of sampling, inspection, certification, 
identification, and disposition incurred in meeting the requirements of 
this section shall be paid by the importer. Whenever peanuts are 
offered for inspection, the importer shall furnish any labor and pay 
any costs incurred in moving and opening containers as may be necessary 
for proper sampling and inspection.
    (2) For farmers stock inspection, the importer shall cause the 
inspection service to perform an incoming inspection and to issue an 
CFSA-1007, ``Inspection Certificate and Sales Memorandum'' form 
designating the lot as Segregation 1, 2, or 3 quality peanuts. For 
shelled and cleaned-inshell peanuts, the importer shall cause the 
inspection service to perform an outgoing inspection and issue an FV-
184-9A, ``Milled Peanut Inspection Certificate'' reporting quality and 
size of the shelled or cleaned-inshell peanuts, whether the lot meets 
or fails to meet quality requirements for human consumption of this 
section, and that the lot originated in a country other than the United 
States. The importer shall provide to the Secretary copies of all CFSA 
1007 and FV-184-9A applicable to each peanut lot conditionally released 
to the importer. Such reports shall be submitted as provided in 
paragraph (g)(5) of this section.
    (3) Procedures for sampling and testing peanuts. Sampling and 
testing of peanuts for incoming and outgoing inspections of peanuts 
presented for importation into the United States will be conducted as 
follows:
    (i) Application for sampling. The importer shall request inspection 
and certification services from one of the following inspection service 
offices convenient to the location where the peanuts are presented for 
incoming and/or outgoing inspection. To avoid possible delays, the 
importer should make arrangements with the inspection service in 
advance of the inspection date. A copy of the Customs Service entry 
document specific to the peanuts to be inspected shall be presented to 
the inspection official prior to sampling of the lot.
    (A) The following offices provide incoming, farmers stock 
inspection:

Dothan, AL, tel: (205) 792-5185,
Graceville, FL, tel: (904) 263-3204,
Winter Haven, FL, tel: (813) 291-5820, ext 260,
Albany, GA, tel: (912) 432-7505,
Williamston, NC, tel: (919) 792-1672,
Columbia, SC, tel: (803) 253-4597,
Suffolk, VA, tel: (804) 925-2286,
Portales, NM, tel: (505) 356-8393,
Oklahoma City, OK, tel: (405) 521-3864,
Gorman, TX, tel: (817) 734-3006,
Yuma, AZ, tel: (602) 344-3869.

    (B) The following offices, in addition to the offices listed in 
paragraph (A), provide outgoing sampling and/or inspection services, 
and certify shelled and cleaned-inshell peanuts as meeting 

[[Page 3616]]
or failing the quality requirements of this section:

Eastern U.S.

Mobile, AL, tel: (205) 690-6154,
Jacksonville, FL, tel: (904) 359-6430,
Miami, FL, tel: (305) 592-1375,
Tampa, FL, tel: (813) 272-2470,
Presque Isle, ME, tel: (207) 764-2100,
Baltimore/Washington, tel: (301) 344-1860,
Boston, MA, tel: (617) 389-2480,
Newark, NJ, tel: (201) 645-2670,
New York, NY, tel: (212) 718-7665,
Buffalo, NY, tel: (716) 824-1585,
Philadelphia, PA, tel: (215) 336-0845,
Norfolk, VA, tel: (804) 441-6218,

Central U.S.

New Orleans, LA, tel: (504) 589-6741,
Detroit, MI, tel: (313) 226-6059,
St. Paul, MN, tel: (612) 296-8557,
Las Cruces, NM, tel: (505) 646-4929,
Alamo, TX, tel: (210) 787-4091,
El Paso, TX, tel: (915) 540-7723,
Houston, TX, tel: (713) 923-2557,

Western U.S.

Nogales, AZ, tel: (602) 281-0783,
Los Angeles, CA, tel: (213) 894-2489,
San Francisco, CA, tel: (415) 876-9313,
Honolulu, HI, tel: (808) 973-9566,
Salem, OR, tel: (503) 986-4620,
Seattle, WA, tel: (206) 859-9801.

    (c) Questions regarding inspection services or requests for further 
assistance may be obtained from: Fresh Products Branch, P.O. Box 96456, 
room 2049-S, Fruit and Vegetable Division, AMS, USDA, Washington, D.C. 
20090-6456, telephone (202) 690-0604, fax (202) 720-0393.
    (ii) Sampling. Sampling of bulk farmers stock lots shall be 
performed at a facility that utilizes a pneumatic sampler or approved 
automatic sampling device. The size of farmers stock lots, shelled 
lots, and cleaned-inshell lots, in bulk or bags, shall not exceed 
200,000 pounds. For farmers stock, shelled and cleaned-inshell lots not 
completely accessible for sampling, the applicant shall be required to 
have lots made accessible for sampling pursuant to inspection service 
requirements. The importer shall cause appropriate samples of each lot 
of edible quality shelled peanuts to be drawn by the inspection 
service. The amount of such peanuts drawn shall be large enough to 
provide for a grade and size analysis, for a grading check-sample, and 
for three 48-pound samples for aflatoxin assay. Because there is no 
acceptable method of drawing official samples from bulk conveyances of 
shelled peanuts, the importer shall arrange to have bulk conveyances of 
shelled peanuts sampled during the unloading process. A bulk lot 
sampled in this manner must be positive lot identified by the 
inspection service and held in a sealed bin until the associated 
inspection and aflatoxin test results have been reported.
    (4) Aflatoxin assay. (i) The importer shall cause appropriate 
samples of each lot of shelled peanuts intended for edible consumption 
to be drawn by the inspection service. The three 48-pound samples shall 
be designated by the inspection service as ``Sample 1IMP,'' ``Sample 
2IMP,'' and ``Sample 3IMP'' and each sample shall be placed in a 
suitable container and lot identified by the inspection service. Sample 
1IMP may be prepared for immediate testing or Samples 1IMP, 2IMP, and 
3IMP may be returned to the importer for testing at a later date under 
lot identification procedures.
    (ii) The importer shall cause Sample 1IMP to be ground by the 
inspection service or a USDA or PAC-approved laboratory in a 
subsampling mill. The resultant ground subsample shall be of a size 
specified by the inspection service and shall be designated as 
``Subsample 1-ABIMP.'' At the importer's option, a second subsample may 
also be extracted from Sample 1IMP and designated ``Subsample 1-CDIMP'' 
which may be sent for aflatoxin assay to a USDA or PAC-approved 
laboratory. Both subsamples shall be accompanied by a notice of 
sampling signed by the inspector containing identifying information as 
to the importer, the lot identification of the shelled peanut lot, and 
other information deemed necessary by the inspection service.
    Subsamples 1-ABIMP and 1-CDIMP shall be analyzed only in a USDA or 
PAC-approved laboratory. The methods prescribed by the Instruction 
Manual for Aflatoxin Testing, SD Instruction-1, August 1994, shall be 
used to assay the aflatoxin level. The cost of testing and notification 
of Subsamples 1-ABIMP and 1-CDIMP shall be borne by the importer.
    (iii) The samples designated as Sample 2IMP and Sample 3IMP shall 
be held as aflatoxin check-samples by the inspection service or the 
importer until the analyses results from Sample 1IMP are known. Upon 
call from the USDA or PAC-approved laboratory, the importer shall cause 
Sample 2IMP to be ground by the inspection service in a subsampling 
mill. The resultant ground subsample from Sample 2IMP shall be 
designated as ``Subsample 2-ABIMP.'' Upon further call from the 
laboratory, the importer shall cause Sample 3IMP to be ground by the 
inspection service in a subsampling mill. The resultant ground 
subsample shall be designated as ``Subsample 3-ABIMP.'' The importer 
shall cause Subsamples 2-ABIMP and 3-ABIMP to be sent to and analyzed 
only in a USDA or PAC-approved laboratory. Each subsample shall be 
accompanied by a notice of sampling. The results of each assay shall be 
reported by the laboratory to the importer. All costs involved in the 
sampling, shipment and assay analysis of subsamples required by this 
section shall be borne by the importer.
    (iv)(A) Importers should contact one of the following USDA or PAC-
approved laboratories to arrange for chemical analysis.

Science and Technology Division, AMS/USDA, P.O. Box 279, 301 West Pearl 
St., Aulander, NC 27805, Tel: (919) 345-1661 Ext. 156, Fax: (919) 345-
1991
Science and Technology Division, AMS/USDA, 1211 Schley Ave., Albany, GA 
31707, Tel: (912) 430-8490/8491, Fax: (912) 430-8534
Science and Technology Division, AMS/USDA, P.O. Box 488, Ashburn, GA 
31714, Tel: (912) 567-3703
Science and Technology Division, AMS/USDA, 610 North Main St., Blakely, 
GA 31723, Tel: (912) 723-4570, Fax: (912) 723-3294
Science and Technology Division, AMS/USDA, P.O. Box 1368, Dothan, AL 
36301, Tel: (205) 792-5185, Fax: (205) 671-7984
Science and Technology Division, AMS/USDA, 107 South Fourth St., 
Madill, OK 73446, Tel: (405) 795-5615, Fax: (405) 795-3645
Science and Technology Division, AMS/USDA, P.O. Box 272, 715 N. Main 
Street, Dawson, GA 31742, Tel: (912) 995-7257, Fax: (912) 995-3268
Science and Technology Division, AMS/USDA, P.O. Box 1130, 308 Culloden 
St., Suffolk, VA 23434, Tel: (804) 925-2286, Fax: (804) 925-2285
ABC Research, 3437 SW 24th Avenue, Gainesville, FL 32607-4502, Tel: 
(904) 372-0436, Fax: (904) 378-6483
J. Leek Associates, Inc., P.O. Box 50395, 1200 Wyandotte (31705), 
Albany, GA 31703-0395, Tel: (912) 889-8293, Fax: (912) 888-1166
J. Leek Associates, Inc., P.O. Box 368, 675 East Pine, Colquitt, GA 
31737, Tel: (912) 758-3722, Fax: (912) 758-2538
J. Leek Associates, Inc., P.O. Box 6, 502 West Navarro St., DeLeon, TX 
76444, Tel: (817) 893-3653, Fax: (817) 893-3640
J. Leek Associates, Inc., P.O. Box 548, 42 N. Ellis St., Camilla, GA 
31730, Tel: (912) 336-8781, Fax: (912) 336-0146 

[[Page 3617]]

Pert Laboratories, P.O. Box 267, Peanut Drive, Edenton, NC 27932, Tel: 
(919) 482-4456, Fax: (919) 482-5370
Pert Laboratory South, P.O. Box 149, Hwy 82 East, Seabrook Drive, 
Sylvester, GA 31791, Tel: (912) 776-7676, Fax: (912) 776-1137
Professional Service Industries, Inc., 3 Burwood Lane, San Antonio, TX 
78216, Tel: (210) 349-5242, Fax: (210) 342-9401
Southern Cotton Oil Company, 600 E. Nelson Street, P.O. Box 180, 
Quanah, TX 79252, Tel: (817) 663-5323, Fax: (817) 663-5091
Quanta Lab, 9330 Corporate Drive, Suite 703, Selma, TX 78154-1257, Tel: 
(210) 651-5799, Fax: (210) 651-9271.

    (B) Further information concerning the chemical analyses required 
pursuant to this section may be obtained from: Science and Technology 
Division, USDA/AMS, P.O. Box 96456, room 3507-S, Washington, DC 20090-
6456, telephone (202) 720-5231, or facsimile (202) 720-6496.
    (v) Reporting aflatoxin assays. A separate aflatoxin assay 
certificate, Form CSSD-3, ``Certificate of Analysis for Official 
Samples'', or equivalent PAC-approved laboratory form, shall be issued 
by the laboratory performing the analysis for each lot. The assay 
certificate shall identify the importer, the volume of the peanut lot 
assayed, date of the assay, and numerical test result of the assay. The 
results of the assay shall be reported as follows.
    (A) Lots containing 15 ppb or less aflatoxin content shall be 
certified as ``Meets U.S. import requirements for edible peanuts under 
Sec. 999.600 with regard to aflatoxin.''
    (B) Lots containing more than 15 ppb aflatoxin content shall be 
certified as ``Fails to meet U.S. import requirements for edible 
peanuts under Sec. 999.600 with regard to aflatoxin.'' The importer 
shall file USDA Form CSSD-3, or equivalent form, with the Secretary, 
regardless of result.
    (5) Appeal inspection. In the event an importer questions the 
results of a quality and size inspection, an appeal inspection may be 
requested by the importer and performed by the inspection service. A 
second sample will be drawn from each container and shall be double the 
size of the original sample. The results of the appeal sample shall be 
final and the fee for sampling and analysis shall be charged to the 
importer.
    (e) Disposition of peanuts failing edible quality requirements. (1) 
Peanuts failing grade and/or aflatoxin requirements shall be designated 
as non-edible quality ``unrestricted'' peanuts or ``restricted'' 
peanuts and shall be crushed for oil, exported, or disposed to other 
non-edible outlets as specified in this section. For the purposes of 
this regulation, the term ``non-edible quality unrestricted peanuts'' 
means loose shelled kernels, fall through, and pickouts from--and the 
entire milled production of--Segregation 1, Segregation 2, and 
commingled Segregation 1 and 2 farmers stock peanuts which contain more 
than 15 ppb and 25 ppb or less aflatoxin. The term ``non-edible quality 
restricted peanuts'' means loose shelled kernels, fall through, and 
pickouts from--and the entire milled production of--Segregation 1, 
Segregation 2, and commingled Segregation 1 and 2 farmers stock peanuts 
which contain in excess of 25 ppb aflatoxin. The term loose shelled 
kernels means peanut kernels or portions of kernels completely free of 
their hulls, as found in deliveries of farmers stock peanuts or those 
which fail to ride the screens prescribed in paragraph (d)(iv) of this 
section; the term fall through means sound split and broken kernels and 
whole kernels which pass through specified screens; and the term 
pickouts means those peanuts removed during the final milling process 
at the picking table, by electronic equipment, or otherwise during the 
milling process.
    (2) Non-edible quality unrestricted peanuts may be disposed to 
animal feed: Provided, That such peanuts are certified by the 
inspection service as to moisture, foreign material content and treated 
with a coloring agent or dyeing solution covering at least 80 percent 
of the peanuts, handled and shipped under lot identification 
procedures. Except for bulk loads, red tags shall be used and marked 
``Animal Feed, Not For Human Consumption.''
    (3) Lots of non-edible quality unrestricted peanuts may be 
commingled during or after fragmentation and, if certified as meeting 
fragmentation requirements by the inspection service, such fragmented 
peanuts may be exported. For the purposes of this section, the term 
fragmented means that not more than 30 percent of the peanuts shall be 
whole kernels that ride the following screens, by type: Spanish--\15/
64\ x \3/4\ inch slot; Runner--\16/64\ x \3/4\ inch slot; and 
Virginia--\15/64\ x 1 inch slot. All peanut lots exported must be lot 
identified by the inspection service and applicable Customs Service 
procedures for the export of merchandise must be followed.
    (4) Unrestricted fall through may be disposed for use as wild-life 
feed and rodent bait, if in labeled containers.
    (5) Seed peanuts which are chemically treated causing them to be 
unfit for edible or animal feed use shall be exempt from the 
requirements of paragraph (c) of this section.
    (6) Meal produced from the crushing of unrestricted peanuts shall 
be exempt from further aflatoxin testing. Meal produced from the 
crushing of restricted peanuts shall be tested and the numerical test 
result of the chemical assay shall be shown on a certificate covering 
each lot and the certification shall accompany each shipment or 
disposition.
    (7) Non-edible quality restricted peanuts may be crushed for oil or 
exported: Provided, That such peanuts are lot identified, bagged, red 
tagged, and so certified by the inspection service.
    (8) Inspection certifications and proof of non-edible dispositions 
sufficient to account for all peanuts in each consumption entry filed 
by the importer must be reported to the Secretary by the importer 
pursuant to paragraphs (f) (2) and (3) of this section.
    (f) Reconditioning of failing peanuts: (1) Importers may remill 
and/or blanch shelled peanuts which originated from Segregation 1 
peanuts that fail quality requirements of Table 1 or are positive to 
aflatoxin. After such reconditioning, peanuts meeting the quality 
requirements of Table 1 and which are certified negative to aflatoxin 
(15 ppb or less) may be disposed for edible use.
    (2) Whole lots of remilled and/or blanched peanuts, and residuals 
of such peanuts, which continue to fail quality requirements of Table 1 
and contain 25 ppb or less aflatoxin content shall be considered ``non-
edible quality unrestricted'' peanuts and shall be disposed as 
``unrestricted'' peanuts crushed for oil, exported, or animal feed, 
pursuant to provisions of paragraph (e). Meal produced from 
unrestricted peanuts shall be disposed pursuant to paragraph (e)(5).
    (3) Whole lots of remilled and/or blanched peanuts, and residuals 
of such peanuts, which continue to fail quality requirements of Table 1 
and contain more than 25 ppb aflatoxin content, shall be considered 
``non-edible quality restricted'' peanuts and shall be disposed as 
``restricted'' peanuts pursuant to paragraph (e)(6). Meal produced from 
restricted peanuts shall be disposed pursuant to paragraph (e)(5).
    (4) Inspection certifications and proof of non-edible dispositions 
sufficient to account for all peanuts in each consumption entry filed 
by the importer must be reported to the Secretary by the 

[[Page 3618]]
importer pursuant to paragraphs (f) (2) and (3) of this section.
    (g) Safeguard procedures. (1) Prior to arrival of a foreign 
produced peanut lot at a port of entry, the importer, or customs broker 
acting on behalf of the importer, shall mail or send by facsimile 
transmission (fax) a copy of the Customs Service entry documentation 
for the peanut lot to the inspection service office that will perform 
sampling of the peanut shipment. The documentation shall include 
identifying lot or container number(s) and volume of the peanut lot 
being entered, and the location (including city and street address), 
date and time for inspection sampling. The inspection office shall 
sign, stamp, and return the entry document to the importer. The 
importer shall present the stamped document to the Customs Service at 
the port of entry and send a copy of the document to the Secretary. The 
importer also shall cause a copy of the entry document to accompany the 
peanut lot and be presented to the inspection service at the inland 
destination of the lot.
    (2) The importer shall file with the Secretary copies of the entry 
document and grade, aflatoxin, and identification certifications 
sufficient to account for all peanuts in each entry filed by the 
importer. Certificates and other documentation providing proof of non-
edible disposition, such as bills of lading and sales receipts which 
report the weight of peanuts being disposed and the name, address and 
telephone number of the non-edible peanut receiver, must be sent to the 
Marketing Order Administration Branch, Attn: Report of Imported 
Peanuts. Facsimile transmissions and overnight mail may be used to 
ensure timely receipt of inspection certificates and other 
documentation. Fax reports should be sent to (202) 720-5698. Overnight 
and express mail deliveries should be addressed to USDA, AMS, Marketing 
Order Administration Branch, 14th and Independence Avenue, SW, Room: 
2526-S, Washington, DC, 20250. Regular mail should be sent to AMS, 
USDA, P.O. Box 96456, room 2526-S, Washington, DC 20090-6456. Telephone 
inquiries should be made to (202) 720-6862.
    (3) Certificates and other documentation for each peanut lot must 
be filed within 23 days of the filing date of the entry for the lot. 
Failure of an importer to receive edible certification--or arrange for 
appropriate non-edible disposition--on all foreign produced peanuts, 
and file such reports with the Secretary within 23 days of an entry 
declaration, may result in a request for a redelivery demand by the 
Customs Service. Extensions granted by the Customs Service will be 
correspondingly extended by the Secretary, upon request of the 
importer.
    (4) The Secretary shall ask the Customs Service to demand 
redelivery of foreign produced peanut lots failing to meet requirements 
of this section. Importers unable to redeliver or account for all 
peanuts covered in a redelivery order shall be liable for liquidated 
damages. Failure to fully comply with quality and handling requirements 
or failure to notify the Secretary of disposition of all foreign 
produced peanuts, as required under this section, may result in a 
compliance investigation by the Secretary. Falsification of reports 
submitted to the Secretary is a violation of Federal law punishable by 
fine or imprisonment, or both.
    (h) Additional requirements: (1) Nothing contained in this section 
shall be deemed to preclude any importer from milling or reconditioning 
prior to entry any shipment of peanuts for the purpose of making such 
lot eligible for importation. However, all peanuts presented for 
importation into the United States for human consumption use must be 
certified as meeting the quality requirements specified in paragraph 
(c) of this section.
    (2) Conditionally released peanut lots of like quality and 
belonging to the same importer may be commingled. Defects in an 
inspected shelled lot may not be blended out by commingling with other 
shelled lots of higher quality. Such commingling must be consistent 
with applicable Customs Service regulations. Commingled lots must be 
reported and disposed of pursuant to paragraphs (f)(2) and (f)(3) 
respectively of this section.
    (3) Inspection by the Federal or Federal-State Inspection Service 
shall be available and performed in accordance with the rules and 
regulations governing certification of fresh fruits, vegetables and 
other products (7 CFR part 51). The importer shall make each 
conditionally released lot available and accessible for inspection as 
provided herein. Because inspectors may not be stationed in the 
immediate vicinity of some ports-of-entry, importers must make 
arrangements for inspection and certification through one of the 
offices listed in this section.
    (4) Imported peanut lots sampled and inspected at the port of 
entry, or at other locations, shall meet the quality requirements of 
this section in effect on the date of inspection.
    (5) A foreign produced peanut lot, released by the Customs Service 
for consumption, may be transferred or sold to another person: 
Provided, That the original importer shall be the importer of record 
unless the new owner applies for bond and files Customs Service 
documents pursuant to 19 CFR 141.113 and 141.20: and Provided further, 
That such peanuts must be certified and reported to the Secretary 
pursuant to paragraphs (f)(2) and (3) of this section.
    (6) The cost of transportation, sampling, inspection, 
certification, chemical analysis, and identification, as well as 
remilling and blanching, and further inspection of remilled and 
blanched lots, and disposition of failing peanuts, shall be borne by 
the importer. Whenever peanuts are presented for inspection, the 
importer shall furnish any labor and pay any costs incurred in moving, 
opening containers, and shipment of samples as may be necessary for 
proper sampling and inspection. The inspection service shall bill the 
importer for fees covering quality and size inspections; time for 
sampling; packaging and delivering aflatoxin samples to laboratories; 
certifications of lot identification and lot transfer to other 
locations, and other inspection certifications as may be necessary to 
verify edible quality or non-edible disposition, as specified herein. 
The USDA and PAC-approved laboratories shall bill the importer 
separately for fees for aflatoxin assay. The importer also shall pay 
all required Customs Service costs as required by that agency.
    (7) Each person subject to this section shall maintain true and 
complete records of activities and transactions specified in this part. 
Such records and documentation accumulated during importation 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: January 23, 1996.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 96-1667 Filed 1-31-96; 8:45 am]
BILLING CODE 3410-02-P