[Federal Register Volume 61, Number 194 (Friday, October 4, 1996)]
[Proposed Rules]
[Pages 51811-51835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25519]



[[Page 51811]]

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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

7 CFR Parts 997, 998, and 999

[Docket Nos. FV96-997-1 PR; FV96-998-4 PR and FV96-999-3 PR]


Peanuts Marketed in the United States; Changes in Handling and 
Disposition Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposal invites comments on relaxing, for 1996 and 
subsequent crop peanuts, several provisions regulating the handling and 
disposition of domestically and foreign produced peanuts marketed in 
the United States. The rule would eliminate several requirements 
covering the disposition of inedible peanuts. At the same time, it 
would provide safeguard measures including amendments to the aflatoxin 
provisions to prevent inedible peanuts from entering human consumption 
outlets. The proposal would increase opportunities for reconditioning 
failing peanuts and reduce inspection and handling costs to handlers 
and importers. The changes were recommended by the Peanut 
Administrative Committee (Committee), the administrative agency which 
oversees the quality assurance program under Peanut Marketing Agreement 
No. 146 (7 CFR Part 998, Agreement). By law, the same or similar 
regulations issued under the Agreement also must be issued under Part 
997 regulating non-signatory peanut handlers, and Part 999.600 
regulating peanut importers. This proposal includes changes recommended 
by the Department to help ensure effective safeguard measures. The 
recommended changes should enable the industry to be more competitive 
in the changing international peanut market.

DATES: Comments must be received by October 24, 1996.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2523-S, 
P.O. Box 96456, Washington, DC 20090-6456; FAX: (202) 720-5698. All 
comments should reference the docket numbers, 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: Jim Wendland, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Division, 
AMS, USDA, P.O. Box 96456, room 2523-S, Washington, D.C. 20090-6456; 
telephone: (202) 720-2170, or fax: (202) 720-5698; or William G. 
Pimental, Marketing Specialist, Southeast Marketing Field Office, Fruit 
and Vegetable Division, AMS, USDA, P.O. Box 2276, Winter Haven, Florida 
33883-2276; telephone: (941) 299-4770, or fax: (941) 299-5169. Small 
businesses may request information on compliance with this proposed 
regulation by contacting: Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, room 
2523-S, Washington, D.C., 20090-6456; telephone: (202) 720-2491, fax: 
(202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposal is issued under Peanut 
Marketing Agreement No. 146 (7 CFR Part 998); the non-signatory handler 
peanut regulation (7 CFR Part 997); and the peanut import regulation 
published in the June 19, 1996, issue of the Federal Register (61 FR 
31306, 7 CFR Part 999.600). These programs regulate the quality of 
domestically produced peanuts handled by Agreement signers and non-
signers as well as imported peanuts. The first two Parts are effective 
under the Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), hereinafter referred to as the ``Act.'' Part 999 is 
effective under section 108B(f)(2) of the Agricultural Act of 1949, as 
amended (7 U.S.C. 1445c-3).
    The U.S. Department of Agriculture (Department) is issuing this 
rule in conformance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule. There are no administrative procedures which 
must be exhausted prior to any judicial challenge to the provisions of 
this rule.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action 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.
    About 80 signatory or non-signatory peanut handlers are subject to 
regulation under the two domestic programs. There are about 47,000 
peanut producers in the 16-state production area. Small agricultural 
service firms, which include handlers and importers, have been defined 
by the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $5,000,000, and small agricultural 
producers have been defined as those having annual receipts of less 
than $500,000. Approximately 25 percent of the signatory handlers, 
virtually all of the non-signers, and most of the producers may be 
classified as small entities. The import requirements have not been in 
place long enough to determine the exact number of peanut importers or 
the percentage which qualify as small businesses. However, it can be 
assumed that some importers are small entities. Interested persons are 
invited to submit information on the regulatory impact of this proposed 
rule on small businesses.
    The changes to handling requirements proposed in this rule would 
enable handlers to more efficiently manage and process their peanut 
inventories and make better use of their inedible peanuts, without 
jeopardizing safeguard requirements in the current regulations. The 
relaxed requirements should reduce handling costs and, thus, increase 
returns to handlers. The rule would also ensure that all lots of 
peanuts intended for human consumption are chemically tested and 
negative to aflatoxin, and that foreign produced peanuts awaiting the 
start of the new quota period are properly stored. These changes should 
benefit peanut handlers and peanut importers by ensuring that all 
peanuts in domestic U.S. human consumption markets are wholesome.
    Domestic peanut production in 1995 was 1.76 million tons, with a 
farm value of slightly over $1 billion.
    The objective of the two domestic programs and the import 
regulation is to ensure that only high quality and wholesome peanuts 
enter human consumption markets in the United States. About 70 percent 
of domestic handlers, handling approximately 95 percent of the crop, 
have signed the Agreement. The remaining 30 percent are non-signatory 
handlers handling the remaining 5 percent of domestic production. The 
1995 duty-free import quota was equal to approximately 2 percent of 
1995 domestic production.
    Under the three regulations, farmers stock peanuts with visible 
Aspergillus flavus mold (the principal source of aflatoxin) are 
required to be diverted to inedible uses. Each lot of milled peanuts 
must be sampled and the samples chemically analyzed for aflatoxin 
content. Costs to administer the

[[Page 51812]]

Agreement and to reimburse the Department for oversight of the non-
signatory program are paid by an assessment levied on handlers in the 
respective programs.
    The Committee, which is composed of producers and handlers of 
peanuts, meets at least annually to review the Agreement's rules and 
regulations, which are effective on a continuous basis from one year to 
the next. Committee meetings are open to the public, and interested 
persons may express their views at these meetings. The Department 
assesses Committee recommendations as well as information from other 
sources, prior to making any recommended changes to the regulations 
under the Agreement.
    Public Law 101-220 amended section 608b of the Act in 1989 to 
require that all peanuts handled by persons who have not entered into 
the agreement (non-signers) be subject to the same quality and 
inspection requirements to the same extent and manner as are required 
under the Agreement. The non-signatory handler regulations have been 
amended several times thereafter and are published in 7 CFR part 997.
    Similarly, recent amendments to the Agricultural Act of 1949 
require that all foreign produced peanuts in the domestic market fully 
comply with all quality standards under the Agreement. Section 
999.600--Specialty Crops; Import Regulations was added to 7 CFR part 
999 on June 19, 1996 (61 FR 31306), to establish minimum quality, 
identification, certification and safeguard requirements for foreign-
produced farmers' stock, shelled and cleaned-inshell peanuts presented 
for importation into the United States.
    Thus, the Committee's recommended changes to the Agreement's 
regulations, as proposed in this rule, also are proposed for the peanut 
non-signer and import regulations. This proposed rule identifies the 
corresponding changes to the non-signer and import regulations for each 
proposed change to Agreement requirements.
    According to the Committee, the domestic peanut industry is 
undergoing a period of great change. The Committee bases its view, in 
part, on findings in a recent study entitled ``United States Peanut 
Industry Revitalization Project'' developed by the National Peanut 
Council and the Department's Agricultural Research Service (May, 1996). 
According to the study, the U.S. peanut industry has been in a period 
of dramatic economic decline since 1991 because of: (1) Decreasing 
consumption of peanuts and peanut products; (2) accompanying decreases 
in U.S. peanut production and increases in production costs; and (3) 
increasing imports of peanuts and peanut products.
    The study shows that peanut consumption has declined. Between 1991 
and 1994, per capita peanut consumption steadily declined a total of 11 
percent. Peanuts used in primary products declined 12 percent, and 
peanuts used in peanut butter (the largest product usage) declined 20 
percent.
    Among other things, the study shows that harvested acreage of 
peanuts in the U.S. has declined 25 percent between 1991 and 1995. 
Production has fluctuated downward, with 1995 production 30 percent 
below that of 1991. Farm value of peanut production has dropped 29 
percent (from $1.4 billion to slightly over $1 billion) in the same 
period.
    The study points to recent increases in the duty-free import quota 
for raw peanuts. The volume of imported peanuts has, indeed, increased 
due to recent significant relaxations of the duty-free quota enacted 
through the legislation to implement the North American Free Trade 
Agreement (NAFTA) and the Uruguay Round Agreements under the General 
Agreement on Tariffs and Trade (GATT). Prior to 1994, the volume of 
imported peanuts was limited, in most cases, to 1.71 million pounds 
annually. However, the Schedule of the United States annexed to NAFTA, 
implemented on January 1, 1994, provided duty-free entry for up to 
approximately 7.43 million pounds of qualifying peanuts from Mexico. 
For 1996, the duty-free access for Mexican peanuts increased to 
approximately 7.88 million pounds. In calendar year 2008, access for 
Mexican peanuts will be unlimited. In addition, the United States 
Schedule to the Uruguay Round Agreements under GATT increased the 
peanut import quota to 74.5 million pounds in 1995, with additional 
annual increases of approximately 10 million pounds to reach a ceiling 
of 125 million pounds by the year 2000 for all imported peanuts.
    The study shows that imports of peanut butter from 1991 to 1996 
increased 116 percent. More significantly, the study reports that 
imported peanut butter's share of U.S. peanut butter consumption 
increased 12 fold between 1988 and 1993.
    The study also makes projections for the near future. Farmer 
production costs and revenue are projected to be equal by the year 
2000, as are handler costs and revenue. Total imports of shelled 
peanuts and paste are expected to increase 50 percent by the year 2000 
and the U.S. position in the world market is expected to drop 7 percent 
between 1995 and 1996.
    In addition, the modifications in the Federal government's peanut 
quota and price support program under the Federal Agriculture 
Improvement and Reform Act of 1996 will result in the domestic industry 
undergoing changes over the next few years. The study shows that the 
quota poundage was reduced over 20 percent between 1991 and 1995, and 
the support price dropped from $670 per ton in 1995 to $610 in 1996. 
Further decreases in the support price are scheduled over the next few 
years.
    The Committee agrees that all of these factors combined show that 
the domestic peanut industry is in decline and that the outlook is not 
expected to change without some positive intervention by the industry.
    In mid-1994, peanut industry members began to discuss needed 
changes in the handling of peanuts. In mid-1994, the Committee 
appointed a subcommittee to evaluate the present program and to 
recommend changes. The Agreement's handling regulations were evaluated 
with the intent of streamlining procedures and making them consistent 
with current industry economies and technological developments.
    Different recommendations were developed for streamlining both 
incoming and outgoing handling procedures. The proposed changes focus 
on handlers' freedom to prepare and dispose of peanut lots according to 
economic incentives of the marketplace. For instance, current 
restrictions that prevent certain lots failing quality requirements 
from being blanched or remilled would be removed so that more peanuts 
could be reconditioned to meet human consumption requirements. Also, 
provisions throughout the regulations under the Agreement require that 
certain lots be kept separate and apart from other, similar peanut 
lots. For the most part, these provisions tend to limit handlers' 
flexibility to move and recondition peanuts. Such provisions also may 
work against optimum utilization of equipment and facilities, and 
prevent a handler from making the most economic use of their peanut 
inventories. Peanut processing machinery has been improved through 
technological advances to the point that virtually any lot of peanuts, 
regardless of original (incoming) quality, can now be shelled, remilled 
and/or blanched (processed) to meet outgoing quality requirements of 
the Agreement and the non-signer program. In the final analysis, it was 
the opinion of the subcommittee that handlers should have

[[Page 51813]]

the option of deciding whether it is more economically advantageous to 
recondition a lot or send it to an inedible peanut outlet.
    Subcommittee members also recommended that many of the requirements 
controlling disposition of inedible peanuts be removed because those 
requirements should be placed on buyers rather than handlers. The 
subcommittee contended that peanuts either pass or fail quality and 
aflatoxin requirements, and the requirements limiting disposition based 
on aflatoxin content (restricted and unrestricted dispositions) should 
be removed.
    The subcommittee contended further that these changes, primarily 
relaxations, could be made without limiting the effectiveness of the 
Agreement's quality assurance program. As long as all peanut lots 
intended for human consumption continue to be sampled and tested 
against current outgoing requirements, the industry's high quality 
standards would be maintained.
    These recommendations represent a fundamental change in the 
Agreement's handling regulations. The full Committee met three times 
from March to May, 1996, to review all of the recommendations. At a May 
23, 1996, meeting the Committee recommended the following changes to 
the Agreement's incoming and outgoing regulations for 1996 and 
subsequent crop peanuts. After review of the recommendations, the 
Department concurs that the recommended changes would help the industry 
and be in the public interest. This proposed rule would not increase 
reporting and recordkeeping burdens under the Paperwork Reduction Act 
and, thus, would not change the current impact of those burdens on 
small businesses. Moreover, costs imposed for required testing would 
not be applied disproportionately to small businesses. Therefore, the 
AMS has determined that this proposed rule would not have a significant 
economic impact on a substantial number of small entities.
    In accordance with the Paperwork Reduction Act of 1988 (44 U.S.C. 
Chapter 35), information collection requirements that are contained in 
this proposal have been previously approved by the Office of Management 
and Budget (OMB) and have been assigned OMB Nos. 0581-0067 (for 
signatory handlers), 0581-0163 (for non-signers), and 0581-0176 (for 
importers).
    This proposed rule would not increase the reporting and 
recordkeeping burden on handlers and importers regulated under the 
three programs, and may even result in an overall reduction in 
reporting and recordkeeping requirements.
    Following explanation of each recommended change to the Agreement's 
regulation, the corresponding proposed changes to the non-signatory 
regulation and to the import regulation are discussed.

Incoming Regulations

Loose Shelled Kernels

    The Committee recommended amending Sec. 998.100  Incoming quality 
regulation by removing paragraph (d) Loose shelled kernels which 
regulates the acquisition of loose shelled kernels (LSKs) and other 
defective kernels. The Committee believes that the regulations should 
focus more on outgoing quality and less on the shelling and milling 
processes necessary to meet the outgoing, human consumption 
requirements. New, high technology milling and blanching equipment 
enables handlers to recondition failing peanut lots that could not have 
been reconditioned when the regulations were promulgated. Therefore, it 
is no longer necessary to impose restrictions that hinder efficiency of 
handling operations and result in the loss of potentially good quality 
peanuts. Thus, paragraph (d)(1) restrictions on acquiring farmers stock 
with more than 14.49 percent LSKs and 5 percent fall-through from 
specified screen sizes would be removed.
    For the non-signer regulation, paragraph (d) Loose shelled kernels 
in Sec. 997.20, corresponds to paragraph (d) of the Agreement's 
Sec. 998.100. Paragraph (d) of the non-signer regulation would be 
removed for the reasons cited above and to be consistent with 
corresponding changes to the Agreement.
    For the import regulation, paragraph (b)(1)(iv) Loose shelled 
kernels of Sec. 999.600 also would be removed for the reasons cited 
above.
    The Committee recommended removing paragraph (d)(2) which requires 
that handlers submit to the Committee diagrams of their handling 
facilities and procedures. This provision is no longer considered 
necessary for the Committee's oversight of the signatory handlers. 
Therefore, it would also be removed.
    The non-signer regulation and the import regulation do not have 
paragraphs corresponding to paragraph (d)(2) of Sec. 998.100.

Seed Peanuts

    The Committee recommended removing the requirement in Sec. 998.100, 
paragraph (e) Seed peanuts, that requires handlers who receive or 
acquire seed residuals to hold and mill such peanuts separate and apart 
from other edible quality peanuts. The Committee concluded that as long 
as the peanuts sent to human consumption outlets must ultimately meet 
outgoing requirements, including certification as negative to 
aflatoxin, it is not necessary to hold them separate and apart from 
other lots also destined for edible consumption. Therefore, 
Sec. 998.100(e) would be amended to remove such requirement.
    For the non-signer regulation, paragraph (e) Seed peanuts in 
Sec. 997.20 contains different wording but the same meaning and intent 
as the Agreement's seed provisions. Changes to the Agreement's 
paragraph (e) concerning holding and milling seed peanuts separate and 
apart from other peanuts would be made to Sec. 997.20 paragraph (e) of 
the non-signer regulation for the reasons cited above and to be 
consistent with corresponding changes to the Agreement.
    For the import regulation, paragraph (b)(2) Seed peanuts in 
Sec. 999.600, also would be changed accordingly. Further, paragraph 
(b)(2) provides that Segregation 2 and 3 peanuts may be shelled for 
seed purposes, but must be dyed or chemically treated to indicate the 
peanuts are unfit for human or animal consumption. This requirement is 
the same as that in paragraphs (i)(1) and (2) of Sec. 998.200--which 
are recommended to be removed (discussed below). Corresponding changes 
would be made to paragraph (b)(2) of Sec. 999.600. Finally, the 
Department proposes removing the second sentence of the import 
regulation paragraph (b)(2) on reporting disposition to the Secretary. 
This information is adequately covered in the last two sentences of the 
same paragraph.

Oilstock

    In paragraph (f) of Sec. 998.100, the Committee recommended removal 
of the current prohibition on exporting inedible quality peanuts to 
Canada or Mexico and removal of references to ``fragmented'' peanuts. 
Committee members expressed the point that other countries ship 
inedible peanuts and unfragmented peanuts to Canada and Mexico, as well 
as to other international markets. The Committee believes that domestic 
handlers should not deny themselves access to the same international 
markets, thereby optimizing their returns.
    Further, the Committee believes that it would be better to remove 
the term ``fragmented'' from paragraph (f) and allow the term 
``peanuts'' to refer to peanuts in any form, including

[[Page 51814]]

fragmented kernels, which may be acquired by handlers and disposed of 
to crushing or exported. The Department concurs with this 
recommendation. The term ``shelled'' is also removed from paragraph (f) 
where appropriate for the same reason.
    For the non-signer regulation, the prohibition on exports to Canada 
and Mexico and the requirement of fragmentation would be removed to 
make paragraph (f) of Sec. 997.20 consistent with the proposed changes 
to the regulations under the Agreement.
    In Sec. 999.600 of the import regulation, paragraph (b)(3) does not 
restrict exports and so no corresponding change is made.
    Finally in Sec. 998.100, the Committee recommended removal of 
paragraph (j) which covers disposition of shelled peanuts for use as 
animal feed. This paragraph would be removed, since it contains 
restrictions which are not necessary to safeguard the quality of 
peanuts for human consumption. Appropriate safeguard measures are 
provided in proposed replacement provisions discussed below.
    The corresponding paragraph in Sec. 997.20 of the non-signer 
regulation, is paragraph (h)--which also would be removed for the 
reason cited. Paragraph (i) of the non-signer regulations would be 
retained because that paragraph applies to producer/handlers handling 
peanuts of their own production. This paragraph provides that such 
farm-stored peanuts must meet the requirements of the non-signer 
regulation. Paragraph (i) of the non-signer incoming regulation would 
be retained and redesignated as paragraph (g) in Sec. 997.20.
    The import regulation does not have a paragraph corresponding 
specifically to the Agreement's paragraph (j) on animal feed. The topic 
is addressed in paragraph (e) of the outgoing regulations, the removal 
of which is discussed below.

Outgoing Regulations

    Paragraph (a) of Sec. 998.200  Outgoing quality regulation provides 
that peanut lots meeting the Indemnifiable Grade requirements in Table 
2 do not have to be tested and certified as negative to aflatoxin. The 
Committee recommended modification of this requirement to provide that 
all lots (including Indemnifiable Grade lots) intended for human 
consumption be chemically tested and certified ``negative'' as to 
aflatoxin content. This change would make the Agreement regulations 
consistent with current industry practice. Most, if not all, buyers 
require that all peanuts for human consumption be certified negative as 
to aflatoxin. This proposed amendment would, therefore, have a twofold 
purpose. It would codify a practice which is common in the industry, 
and would ensure that the regulations effectuate the objectives of the 
Agreement.
    Under the current outgoing regulation, peanut lots meeting the 
grade requirements of Table 1, Other Edible Quality, must be certified 
negative to aflatoxin prior to shipment to the buyer. This requirement 
would not be changed. Under current industry practice, Indemnifiable 
Grade peanut lots may be chemically tested and certified while the lot 
is in transit to the buyer. This practice could be continued under the 
proposed procedures and the actual transfer of lot ownership would not 
normally occur until certification has been received by the handler. A 
shorter turn-around time for chemical analysis is now possible with 
current testing practices and equipment, overnight and express mail 
services, and fax transmissions.
    The Committee recommended that the regulatory language affecting 
this change should be added to the regulatory text of paragraph (a) 
after Table 2. However, the Department proposes revising paragraph (a) 
between Table 1 and Table 2. The proposed, revised text of paragraph 
(a) more clearly specifies the intent of the Committee's 
recommendation, and removes current text that some consider misleading 
of the industry's common practices. Additional conforming changes would 
be made to the paragraph.
    Paragraphs (a)(1) (i) and (ii) in Sec. 997.30 of the non-signer 
regulation and paragraphs (c)(1) (i) and (ii) in Sec. 999.600 of the 
import regulation correspond to paragraph (a) in Sec. 998.200 of the 
signer regulation. Both sets of paragraphs would be revised for the 
reasons cited above and to correspond with the proposed changes to the 
Agreement's outgoing regulation.
    The Committee recommended changing the title of paragraph (c) 
Pretesting shelled peanuts of Sec. 998.200. The new title is proposed 
to be Sampling and testing shelled peanuts to include the sampling 
process which comprises a significant part of the current paragraph. As 
a conforming change, the beginning of the first sentence of revised 
paragraph (c) would be changed to add the words ``Prior to shipment,* * 
*.'' Also, the first paragraph is proposed to be numbered (c)(1) 
because a paragraph (c)(2) is cited in the Code of Federal Regulations. 
Paragraph (c) is otherwise unchanged.
    A conforming change would be made to the title of corresponding 
paragraph (c) of the non-signer regulation. No conforming change is 
necessary in the import regulation. A conforming change also would be 
made to non-signer paragraph (c)(2) which currently specifies that 
handlers shall cause samples to be ground by the inspection service 
prior to shipment. The revised paragraph would provide that the non-
signer handler shall cause the sample to be ground for testing.
    Paragraph (c)(4) of Sec. 998.200 specifies the maximum allowable 
aflatoxin content for edible peanut lots as 15 parts per billion (ppb). 
Such lots are certified as ``negative'' to aflatoxin. Paragraph (c)(4) 
also specifies a ``negative'' content for inedible peanut lots as 25 
ppb or less. Under the current regulation, failing lots with aflatoxin 
content in excess of 15 ppb but 25 ppb or less are considered 
``unrestricted,'' which means the peanuts can be used in certain non-
human consumption peanut outlets such as animal feed, wildlife feed, 
etc. ``Unrestricted'' use may provide more of a financial return for 
handlers while not posing a food safety threat to consumers. Peanut 
lots with aflatoxin content of more than 25 ppb are certified as 
``restricted'' and can only be crushed for oil or exported. Aflatoxin 
certificates from USDA and private laboratories specify unrestricted 
lots as ``negative'' and usually do not include the numerical count of 
the lot's aflatoxin content. Currently, restricted lot certificates 
must cite the numerical aflatoxin count of the failing lot.
    The Committee's recommendations to revise paragraph (h) and remove 
paragraphs (j) and (l) of Sec. 998.200 would remove, among other 
things, procedures relevant to ``unrestricted'' and ``restricted'' lots 
of peanuts. Restrictions on the disposition of failing peanut lots 
would be relaxed under the proposed rule. Failing lots of peanuts 
composed on LSKs, fall through and pickouts from initial shelling 
operations would be limited to crushing or export unless certified as 
to aflatoxin content. If so certified, the lots could go to other non-
edible uses. Other failing lots and residuals from blanching and 
remilling also could be sold to any buyer provided that the lot is 
positive lot identified (PLI), certified as to aflatoxin content, and 
in specified containers. Therefore, there is no reason to retain the 
phrase in paragraph (c)(4) of Sec. 998.200 that specifies 25 ppb or 
less as ``negative'' to aflatoxin for inedible peanuts. Such a 
requirement would only cause confusion under the proposed regulations.

[[Page 51815]]

    Further, the proposed replacement paragraphs ((f), (g), and (h) of 
Sec. 998.200) would require that failing lots be ``certified as to 
aflatoxin content''--which means a numerical count rather than a 
general term covering a ppb spread from 16 to 26 ppb under current 
practice. For these reasons, the Department proposes removing reference 
to 25 ppb or less as ``negative'' for inedible peanuts. For peanut lots 
testing more than 15 ppb, the aflatoxin certificate would be required 
to show the lot's numerical aflatoxin count.
    Currently, peanut lots meeting human consumption requirements may 
be certified as ``negative'' to aflatoxin--meaning that the chemical 
analysis shows the peanuts have 15 ppb or less aflatoxin content. The 
chemical analysis certificates for such lots usually are certified as 
``negative as to aflatoxin for edible peanuts'' (or similar language). 
The certificates do not have to specify the numerical aflatoxin count 
of the lot.
    If this proposed rule becomes effective, USDA and private aflatoxin 
laboratories would specify the numerical aflatoxin content on 
certificates issued on inedible peanut lots testing more than 15 ppb. 
Aflatoxin certificates on lots which fail grade requirements but are 
tested at 15 ppb or less, would be certified as ``negative to 
aflatoxin'' for inedible peanuts. Non-signer and imported peanut lots 
meeting edible requirements would also be required to be certified as 
negative to aflatoxin.
    In the non-signer regulations, a corresponding change would be made 
to paragraph (a)(2) of Sec. 997.30. In the import regulation, paragraph 
(f)(3) establishes the restricted category of inedible peanuts as more 
than 25 ppb aflatoxin content. That paragraph would be removed for the 
reasons cited above and to correspond with other recommendations of the 
Committee.
    Paragraph (d) Identification of Sec. 998.200 is proposed to be 
amended by adding a clause in the first sentence establishing the 
maximum lot size as 200,000 pounds. The maximum limit specification 
occurs elsewhere in the Agreement's regulatory language and is proposed 
to be added here for consistency and clarity. The phrase would be 
removed elsewhere in the Agreement regulations, but would apply to all 
sampling situations.
    In the non-signer regulation, section Sec. 997.50 applies to 
identification, among other topics. While the maximum lot size is 
specified elsewhere in the regulations, the same sentence added to 
paragraph (d) of Sec. 998.200 is added to Sec. 997.50  Inspection, 
chemical analysis, certification and identification.
    In the import regulation, paragraph (d)(3)(ii) in Sec. 999.600 
already specifies the 200,000 pound maximum lot size for farmers stock, 
shelled, and cleaned-inshell peanuts for sampling purposes.
    Paragraph (f) Interplant transfer of Sec. 998.200 was revised last 
year and currently provides that peanut lots may be transferred to any 
handler or storage without PLI and certification, and that, upon 
disposition for human consumption such transferred peanuts must meet 
edible requirements. This paragraph is consistent with the Committee's 
intention to remove provisions which restrict movement and increase 
costs of handling peanuts. As long as any lot of peanuts intended for 
human consumption are required to be sampled and meet outgoing quality 
requirements and are PLI, any additional requirements on the transfer 
of peanuts between a handler's plants, that do not affect outgoing 
quality, are irrelevant. Further, handlers would be required to keep 
records of all such transfers.
    In the non-signer regulation, paragraph (f) covers the transfer of 
non-signer peanuts between plants. This paragraph would be removed (as 
discussed below).
    The import regulation does not have corresponding requirements on 
the transfer of imported peanuts between plants, and, therefore, no 
conforming change is necessary for that program.

Disposition of Failing Quality, Inedible Peanuts

    Finally, the Committee recommended streamlining Sec. 998.200 by 
removing 16 paragraphs covering disposition requirements and procedures 
concerning inedible (failing quality) peanuts used for research 
projects, wildlife feed, rodent bait, chemically treated seed, 
fragmented export, meal from crushing, and animal feed. The paragraphs 
proposed to be removed from Sec. 998.200 are:
    (1) Paragraph (g)(1): defining LSKs, fall through, and pickouts and 
inedible quality peanuts;
    (2) paragraph (g)(2): keeping such peanuts separate and apart from 
other peanuts;
    (3) paragraph (g)(3): disposing of such peanuts to research 
projects, wildlife feed, rodent bait, chemical treatment for seed, and 
export to countries other than Canada and Mexico, designations of 
restricted and unrestricted failing lots, and limiting disposition of 
meal from crushing;
    (4) paragraph (g)(4) specifying further requirements on the 
transfer of inedible peanuts;
    (5) paragraph (h)(1) specifying further requirements on identifying 
and reporting the transfer of inedible peanuts;
    (6) paragraph (h)(3) specifying further requirements regarding the 
disposition of failing quality Segregation 1 peanuts to specified 
outlets;
    (7) paragraph (i)(1) specifying disposition of seed peanuts and 
seed residuals;
    (8) paragraph (i)(2) specifying the chemical treatment of seed 
peanuts;
    (9) paragraph (j)(1) specifying requirements on commingling and 
disposition of Segregation 2 and 3 peanuts;
    (10) paragraph (j)(2) specifying further requirements on 
commingling and disposition of Segregation 2 and 3 peanuts;
    (11) paragraph (k)(1) regulating the exportation of Segregation 1 
peanuts;
    (12) paragraph (k)(2) specifying further requirements on the 
disposition of Segregation 1 peanuts to inedible outlets;
    (13) paragraph (l)(1) regarding the unrestricted disposition of 
shelled peanuts;
    (14) paragraph (l)(2) regarding the restricted disposition of 
shelled peanuts;
    (15) paragraph (m)(1) specifying requirements for the disposition 
of shelled peanuts for domestic animal feed; and (16) paragraph (m)(2) 
specifying coloring or dyeing and other requirements for disposition as 
domestic animal feed.
    The proposed changes include removal of paragraphs (j) and (k) from 
Sec. 998.200. These paragraphs address disposition requirements for 
farmers stock peanuts. The Committee believes that these two paragraphs 
would no longer be needed because current paragraph (f) Oilstock of 
Sec. 998.100 Incoming quality regulations provides that handlers may 
acquire Segregation 2 and 3 peanuts for crushing or export and that the 
Area Association supervise such dispositions. Handlers may not acquire 
Segregation 2 or 3 peanuts for purposes other than crushing or export. 
Handlers may also acquire for crushing or export peanuts originating 
from Segregation 1 farmers stock which are milled and fail human 
consumption quality and are PLI.
    Paragraph (j)(3) of the outgoing regulation provides handlers with 
exemption from assessments for acquisitions of Segregation 2 and 3 
peanuts used for crushing or export. The Committee intends that the 
assessment exemption for such peanuts should remain in effect, but did 
not specifically discuss retention of the paragraph.

[[Page 51816]]

Paragraph (j)(3) was added to the regulatory language last year (60 FR 
36208, July 14, 1995) to make clear the provisions of Secs. 998.31 and 
.48 of the Agreement. Because paragraph (j)(3) is relatively new in the 
regulatory text, and because a corresponding provision in the non-
signer regulation is required, the Department proposes that the 
exemption for Segregation 2 and 3 peanuts acquired for oilstock or 
export remain in the regulation. The exemption paragraph would be 
redesignated as paragraph (i) in Sec. 998.100 of the incoming 
regulation, and revised to remove the references to the removed 
paragraphs (j)(1) and (j)(2) in Sec. 998.200.
    A relaxation also is recommended by the Committee in the current 
blanching (h)(2) and remilling (h)(4) paragraphs. These provisions 
prohibit the blanching or remilling of peanut lots which exceed certain 
defect levels--10 percent total unshelled peanuts and damaged kernels, 
or 10 percent foreign material, and, for remilling, 10 percent fall 
through. The restrictions on the amount of damage and foreign material 
in out-of-grade lots would be removed so that handlers would have more 
opportunity to recondition failing lots. This would increase handler 
flexibility, reduce inspection and handling costs, and enable more 
peanuts to be reconditioned and shipped for human consumption. The 
Committee recommended that the restriction on 10 percent fall-through 
for remilling peanuts remain in effect. The non-signer and import 
regulations do not contain the same limitations on blanching and 
remilling of defective lots, so the corresponding paragraphs 
(Sec. 997.40(a) and Sec. 999.600(f), respectively) in those regulations 
do not need to reflect this proposed change.
    The Committee indicated that the present regulations are too 
restrictive and limit handlers' ability to recondition potentially 
edible peanuts. Further, as long as peanuts are required to meet the 
outgoing requirements, including negative aflatoxin certification, it 
should not matter from which categories the peanuts originated. The 
Committee recommended removal of many of the restrictions as proposed 
in this rule and the addition of appropriate safeguards, as discussed 
below. The Committee believes these safeguard requirements would help 
ensure that inedible peanuts do not end up in human consumption 
outlets.
    The provisions covering peanut disposition would be replaced by two 
new paragraphs and revisions would be made in two existing paragraphs. 
New paragraphs (f) (1), (2) and (3) of the outgoing regulation would 
modify Sec. 998.32 of the Agreement and specify disposition 
requirements for edible and non-edible peanut lots. New paragraph (g) 
would provide for disposition of inedible milled peanuts (``sheller 
oilstock residuals''). Proposed paragraph (h)(1) would cover the 
blanching of inedible peanuts (revised from current paragraph (h)(2)). 
Proposed paragraph (h)(2) would cover the remilling of inedible peanuts 
(revised from current paragraph (h)(4)).
    The Committee believes that safeguard measures in the current 
regulations should be maintained in the proposed changes because peanut 
lots sent to human consumption outlets would still need to meet the 
quality requirements of paragraph (a) and be certified negative to 
aflatoxin. Peanuts which cannot be reconditioned (or which a handler 
chooses not to recondition) to meet outgoing quality requirements would 
continue to be required to be PLI, red tagged, and maintained in 
appropriate containers. If disposed of to inedible peanut outlets other 
than crushing or export, failing peanuts would be required to be 
certified as to aflatoxin content and that certification would 
accompany the lot to the inedible peanut outlet. Paragraph (f)(2) also 
would require that the shipping papers state that the peanuts are not 
to be used for human consumption. All inedible dispositions would be 
reported to the Committee.
    In proposed paragraph (f)(3), failing quality peanuts not sent to 
such inedible outlets must be either crushed or exported as prescribed 
in new paragraph (g) or blanched or remilled pursuant to new paragraphs 
(h)(1) and (2), respectively. Segregation 2 and 3 farmers stock peanuts 
would be allowed to be milled for seed. This is a standard procedure 
for obtaining seed peanuts.
    New paragraph (g) of Sec. 998.200 would provide that peanuts and 
portions of peanuts which result from milling operations are identified 
as ``sheller oilstock residuals.'' Such peanuts may include loose 
shelled kernels, fall through, and pick-outs as defined in that 
paragraph and whole lots of failing peanuts that a handler may choose 
to crush or export. Under the proposed paragraph (g), sheller oilstock 
residuals which are certified as to aflatoxin content could be disposed 
of ``domestically,'' which means that the peanuts could be sent to an 
inedible peanut outlet pursuant to proposed paragraph (f)(2) or crushed 
for oil. To be sent to an inedible outlet, sheller oilstock residuals 
would have to be certified as to aflatoxin content. Such peanuts also 
could be exported. Seller oilstock residuals not certified as aflatoxin 
content could only be crushed or exported as specified in proposed 
paragraph (g). Further, the shipping papers accompanying such lots 
would specify that disposition limitation. All movement of sheller 
oilstock residuals would be reported to the Committee--which is 
consistent with current reporting requirements. However, the Department 
proposed to establish the following additional safeguard requirement to 
help ensure that inedible peanut lots are not disposed of to 
inappropriate inedible peanut outlets.
    The Committee's recommended changes in this proposed rule would 
remove nearly all restrictions on handlers selling peanuts to inedible 
peanut outlets. To help ensure that peanut lots with excessively high 
aflatoxin content are not used in inedible outlets where aflatoxin 
contamination could be transferred to human consumption products, the 
Department proposes requiring that no peanut lot disposed to an 
inedible outlet, other than for crushing or export, could exceed 300 
ppb aflatoxin content. The 300 ppb content ceiling is the maximum 
aflatoxin content recommended by the Food and Drug Administration (FDA) 
for peanuts used in animal (livestock) feed. To make this change, an 
additional paragraph (2) specifying the restriction would be added to 
the proposed sheller oilstock residual paragraph (g). Proposed 
paragraph (g) would be designated as (g)(1). The same provision would 
be added to the non-signer (Sec. 997.40(c)(2)) and import regulations 
(Sec. 999.600(e)(2)(ii)).
    Thus, the affect of this proposed rule is to raise from 25 to 300 
ppb aflatoxin content limit for failing peanut lots which can be 
disposed to inedible outlets. Under the proposed changes to the 
handling regulations, handlers would be allowed to recondition failing 
peanut lots, and would have more incentive to do so. Handlers would 
have the option of crushing a lot for oil or reconditioning the lot. 
Lots above 300 ppb aflatoxin content which are not economically 
beneficial to recondition would have to be crushed or exported. With 
current technologies, reconditioning should be possible for most all 
failing peanut lots. Whole and residual lots exceeding 300 ppb 
aflatoxin content could be commingled until sufficient volume is 
accumulated for crushing disposition.
    According to the FDA, residuals from the reconditioning of lots 
exceeding 300 ppb and the meal from crushed lots exceeding 300 ppb 
should not be used as animal feed.

[[Page 51817]]

    To increase peanut handlers and importers awareness of wholesome 
peanut uses, the Department includes in this preamble discussion a 
summary of FDA's recommended maximum aflatoxin content for domestic 
animal feed. This information is summarized from FDA's Compliance 
Policy Guides (Sec. 683.100) revised March 28, 1994. In that guide, FDA 
states that ``Action levels for aflatoxin in animal feed now apply also 
to peanut products (peanuts, peanut meal, peanut hulls, peanut skins 
and ground peanut hay).'' With regard to animal feeds, the FDA guide 
provides as follows:

--Peanut products intended for finishing (i.e., feedlot) beef cattle: 
Action level 300 ppb.
--Peanut products intended for finishing swine of 100 pounds or 
greater: Action level 200 ppb.
--Peanut products intended for breeding beef cattle, breeding swine, or 
mature poultry: Action level 100 ppb.
--Peanut products and feed ingredients intended for immature animals: 
Action level 20 ppb.
--Peanut products and other feed ingredients intended for dairy 
animals, for animal species or uses not specified above, or when the 
intended use is not known: Action level 20 ppb.

    In the current regulations under the Agreement, inedible peanut 
lots certified at 26 or more ppb cannot be sent to certain inedible 
peanut outlets where the peanuts would not be subject to heating in the 
preparation for inedible use or for uses which would allow the 
aflatoxin to be passed to another food product entering human 
consumption channels. This is a food safety measure which helps prevent 
aflatoxin-contaminated peanut lots from being used in certain inedible 
outlets--such as dairy cattle feed where the aflatoxin could be passed 
to human consumption in the milk.
    This proposed rule would change the certification protocols for 
inedible peanut lots. Currently, peanut lots which meet both grade 
quality (paragraph (a)) and aflatoxin requirements (15 ppb or less) are 
certified as ``negative as to aflatoxin for edible quality peanuts''--
or similar language.
    Further, lots failing grade requirements but which are certified as 
25 or less ppb are currently certified as ``negative to aflatoxin for 
inedible peanuts.'' Under the proposal, peanut lots meeting both grade 
and aflatoxin requirements would continue to be certified as negative 
to aflatoxin for edible peanuts and the aflatoxin count would not be 
shown on the aflatoxin certificate.
    For peanut lots which fail grade requirements but which meet 
aflatoxin requirements, the proposed rule would provide that the 
aflatoxin certificate show the aflatoxin count of the lot and state 
that the peanuts are inedible grade quality. The Department believes 
this would assist handlers in marketing inedible quality peanuts. For 
example, a lot which is inedible grade quality but tests as 5 ppb would 
be certified as ``inedible quality peanuts with 5 ppb aflatoxin 
content''--or similar language.
    Finally, the proposed rule would provide that the aflatoxin 
certificate of any peanut lot which exceeds 15 ppb aflatoxin content, 
regardless of grade certification, would show the numerical count of 
aflatoxin content and state that the lot is inedible because of 
excessive aflatoxin content--or similar language. The certification 
protocols would be implemented by the USDA and PAC-approved 
laboratories and would be applied to signer, non-signer, and imported 
peanuts.
    The Department also proposes changes to paragraph (h). In the 
proposed text for the revised blanching and remilling paragraphs, the 
phrase ``which originated from Segregation 1 peanuts'' was not 
included. No explanation was provided in the Committee meeting or 
meeting minutes as to the benefit of removing this important safeguard 
provision. The phrase, at the very least, serves as a reminder that 
only Segregation 1 peanuts may be shelled and sent to edible 
consumption outlets. Thus, the Department proposes re-inserting the 
phrase ``which originated from Segregation 1 peanuts'' in the blanching 
(h)(1) and remilling (h)(2) paragraphs proposed by the Committee.
    Also, the Committee recommended that the titles of the revised 
blanching (h)(1) and remilling (h)(2) paragraphs include reference to 
Committee approved blanchers and remillers, respectively. However, the 
Department proposes removing the reference in the titles because the 
reference is not necessary.
    In non-signer Sec. 997.30  Outgoing regulation, paragraphs (f) 
Transfer between plants and (g) Residuals from seed peanuts correspond 
to the same topics covered in the Agreement's outgoing regulation, and 
would be removed, accordingly. The subject matter in the two paragraphs 
would be replaced with a revised Sec. 997.40  Reconditioning and 
disposition of peanuts failing quality requirements. Current 
Sec. 997.40 covers certain outgoing requirements corresponding to those 
in the Agreement's Sec. 998.200. Paragraphs (a)(1) and (2) of 
Sec. 997.40 covers remilling and blanching of inedible shelled peanuts. 
These two paragraphs would be revised, and the order reversed, to 
conform with the Committee's recommended revised blanching and 
remilling paragraphs (h)(1) and (2). However, the paragraphs are not 
identical to the Agreement provisions because non-signers are not 
required to receive Department approval prior to moving a failing 
shelled lot to a blancher or remiller. Also, the non-signer regulations 
do not limit remilling and blanching to Committee approved remillers, 
blanchers or exporters. Therefore, those requirements are not included 
in the proposed revised non-signer blanching and remilling paragraphs.
    The provisions of current non-signer paragraph (a)(3) of 
Sec. 997.40 covering the ownership of peanuts moved for custom 
blanching or remilling, and the certification and reporting of such 
peanuts, are included in the revised Sec. 997.40 blanching and 
remilling paragraphs (d)(1) and (2), and would be deleted in this 
proposed rule. Likewise, the contents of current paragraph (a)(4) on 
the bagging, red tagging and disposition of blanched and remilled 
peanuts are included in the revised Sec. 997.40(d)(1) and (2). This 
would make the non-signer blanching and remilling paragraphs conform 
with the Agreement's revised blanching and remilling paragraphs.
    Four paragraphs in Sec. 997.40(b) Disposition of shelled peanuts 
failing quality requirements for human consumption cover the various 
disposition procedures and outlets for failing quality, inedible 
peanuts. These requirements would remain the same as, but organized and 
worded differently from, the Agreement's Sec. 998.200 requirements in 
paragraphs (g) through (m)--most of which would be removed and replaced 
as described above. The provisions removed from paragraph (b) of 
Sec. 997.40 are:
    (1) Paragraph (b)(1) regulating the disposition of shelled peanuts 
to unrestricted crushing, fragmenting or dyeing, export, animal feed, 
wildlife feed, and rodent bait;
    (2) paragraph (b)(2) specifying further requirements for 
disposition to animal feed (coloring or dyeing, PLI, valid aflatoxin 
certification, and reporting);
    (3) paragraph (b)(3) regulating the disposition of shelled peanuts 
to restricted crushing, and export;
    (4) paragraph (b)(4) regulating the disposition of Segregation 2 
and 3 farmers stock peanuts to restricted and

[[Page 51818]]

unrestricted meal, crushing and export; and
    (5) paragraph (b)(5) specifying reporting requirements for LSKs, 
fall through, and pickouts.
    These paragraphs would be removed for the same reasons and to 
correspond with the proposed changes to the Agreement's outgoing 
regulation.
    Paragraph (b)(6) of Sec. 997.40 would be retained because it 
exempts from assessments, Segregation 2 and 3 farmers stock peanuts 
acquired by non-signatory handlers for crushing or export. The 
corresponding paragraph in the Agreement is retained and redesignated 
in this proposed rulemaking. Therefore, such Segregation 2 and 3 
peanuts acquired by non-signatory handlers also would continue to be 
exempt from assessments. Paragraph (b)(6) would be revised and 
redesignated as paragraph (b) under Sec. 997.51  Assessments and the 
existing text in Sec. 997.51 would be redesignated as paragraph (1).
    There is no authority to assess imported peanuts.
    Several changes would be made to the import regulation regarding 
disposition of inedible peanuts. Paragraph (c)(3) of Sec. 997.40 would 
be moved and replace current paragraph (e). To make the same changes to 
the import regulation, the provisions in paragraphs (e) and (f) would 
be revised and placed under new paragraph (e), and paragraphs (g) and 
(h) would be redesignated as (f) and (g), respectively.
    New paragraph (e)(1) of Sec. 999.600 provides an overview for 
reconditioning imported lots. New paragraph (e)(2) covers failing lots 
disposed of to inedible uses such as animal feed, wildlife feed, seed 
peanuts and meal, which are currently regulated under paragraphs (e) 
and (f). Dispositions to these inedible outlets would be required to be 
positive lot identified with red tags, bagged, and the bill of lading 
would state that the peanuts could not be used for human consumption. 
This proposal would remove all references to ``restricted'' and 
``unrestricted'' failing peanuts and the limitations on the disposition 
of restricted and unrestricted lots.
    Proposed new paragraph (e)(3) of the import regulation would cover 
disposition of failing quality peanuts (``sheller oilstock residuals'') 
to crushing or export. Peanuts covered under the new (e)(3) would be 
primarily loose shelled kernels, fall through and pickouts from milling 
operations, but may also include any other failing lot that an importer 
chooses to crush or export. Identification, certification and labeling 
requirements are the same as those in corresponding paragraphs proposed 
for the Agreement.
    New paragraph (e)(4) would specify reporting requirements for 
inedible lots pursuant to the reporting requirements in the safeguard 
procedures.
    Finally, a paragraph would be added at the end of the regulations 
under the Agreement text which would specify that certain records would 
be required to be maintained pursuant to Sec. 998.43 of the Agreement. 
These records would pertain to peanuts which are not certified for 
human consumption. In addition to maintaining certain records, the 
Agreement provides that all records would be made available to 
Committee staff and to representatives of the Secretary, as is 
necessary to document compliance with Agreement regulations. The 
additional provision does not represent an increase in the number of 
forms handlers and importers would have to complete, report, or 
maintain under the program.
    No corresponding changes are necessary in the non-signer and import 
regulations. However, in Sec. 997.52  Reports of acquisition and 
shipments and elsewhere in the non-signer regulation, references 
regarding specific Fruit and Vegetable Division form numbers are 
proposed to be replaced with a more generic statement ``forms provided 
by the Division.'' This would enable the Department to revise and 
reduce the number of forms without additional rulemaking expense.
    The unchanged portions of the incoming and outgoing regulations 
currently in effect for 1995 and subsequent crop peanuts would remain 
in effect for 1996 and subsequent crop peanuts.

Additional Change to Sec. 999.600 Import Regulation

Early Entry and Bonded Storage Pending New Quota

    Experience shows that some importers continue to ship peanuts to 
the U.S. even after the duty-free quota is filled for one year. The 
peanuts are sampled and inspected when off-loaded at the port and then 
sent inland to Customs Service bonded warehouses where the peanuts are 
stored until the opening of the next yearly quota--which could be as 
long as 11 months. New crop peanuts from Argentina, for instance, may 
be harvested as early as May or June but may arrive in the U.S. too 
late to be included in that year's quota. Such peanuts could be placed 
in bonded storage awaiting the next quota year beginning the following 
April.
    The Department has determined that the grade and aflatoxin 
certificates issued on such peanuts upon arrival in May, June, or 
later, of one quota year should continue to be valid until the 
following quota year. This is consistent with the Agreement which does 
not place any time limits on the applicability of grade and aflatoxin 
inspection certificates.
    However, paragraph (e) Reinspection of Sec. 998.200 provides that 
if the Committee has reason to believe that peanuts may have been 
damaged or deteriorated while in storage, it may reject the then 
effective inspection certificate and require a reinspection. The 
Department exercises similar oversight of imported peanuts to ensure 
that only wholesome peanuts enter human consumption channels. Because 
of the possibility of deterioration while in storage, the Department 
needs to know which peanut shipments are held in bonded storage for an 
extended period of time, so that the wholesomeness of such peanuts 
could be verified when removed from storage. Therefore, the Department 
proposes that an additional safeguard measure, new paragraph (f)(6) be 
added to the import regulation.
    The proposal would require that importers report to AMS peanut 
shipments which are sampled, inspected, and held in bonded storage in 
excess of a stated period of time. Such time would be set at one month 
in this proposal. AMS seeks comments as to whether or not one month is 
appropriate. The report would be filed pursuant to paragraphs (f)(2) 
and (3) of this section at the time of inspection and entry into a 
bonded warehouse for storage. The report would include copies of 
Customs Service documentation of the lot, the grade and aflatoxin 
certificates, and location of the storage warehouse.
    To avoid deterioration, peanuts should be stored in clean, dry, 
odor free, warehouses and under sanitation and cold storage conditions 
consistent with industry standards. While the Agreement does not 
require cold storage conditions, the following points should be used as 
a cold storage guide:

--Temperatures should range from 34 to 41 degrees Fahrenheit with a 
relative humidity of 55 to 70 percent.
--Daily or weekly recording charts of temperature and humidity should 
be maintained.
--Interior air circulation should be adequate to maintain uniform 
temperatures.
--Pans under refrigeration equipment should prevent condensation from 
dripping onto the peanuts.
--Peanuts should be gradually removed from cold storage over 2 to 3 
days.


[[Page 51819]]


    This and other information on sanitation, facilities, management 
practices, and dry storage is taken from Good Management Practices for 
Shelled Goods Cold Storage and Shelled Goods Dry Storage distributed by 
the National Peanut Council. Copies are available for a nominal price 
to non-members by calling (703)-838-9500.
    Imported peanut lots certified as meeting human consumption 
requirements and subsequently stored under such conditions and in 
appropriate warehouses, may be entered for consumption when the next 
quota year begins--without further reporting to AMS. Upon filing for 
entry, the importer shall certify in writing to the Customs Service 
that the peanuts covered by the entry documentation have been stored 
consistent with industry standards for the entire length of the storage 
period.
    Paragraph (b)(4) of the import regulation provides authority for 
the Secretary to require a reinspection of an imported peanut lot. If 
the documentation provided to AMS, or if any evidence subsequently 
received by AMS, indicates that appropriate storage standards have not 
been met or maintained and the peanuts may have been damaged or 
deteriorated, the Secretary could demand reinspection of the lot prior 
to the importer's filing for consumption entry of the lot.
    Paragraph (b)(4) of Sec. 999.600 is currently placed in the import 
rule's Incoming quality regulation. However, reinspections are more 
likely to be needed when shelled peanuts are placed under bonded 
storage several months prior to the beginning of the next quota year, 
as discussed above. Therefore, the Department proposes to redesignate 
it as paragraph (f)(5) Reinspection in the import regulation. As a 
safeguard provision, the paragraph will apply to farmers stock, 
shelled, and inshell imported peanuts. The intent and requirements of 
the paragraph remain unchanged.
    Some paragraphs of the three peanut regulations would not be 
changed in this proposal. However, for a better understanding of the 
proposed changes, the three regulations are published in their entirety 
as proposed, including paragraphs which are not changed.
    If adopted, the proposed changes to the signer and non-signer 
programs should be in effect as soon as possible to cover as much of 
the crop year as possible. Thus, a 20-day (rather than 30-day) comment 
period is provided to allow interested persons to respond to this 
proposal. All written comments timely received will be considered 
before a final determination is made in this matter.
    Because this proposed rule will not be implemented before the 
beginning of the 1996 domestic crop year, comments are also requested 
on whether final implementation of this proposal after the beginning of 
the crop year would have an unequal effect on one or more of the three 
production areas or unequally affect small or large handlers.

List of Subjects

7 CFR Part 997

    Food grades and standards, Peanuts, Reporting and recordkeeping 
requirements.

7 CFR Part 998

    Marketing agreements, Peanuts, Reporting and recordkeeping 
requirements.

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 parts 997, 998 and 
999 are proposed to be amended as follows:

PART 997--PROVISIONS REGULATING THE QUALITY OF DOMESTICALLY 
PRODUCED PEANUTS HANDLED BY PERSONS NOT SUBJECT TO THE PEANUT 
MARKETING AGREEMENT

    1. The authority citation for 7 CFR part 997 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Under the center heading ``Quality Regulations,'' Secs. 997.20, 
997.30, 997.40 and 997.50 are revised to read as follows:

Quality Regulations


Sec. 997.20  Incoming regulation.

    (a) No handler shall receive or acquire peanuts intended for human 
consumption, either from a producer or other person, unless such 
peanuts are inspected pursuant to Sec. 997.50 and are determined to be 
Segregation 1 peanuts at time of receipt from the producer or, if 
received from another person, had not been mixed with peanuts of a 
lower quality than Segregation 1 and meet the following additional 
requirements specified in this section: Provided, That a handler may--
    (1) Acquire shelled peanuts from the Commodity Credit Corporation 
(CCC) or cleaned inshell or shelled peanuts from other handlers, a 
handler as defined in 7 CFR 998.8, or from buyers who have purchased 
such peanuts from handlers or from the CCC, if the lot has been 
certified as meeting the requirements of Sec. 997.30(a) and the 
identity is maintained; and/or
    (2) Perform services for an area association pursuant to a peanut 
receiving and warehouse contract.
    (b) Moisture and foreign material. (1) Moisture. Except as provided 
under paragraph (d) of Sec. 997.20, no handler shall receive or acquire 
peanuts containing 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 storing or milling. For 
farmers stock peanuts, moisture determinations shall be rounded to the 
nearest whole number. Moisture determinations on shelled peanuts shall 
be carried to the hundredths place.
    (2) Foreign material. No handler shall receive or acquire farmers 
stock peanuts containing more than 10.49 percent foreign material, 
except that peanuts having a higher foreign material content may be 
received or acquired if they are 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.
    (c) 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.
    (d) Seed peanuts. Peanuts which are not Segregation 1 peanuts and 
therefore cannot be acquired for human consumption may be acquired, 
shelled and delivered for seed purposes. Peanuts intended for seed use, 
produced under the auspices of a State agency which regulates or 
controls the production of seed peanuts, which do not meet Segregation 
1 requirements shall be stored and shelled separate from peanuts 
intended for human consumption. However, Segregation 2 seed peanuts, 
produced under the auspices of the State agency, which contain up to 
3.00 percent damaged kernels and are free from visible Aspergillus 
flavus may be stored and shelled with Segregation 1 peanuts which are 
also produced under the auspices of the State agency. A handler whose 
operations include custom seed shelling may receive, custom shell, and 
deliver for seed purposes farmers stock peanuts, and such peanuts shall 
be exempt from the requirements of this section and, therefore, shall 
not be required to be inspected and certified as meeting these 
requirements, and the

[[Page 51820]]

handler shall report to the Division the weight of each lot of farmers 
stock peanuts received on such basis on a form provided by the 
Department. However, handlers who acquire seed peanut residuals from 
their custom shelling of uninspected (farmers stock) seed peanuts or 
from another person may mill such residuals with other receipts or 
acquisitions of the handler, and such peanuts which meet the 
requirements specified in Sec. 997.30(a) may be disposed of by sale to 
human consumption outlets.
    (e) Oilstock. Handlers may acquire for disposition to domestic 
crushing or export farmers stock peanuts of a lower quality than 
Segregation 1 or grades or sizes of shelled peanuts or cleaned inshell 
peanuts which fail to meet the requirements for human consumption. 
Handlers may act as accumulators and acquire, for other handlers; a 
handler as defined in 7 CFR 998.8 or from other persons, Segregation 2 
or 3 farmers stock peanuts. Handlers may also acquire shelled peanuts 
originating from Segregation 2 or 3 farmers stock or the entire mill 
production of peanuts from Segregation 1 farmers stock or lots of 
shelled peanuts originating from Segregation 1 peanuts and which have 
been positive lot identified as specified in Sec. 997.30(d), which 
failed to meet the requirements for human consumption pursuant to 
Sec. 997.30(a): Provided, That all such acquisitions are held separate 
from Segregation 1 peanuts acquired for milling or from edible grades 
of shelled or milled peanuts. Handlers may commingle the Segregation 2 
and 3 peanuts or keep them separate and apart. Handlers who acquire 
farmers stock peanuts of a lower quality than Segregation 1 or cleaned 
inshell peanuts which fail to meet the requirements for human 
consumption shall report such acquisitions to the Division as 
prescribed on a form prescribed by the Division. Handlers who acquire 
grades or sizes of shelled peanuts which fail to meet the requirements 
for human consumption for disposition to domestic crushing and 
subsequent export to countries shall report such disposition on a form 
provided by the Division.
    (f) Shelled peanuts. Handlers may acquire shelled peanuts (which 
originated from ``Segregation 1 peanuts'') from other handlers or a 
handler as defined in 7 CFR 998.8, for remilling and subsequent 
disposition to human consumption outlets. Further disposition of such 
peanuts shall be regulated by Sec. 997.40.
    (g) No producer may handle, process, prepare for sale, or otherwise 
alter peanuts of his own production from the condition of farmers 
stock, for disposition in human consumption outlets unless such peanuts 
are first inspected and certified pursuant to Sec. 997.50 and meet the 
applicable requirements of this section.


Sec. 997.30  Outgoing Regulation.

    (a) Shelled peanuts. (1)(i) No handler shall ship or otherwise 
dispose of shelled peanuts for human consumption unless such peanuts 
are positive lot identified, certified ``negative'' as to aflatoxin and 
certified as meeting the requirements in Table 1:

                                           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                                                      Total          materials     Moisture 
                                      kernels       minor        Sound split and     Sound whole kernels                         (percent)    (percent) 
                                     (percent)     defects       broken kernels                                                                         
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner............................         1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00%; both screens.          .20         9.00
                                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
Virginia (except No. 2)...........         1.50         2.50  3.00%; \17/64\ inch;  3.00%; \15/64\ x 1    4.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 
Spanish and Valencia..............         1.50         2.50  3.00%; \16/64\ inch;  3.00%; \15/64\ x \3/  4.00%; both screens.          .20         9.00
                                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
No. 2 Virginia....................         1.50         3.00  6.00%; \17/64\ inch;  6.00%; \15/64\ x 1    6.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Lots of ``splits''                                                                   
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner (not more than 4% sound             1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\ x \3/  4.00%; both screens.          .20         9.00
 whole kernels).                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
Virginia (not less than 90%                1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\ x 1    4.00%; both screens.          .20         9.00
 splits).                                                      round screen.         inch; slot screen.                                                 
Spanish and Valencia (not more             1.50         2.50  3.00%; \16/64\ inch;  3.00%; \13/64\ x \3/  4.00%; both screens.          .20         9.00
 than 4% sound whole kernels).                                 round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (ii) Prior to disposition to human consumption outlets, peanuts 
must be positive lot identified, be certified ``negative'' as to 
aflatoxin, and be certified as meeting the following superior quality 
requirements in Table 2:

[[Page 51821]]



                                         Table 2.--Superior Quality Requirements--Peanuts for Human Consumption                                         
                                                               [Whole Kernels and Splits]                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Maximum limitations                                                                  
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                                                                                             
                                     Unshelled     peanuts,                                                                                             
                                    peanuts and    damaged       Sound split and                                                  Foreign               
      Type and grade category         damaged    kernels and     broken kernels      Sound whole kernels          Total          materials     Moisture 
                                      kernels       minor           (percent)             (percent)                              (percent)    (percent) 
                                     (percent)     defects                                                                                              
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner U.S. No. 1 and better......         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\ x \3/  4.00%; both screens.          .10         9.00
                                                               round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia U.S. No. 1 and better....         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\ x 1    4.00%; both screens.          .10         9.00
                                                               round screen.         inch, slot screen.                                                 
Spanish and Valencia U.S. No. 1            1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\ x \3/  4.00%; both screens.          .10         9.00
 and better.                                                   round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Runner U.S. Splits (not more than          1.25         2.00  2.00%; \17/64\ inch,  3.00%; \14/64\ x \3/  4.00%; both screens.          .20         9.00
 4% sound, whole kernels).                                     round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia U.S. Splits (not less             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \14/64\ x 1    4.00%; both screens.          .20         9.00
 than 90% splits and not more than                             round screen.         inch, slot screen.                                                 
 3.00% sound whole kernels and                                                                                                                          
 portions passing through \20/64\                                                                                                                       
 inch round screen).                                                                                                                                    
Spanish and Valencia U.S. Splits           1.25         2.00  2.00%; \16/64\ inch,  3.00%; \13/64\ x \3/  4.00%; both screens.          .20         9.00
 (not more than 4% sound, whole                                round screen.         4\ inch, slot                                                      
 kernels).                                                                           screen.                                                            
Runner with splits (not more than          1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\ x \3/  4.00%; both screens.          .10         9.00
 15% sound splits).                                            round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia with splits (not more             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\ x 1    4.00%; both screens.          .10         9.00
 than 15% sound splits).                                       round screen.         inch, slot screen.                                                 
Spanish and Valencia with splits           1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\ x \3/  4.00%; both screens.          .10         9.00
 (not more than 15% sound splits).                             round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (2) The term ``fall through'', as used herein, shall mean sound 
split and broken kernels and whole kernels which pass through specified 
screens. Prior to shipment, appropriate samples for pretesting shall be 
drawn in accordance with paragraph (c) of this section from each lot of 
Superior Quality peanuts. For the current crop year, ``negative'' 
aflatoxin content means 15 parts per billion (ppb) or less for peanuts 
which have been certified as meeting edible quality grade requirements.
    (b) Cleaned inshell peanuts. No handler shall ship, sell, or 
otherwise dispose of cleaned inshell peanuts for human consumption:
    (1) With more than 1.00 percent kernels with mold present unless a 
sample of such peanuts, drawn by an inspector of the Federal or 
Federal-State Inspection Service, was analyzed chemically by a U.S. 
Department of Agriculture laboratory (hereinafter referred to as ``USDA 
laboratory'') or a laboratory listed in paragraph (c) of this section 
and found to be wholesome relative to aflatoxin;
    (2) With more than 2.00 percent peanuts with damaged kernels;
    (3) With more than 10.00 percent moisture; or
    (4) With more than 0.50 percent foreign material.
    (c) Sampling and testing shelled peanuts. (1) Each handler shall 
cause appropriate samples of each lot of edible quality shelled peanuts 
to be drawn by an inspector of the Federal or Federal-State Inspection 
Service. The gross amount of peanuts drawn shall be large enough to 
provide for a grade analysis, for a grading check-sample, and for three 
48-pound samples for aflatoxin assay. The three 48-pound samples shall 
be designated by the Federal or Federal-State Inspection Service as 
``Sample #1N'', ``Sample #2N'', and ``Sample #3N'' and each sample 
shall be placed in a suitable container and ``positive lot identified'' 
by means acceptable to the Inspection Service. Sample #1N may be 
prepared for immediate testing or Sample #1N, Sample #2N, and Sample 
#3N may be returned to the handler for testing at a later date.
    (2) The handler shall cause Sample #1 to be ground by the Federal 
or Federal-State Inspection Service, a USDA laboratory or a laboratory 
listed herein, in a ``subsampling mill'' approved by the Division. The 
resultant ground subsample from Sample #1N shall be of a size specified 
by the Division and shall be designated as ``Subsample 1--ABN'' and at 
the handler's or buyer's option, a second subsample may also be 
extracted from Sample #1N. It shall be designated as ``Subsample 1--
CDN''. Subsample 1--CDN may be sent as requested by the handler or 
buyer, for aflatoxin assay, to a USDA laboratory or other laboratory 
that can provide analyses results on such samples in 36 hours. The cost 
of sampling and testing Subsample 1--CDN shall be for the account of 
the requester. Subsample 1--ABN shall be analyzed only in a USDA

[[Page 51822]]

laboratory or a laboratory listed herein. Both Subsamples 1--ABN and 
1--CDN shall be accompanied by a notice of sampling signed by the 
inspector containing, at least, identifying information as to the 
handler (shipper), the buyer (receiver), if known, and the positive lot 
identification of the shelled peanuts. A copy of such notice covering 
each lot shall be sent to the Division.
    (3) The samples designated as Sample #2N and Sample #3N shall be 
held as aflatoxin check-samples by the Inspection Service or the 
handler and shall not be included in the shipment to the buyer until 
the analyses results from Sample #1N are known.
    (4) Upon call from the laboratory, handler shall cause Sample #2N 
to be ground by the Inspection Service in a ``subsampling mill.'' The 
resultant ground subsample from Sample #2N shall be of a size specified 
by the Division and it shall be designated as ``Subsample #2--ABN.'' 
Upon call from the laboratory, the handler shall cause Sample #3N to be 
ground by the Inspection Service in a ``subsampling mill.'' The 
resultant ground subsample from Sample #3N shall be of a size specified 
by the Division and shall be designated as ``Subsample #3--ABN''. 
``Subsamples 2--ABN and 3--ABN'' shall be analyzed only in a USDA 
laboratory or a laboratory listed herein and each shall be accompanied 
by a notice of sampling. A copy of each such notice shall be sent to 
the Division. The results of each assay shall be reported by the 
laboratory to the handler and to the Division. All costs involved in 
the sampling and testing of peanuts required by this regulation shall 
be for the account of the applicant.
    (5) Information on making arrangements for the required inspection 
and certification can be obtained by contacting the Fresh Products 
Branch, Fruit and Vegetable Division, Agricultural Marketing Service, 
USDA, P.O. Box 96456, room 2049-S, Washington, DC, 20090-6456, 
telephone (202) 690-0604 or facsimile (202) 720-0393.
    (i) Laboratories at the following locations are approved to perform 
the chemical analyses required pursuant to this part. The sampling plan 
and procedures may be obtained from the Science Division.

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, 1557 Reeves St., Dothan, AL 
36303, Tel: (334) 794-5070, Fax: (334) 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
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

    (ii) Handlers should contact the nearest laboratory from the list 
in paragraph (c)(5)(i) of this section to arrange to have samples 
chemically analyzed for aflatoxin content, or for further information 
concerning the chemical analyses required pursuant to this part 
handlers may contact: The Science and Technology Division, Agricultural 
Marketing Service, USDA, P.O. Box 96456, room 3507-S, Washington, D.C., 
20090-6456, telephone (202) 720-5231, facsimile (202) 720-6496.
    (d) Identification. Each lot of shelled or cleaned inshell peanuts, 
in lot sizes not exceeding 200,000 pounds, shall be identified by 
positive lot identification procedures prior to being shipped or 
otherwise disposed of. For the purpose of this regulation, ``positive 
lot identification'' of a lot of shelled or inshell peanuts is a means 
of relating the inspection certificate to the lot which has been 
inspected so that there can be no doubt that the peanuts are the same 
ones described on the inspection certificate. The crop year that is 
shown on the positive lot identification tags, or other means of 
positive lot identification shall accurately describe the crop year in 
which the peanuts in the lot were produced. Such procedure on bagged 
peanuts shall consist of attaching a lot numbered tag bearing the 
official stamp of the Federal or Federal-State Inspection Service to 
each filled bag in the lot. The tag shall be sewed (machine sewed if 
shelled peanuts) into the closure of the bag except that in plastic 
bags the tag shall be inserted prior to sealing so that the official 
stamp is visible. Any peanuts moved in bulk or bulk bins shall have 
their lot identity maintained by sealing the conveyance and if in other 
containers by other means acceptable to the Federal or Federal-State 
Inspection Service. All lots of shelled or cleaned inshell peanuts 
shall be handled, stored, and shipped under positive lot identification 
procedures, except those lots which have been reconstituted and/or 
commingled at the request of the receiver. All such reconstituted and/
or commingled lots will no longer be considered positive lot identified 
and, therefore, no longer be eligible for appeal inspection. Handler 
shall keep and maintain records of the quantities involved in each 
reconstituting and/or commingling procedure, whether in single or 
multiple lots, and such records shall be available to the Division on 
request.
    (e) Reinspection. Whenever the Division has reason to believe that 
peanuts may have been damaged or deteriorated while in storage, the 
Division may reject the then effective inspection certificate and may 
require the owner of the peanuts to have a reinspection to establish 
whether or not such peanuts may be disposed of for human consumption.


Sec. 997.40  Reconditioning and disposition of peanuts failing quality 
requirements.

    (a) Lots of peanuts which have not been certified as meeting the 
requirements for disposition to human

[[Page 51823]]

consumption outlets, may be disposed of for non-human consumption uses 
which are not regulated or limited by the provisions specified in this 
section: Provided, That each such lot is positive lot identified, using 
red tags, and certified as to aflatoxin content (actual numerical 
count). However, on the shipping papers covering the disposition of 
each such lot of inedible quality peanuts, the handler shall cause the 
following statement to be shown: ``The peanuts covered by this bill of 
lading (or invoice, etc.) are not to be used for human consumption.''
    (b) Except for inedible quality peanuts disposed of under the 
provisions of paragraph (f)(2) of this section and peanuts derived from 
the milling for seed of Segregation 2 and 3 farmers stock peanuts, 
peanuts which have not been certified as meeting the standards set 
forth in paragraphs (a) or (b) of Sec. 997.30 shall be disposed of as 
prescribed hereinafter in this section.
    (c) Sheller Oil Stock Residuals--For Crushing or Export. Peanuts, 
or portions of peanuts which are separated from edible quality peanuts 
by screening or sorting or other means during the milling process, may 
be segregated into categories or they may be commingled as sheller oil 
stock residuals. Such sheller oil stock residuals shall be identified 
pursuant to paragraph (d) of this section, but using a red tag, and 
such peanuts may be disposed of domestically or to the export market, 
in bulk or bags or other suitable containers. The movement of such 
peanuts shall be reported to the Division by the shipping handler and 
the crusher, as requested by the Division.
    (1) If the peanuts have not been tested and certified as to 
aflatoxin content, as prescribed in paragraph (c) of this section, the 
handler shall cause the following statement to be shown on the shipping 
papers: ``The peanuts covered by this bill of lading (or invoice, etc.) 
are limited to crushing only and may contain aflatoxin.''
    (2) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (d) Blanching peanuts failing quality requirements. Handlers may 
blanch or cause to have blanched positive lot identified shelled 
peanuts, which originated from Segregation 1 peanuts, that fail to meet 
the requirements of paragraph (a) of this section because of excessive 
damage, minor defects, moisture, or foreign material or are positive as 
to aflatoxin. Lots of peanuts which are moved under these provisions 
must be accompanied by a valid grade inspection certificate and the 
title shall be retained by the handler until the peanuts are blanched 
and certified by an inspector of the Federal or Federal-State 
Inspection Service as meeting the requirements for disposal into human 
consumption outlets. To be eligible for disposal into human consumption 
outlets, such peanuts after blanching, must meet specifications for 
unshelled peanuts, damaged kernels, minor defects, moisture, and 
foreign material as listed in paragraph (a) of this section and be 
accompanied by a negative aflatoxin certificate. The residual peanuts, 
excluding skins and hearts, resulting from blanching under these 
provisions, shall be bagged and red tagged and disposition shall be 
that such peanuts are returned to the handler for further disposition; 
or, in the alternative, such residuals shall be positive lot identified 
by the Federal or Federal-State Inspection Service, and shall be 
disposed of, by the blancher to crushers who agree to comply with the 
terms of paragraph (c) of this section.
    (e) Remilling peanuts failing quality requirements. Handlers may 
remiller or cause to have remilled shelled peanuts, which originated 
from Segregation 1 peanuts, that fail to meet the requirements for 
disposition to human consumption outlets heretofore specified in 
paragraph (a) of this section: Provided, That such lots of peanuts 
contain not in excess of 10 percent fall through. Lots of peanuts moved 
under these provisions must be accompanied by a valid grade inspection 
certificate and must be positive lot identified and the title of such 
peanuts shall be retained by the handler until the peanuts have been 
remilled and certified by the Federal or Federal-State Inspection-
Service as meeting the requirements for disposition to human 
consumption outlets specified in paragraph (a) of this section, and be 
accompanied by a negative aflatoxin certificate. Remilling under these 
provisions may include composite remilling of more than one such lot of 
peanuts owned by the same handler. However, such peanuts owned by one 
handler shall be held and remilled separate and apart from all other 
peanuts. The residual peanuts resulting from remilling under these 
provisions, shall be bagged and red tagged and disposition shall be 
that such peanuts are returned to the handler for further disposition; 
or, in the alternative, such residuals shall be positive lot identified 
by the Federal or Federal-State Inspection Service, and shall be 
disposed of, by the remiller, to crushers who agree to comply with the 
terms of paragraph (c) of this section.


Sec. 997.50  Inspection, chemical analysis, certification and 
identification.

    Each handler shall, at the handler's own expense, prior to or upon 
receiving and before shipping or disposing of peanuts, cause an 
inspection to be made of any such peanuts not covered by a valid 
inspection certificate, to determine whether such peanuts meet the 
applicable grade requirements effective pursuant to this part, and 
shall comply with such identification requirements prescribed by this 
part or which the Secretary may prescribe. Each handler shall also 
cause appropriate samples to be drawn and chemically analyzed by a USDA 
laboratory, or laboratory listed in Sec. 997.30, for wholesomeness as 
provided in Sec. 997.30 of this part. Such handler shall obtain grade 
and aflatoxin certificates stating that such peanuts meet the 
aforementioned applicable requirements and all such certificates shall 
be available for examination or use by the Division. Acceptable 
certificates shall be those issued by Federal or Federal-State 
inspectors authorized or licensed by the Secretary and USDA 
laboratories or those listed in Sec. 997.30 of this part.
    Each handler shall furnish, or cause the inspection service or the 
laboratory to furnish, to the Division, a copy of the inspection 
certificate and a copy of the results of the chemical analyses issued 
to the handler on each lot of shelled peanuts or cleaned inshell 
peanuts.
    3. Under the center heading ``Assessments,'' section 997.51 is 
revised to read as follows:


Sec. 997.51  Assessments.

    (a) Each first handler shall pay to the Secretary, with respect to 
Segregation 1 peanuts received or acquired by the handler, including 
the handler's own production, an administrative assessment as approved 
by the Secretary. The rate of assessment shall be the same as the 
administrative assessment approved by the Secretary and applied to 
signatory handlers under the Peanut Marketing Agreement No. 146. Such 
administrative assessment shall be applied during the crop year 
beginning July 1 and ending June 30 of the following year. Each 
handler's pro rata share shall be the rate of assessment fixed by the 
Secretary per net ton of farmers stock peanuts received or acquired, 
other than those peanuts described in Sec. 997.20(a) (1) and (2). 
During the crop year, the Secretary may increase the rate of assessment 
if such an increase is established under the Agreement.
    (b) Segregation 2 and Segregation 3 farmers stock peanuts disposed 
to

[[Page 51824]]

crushing or exported are exempt from assessments under this section.
    4. Under the center heading ``Reports, Books and Records,'' 
Secs. 997.52, 997.53 and 997.54 are revised to read as follows:

Reports, Books and Records


Sec. 997.52  Reports of acquisitions and shipments.

    Each handler shall report acquisitions of Segregation 1 farmers 
stock peanuts on a form provided by the Division and file such other 
reports of acquisitions and shipments of peanuts, as prescribed in this 
part. Upon the request of the Division, each handler shall furnish such 
other reports and information as necessary to enable the Division to 
carry out the provisions of this part. All reports and records 
furnished or submitted by handlers to the Division which include data 
or information constituting a trade secret or disclosing the trade 
position, financial condition, or business operations of the particular 
handler shall not be disclosed unless such disclosure is determined 
necessary by the Secretary to enforce the provisions of this part.


Sec. 997.53  Verification of reports.

    For the purpose of checking and verifying reports filed by handlers 
or the operation of handlers under the provisions of this part, the 
Secretary, through its duly authorized agents, shall have access to any 
premises where peanuts may be held by any handler and at any time 
during reasonable business hours and shall be permitted to inspect any 
peanuts so held by such handler and any and all records of such handler 
with respect to the acquisition, movement, holding, processing or 
disposition of all peanuts which may be held or which may have been 
disposed of by the handler. Each handler shall maintain such records of 
peanuts received, held, and disposed of by the handler, that will 
substantiate any required reports and will show performance under this 
part. Such records shall be retained for at least two years beyond the 
crop year of their applicability.


Sec. 997.54  Agents.

    The Secretary may, by a designation in writing, name any person, 
including any officer or employee of the United States Government, or 
name any service, division or branch in the United States Department of 
Agriculture, to act as his agent or representative in connection with 
any of the provisions of this part.

PART 998--MARKETING AGREEMENT REGULATING THE QUALITY OF 
DOMESTICALLY PRODUCED PEANUTS

    1. The authority citation for 7 CFR part 998 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Under the center heading ``Implementing Regulations,'' 
Secs. 998.100 and 998.200 are revised to read as follows:

Implementing Regulations


Sec. 998.100  Incoming quality regulation for 1996 and subsequent crop 
peanuts.

    The following modify Sec. 998.5 of the peanut marketing agreement 
and modify or are in addition to the restrictions of section 31 on 
handler receipts or acquisitions of peanuts:
    (a) Modification of Sec. 998.5, paragraphs (b), (c), and (d). 
Paragraphs (b), (c), and (d) of Sec. 998.5 of the peanut marketing 
agreement are modified for the purposes of this section as to farmers 
stock peanuts to read respectively as follows:
    (1) Segregation 1. Segregation 1 peanuts means farmers stock 
peanuts with not more than 2 percent damaged kernels nor more than 1.00 
percent concealed damage caused by rancidity, mold, or decay and which 
are free from visible Aspergillus flavus.
    (2) Segregation 2. Segregation 2 peanuts means farmers stock 
peanuts with more than 2 percent damaged kernels or more than 1.00 
percent concealed damage caused by rancidity, mold, or decay and which 
are free from visible Aspergillus flavus.
    (3) Segregation 3. Segregation 3 peanuts means farmers stock 
peanuts with visible Aspergillus flavus.
    (b) Moisture and foreign material.
    (1) Moisture. Except as provided under paragraph (d) of 
Sec. 998.100, no handler shall receive or acquire peanuts containing 
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 storing or milling. On farmer's stock, such 
moisture determinations shall be rounded to the nearest whole number; 
on shelled peanuts, the determinations shall be carried to the 
hundredths place and shall not be rounded to the nearest whole number.
    (2) Foreign material. No handler shall receive or acquire farmers 
stock peanuts containing more than 10.49 percent foreign material, 
except that peanuts having a higher foreign material content may be 
received or acquired if they are 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.
    (c) 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.
    (d) Seed peanuts. A handler may acquire and deliver for seed 
purposes farmers stock peanuts which meet the requirements of 
Segregation 1 peanuts. If the seed peanuts are produced under the 
auspices of a State agency which regulates or controls the production 
of seed peanuts, they may contain up to 3 percent damaged kernels and 
have visible Aspergillus flavus, and, in addition, the following 
moisture content, as applicable:
    (1) Seed peanuts produced in the Southeastern and Virginia-Carolina 
areas, may contain up to 10.49 percent moisture except Virginia type 
peanuts which are not stacked at harvest time may contain up to 11.49 
percent moisture; and
    (2) Seed peanuts produced in the Southwestern area may contain up 
to 10.49 percent moisture. However, seed peanuts produced under the 
auspices of the State agency, which contain up to 3 percent damaged 
kernels and are free from visible Aspergillus flavus, shall be stored 
and shelled from other peanuts; and any residuals not used for seed 
shall not be used or disposed of for human consumption unless it is 
determined to be wholesome by chemical assay for aflatoxin. Seed 
peanuts produced under the auspices of the State agency which contain 
up to 3 percent damaged kernels and are free from visible Aspergillus 
flavus, may be stored and shelled with Segregation 1 seed peanuts which 
are also produced under the auspices of the State agency. A handler 
whose operations include custom shelling may receive, custom shell, and 
deliver for seed purposes farmers stock peanuts, and such peanuts shall 
be exempt from the Incoming Quality Regulation requirements, and, 
therefore, shall not be required to be inspected and certified as 
meeting the Incoming Quality Regulation requirements, and the handler 
shall report to the Committee, as requested, the weight of each lot of 
farmers stock peanuts received on such basis on a form furnished by the 
Committee. Handlers who acquire seed peanut residuals from their custom 
shelling of uninspected (farmers stock) seed peanuts or from another 
producer or sheller may mill such residuals with

[[Page 51825]]

other receipts or acquisitions of the handler, and such residuals which 
meet the Outgoing Quality Regulation requirements, may be disposed of 
by sale to human consumption outlets.
    (e) Oilstock. Handlers may acquire for disposition to domestic 
crushing or export farmers stock peanuts of a lower quality than 
Segregation 1 or grades or sizes of shelled peanuts or cleaned inshell 
peanuts which fail to meet the requirements for human consumption. The 
provision of Sec. 998.31 of the marketing agreement restricting 
acquisitions of such peanuts to handlers who are crushers is hereby 
modified pursuant to Sec. 998.34, to authorize all handlers to act as 
accumulators and acquire, from other handlers or non-handlers, 
Segregation 2 or 3 farmers stock peanuts. Handlers may also acquire for 
crushing or export from other handlers peanuts originating from 
Segregation 2 or 3 farmers stock or the entire mill production of 
shelled peanuts from Segregation 1 farmers stock or lots of peanuts 
originating from Segregation 1 peanuts and which have been positive lot 
identified as specified in paragraph (d) of Sec. 998.200, Outgoing 
quality regulation, which failed to meet the requirements for human 
consumption pursuant to paragraph (a) of Sec. 998.200, Outgoing quality 
regulation: Provided, That all such acquisitions are held separate from 
Segregation 1 peanuts acquired for milling or from edible grades of 
shelled or milled peanuts. Handlers may commingle the Segregation 2 and 
3 peanuts or keep them separate and apart. Handlers who acquire farmers 
stock peanuts of a lower quality than Segregation 1 or grades or sizes 
of shelled peanuts or cleaned inshell peanuts which fail to meet the 
requirements for human consumption shall report such acquisitions as 
prescribed by the Committee. To be eligible to receive or acquire 
Segregation 2 or 3 farmers stock peanuts and shelled peanuts 
originating therefrom, a handler shall pay to the Area Association a 
fee for the purpose of covering cost of supervision of the disposition 
of such peanuts.
    (f) Segregation 2 and 3 control. To assure the removal from edible 
outlets of any lot of peanuts determined by Federal or Federal-State 
Inspection Service to be Segregation 2 or Segregation 3, each handler 
shall inform each employee, country buyer, commission buyer, or like 
person through whom the handler receives peanuts of the need to receive 
and withhold all lots of Segregation 2 and Segregation 3 peanuts from 
milling for edible use. If any lot of Segregation 2 or Segregation 3 
farmers stock peanuts is not withheld but returned to the producer, the 
handler shall cause the Inspection Service to forward immediately a 
copy of the inspection certificate on the lot to the designated office 
of the handler and a copy to the Committee which shall be used only for 
information purposes.
    (g) Farmers stock storage and handling facilities. Handlers shall 
report to the Committee, on a form furnished by the Committee, all 
storage facilities or contract storage facilities which they will use 
to store acquisitions of current crop Segregation 1 farmers stock 
peanuts, and all such storage facilities must be reported prior to 
storing of any such handler acquisitions. Handlers shall also report to 
the Committee the locations at which they will receive or acquire 
current crop farmers stock peanuts. All such storage facilities shall 
have reasonable and safe access to allow for inspection of the facility 
and its contents. All such storage facilities must be of sound 
construction, in good repair, and built and equipped so as to provide 
suitable storage and sufficient safeguards to prevent moisture 
condensation and provide adequate protection for farmers stock peanuts. 
All breaks or openings in the walls, floors, or roofs of the facilities 
shall have been repaired so as to keep out moisture. Elevator pits and 
wells must be kept dry and free of moisture at all times. Insect 
control procedures must be carried out in such a manner as to prevent 
undesirable moisture in the storage facilities. Any conditions in 
warehouses, elevators, pits, transportation equipment, including trucks 
and hopper cars, and other farmers stock handling equipment conducive 
to the growth or spread of Aspergillus flavus mold shall be corrected 
to the satisfaction of the Committee. The Committee may make periodic 
inspections of farmers stock storage and handling facilities and 
farmers stock peanuts stored in such facilities to determine if 
handlers are adhering to these requirements.
    (h) Shelled peanuts. Handlers may acquire shelled peanuts, which 
originated from ``Segregation 1 peanuts,'' from other handlers, for 
remilling and subsequent disposition to human consumption outlets.
    (i) Segregation 2 and Segregation 3 farmers stock peanuts held 
separate and apart or commingled, and disposed of to crushing or export 
are exempt from assessments under this section.


Sec. 998.200  Outgoing quality regulation for 1996 and subsequent crop 
peanuts.

    The following modify or in addition to the peanut marketing 
agreement restrictions of Sec. 998.32 on handler disposition of 
peanuts:
    (a) Shelled peanuts. (1) No handler shall ship or otherwise dispose 
of shelled peanuts for human consumption unless such peanuts are 
positive lot identified, certified ``negative'' as to aflatoxin, and 
certified as meeting the requirements in the following ``Other Edible 
Quality * * *'' grades:

                                   Table 1.--``Other Edible Quality'' (Indemnifiable) Grades--Whole Kernels and Splits                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Excluding lots of ``splits''                                                              
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through                                                    
                                     Unshelled     peanuts,  ------------------------------------------------------------------                         
                                    peanuts and    damaged                                                                        Foreign               
     Type and grade  category         damaged    kernels and                                                                     materials     Moisture 
                                      kernels       minor        Sound split and     Sound whole kernels          Total          (percent)    (percent) 
                                     (percent)     defects       broken kernels                                                                         
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner............................         1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00%; both screens.          .20         9.00
                                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
Virginia (except No. 2)...........         1.50         2.50  3.00%; \17/64\ inch;  3.00%; \15/64\ x 1    4.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 

[[Page 51826]]

                                                                                                                                                        
Spanish and Valencia..............         1.50         2.50  3.00%; \16/64\ inch;  3.00%; \15/64\ x \3/  4.00%; both screens.          .20         9.00
                                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
No. 2 Virginia....................         1.50         3.00  6.00%; \17/64\ inch;  6.00%; \15/64\ x 1    6.00%; both screens.          .20         9.00
                                                               round screen.         inch; slot screen.                                                 
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Lots of ``splits''                                                                   
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner (not more than 4% sound             1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\ x \3/  4.00%; both screens.          .20         9.00
 whole kernels).                                               round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
Virginia (not less than 90%                1.50         2.50  3.00%; \17/64\ inch;  3.00%; \14/64\ x 1    4.00%; both screens.          .20         9.00
 splits).                                                      round screen.         inch; slot screen.                                                 
Spanish and Valencia (not more             1.50         2.50  3.00%; \16/64\ inch;  3.00%; \13/64\ x \3/  4.00%; both screens.          .20         9.00
 than 4% sound whole kernels).                                 round screen.         4\ inch; slot                                                      
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (2) Prior to disposition to human consumption outlets, peanuts must 
be positive lot identified, be certified ``negative'' as to aflatoxin, 
and be certified as meeting the requirements in the following 
``Indemnifiable Grades'' grades:

                                                             Table 2.--Indemnifiable Grades                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Maximum limitations                                                                  
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through                                                    
                                     Unshelled     peanuts,  ------------------------------------------------------------------                         
                                    peanuts and    damaged                                                                        Foreign               
      Type and grade category         damaged    kernels and     Sound split and                                                 materials     Moisture 
                                      kernels       minor        broken kernels      Sound whole kernels          Total          (percent)    (percent) 
                                     (percent)     defects          (percent)             (percent)                                                     
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner U.S. No.1 and better.......         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\x\3/4\  4.00%; both screens.          .10         9.00
                                                               round screen.         inch, slot screen.                                                 
Virginia U.S. No.1 and better.....         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\x1      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\3/4\  4.00%; both screens.          .10         9.00
 and better.                                                   round screen.         inch, slot screen.                                                 
Runner U.S. Splits (not more than          1.25         2.00  2.00%; \17/64\ inch,  3.00%; \14/64\x\3/4\  4.00%; both screens.          .20         9.00
 4% sound, whole kernels).                                     round screen.         inch, slot screen.                                                 
Virginia U.S. Splits (not less             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \14/64\x1      4.00%; both screens.          .20         9.00
 than 90% splits and not more than                             round screen.         inch, slot screen.                                                 
 3.00% sound whole kernels and                                                                                                                          
 portions passing through \20/64\                                                                                                                       
 inch round screen).                                                                                                                                    
Spanish and Valencia U.S. Splits           1.25         2.00  2.00%; \16/64\ inch,  3.00%; \13/64\x\3/4\  4.00%; both screens.          .20         9.00
 (not more than 4% sound, whole                                round screen.         4.00%; inch, slot                                                  
 kernels).                                                                           screen.                                                            
Runner with splits (not more than          1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\x\3/4\  4.00%; both screens.          .10         9.00
 15% sound splits).                                            round screen.         inch, slot screen.                                                 
Virginia with splits (not more             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\x1      4.00%; both screens.          .10         9.00
 than 15% sound splits).                                       round screen.         inch, slot screen.                                                 

[[Page 51827]]

                                                                                                                                                        
Spanish and Valencia with splits           1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\x\3/4\  4.00%; both screens.          .10         9.00
 (not more than 15% sound splits).                             round screen.         inch, slot screen.                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (3) The term ``fall through'', as used herein, shall mean sound 
split and broken kernels and whole kernels which pass through specified 
screens.
    (b) Cleaned inshell peanuts. No handler shall ship or otherwise 
dispose of cleaned inshell peanuts for human consumption:
    (1) With more than 1.00 percent kernels with mold present unless a 
sample of such peanuts, drawn by an inspector of the Federal or 
Federal-State Inspection Service, was analyzed chemically by 
laboratories approved by the Committee or by a U.S. Department of 
Agriculture laboratory (hereinafter referred to as ``USDA laboratory'') 
and found to be wholesome relative to aflatoxin;
    (2) with more than 2.00 percent peanuts with damaged kernels;
    (3) with more than 10.00 percent moisture; or
    (4) with more than 0.50 percent foreign material. The lot size of 
such peanuts in bags or bulk shall not exceed 200,000 pounds.
    (c) Sampling and testing shelled peanuts. (1) Prior to shipment, 
each handler shall cause appropriate samples of each lot of edible 
quality shelled peanuts to be drawn by an inspector of the Federal or 
Federal-State Inspection Service. The gross amount of peanuts drawn 
shall be large enough to provide for a grade analysis, for a grading 
check-sample, and for three 48-pound samples for aflatoxin assay. The 
three 48-pound samples shall be designated by the Federal or Federal-
State Inspection Service as ``Sample #1,'' ``Sample #2,'' and ``Sample 
#3'' and each sample shall be placed in a suitable container and 
``positive lot identified'' by means acceptable to the Inspection 
Service and the Committee. Sample #1 may be prepared for immediate 
testing or Sample #1, Sample #2, and Sample #3 may be returned to the 
handler for testing at a later date. However, before shipment of the 
lot to the buyer (receiver), the handler shall cause Sample #1 to be 
ground by the Federal or Federal-State Inspection Service or a USDA or 
designated laboratory in a ``subsampling mill'' approved by the 
Committee. The resultant ground subsample from Sample #1 shall be of a 
size specified by the Committee and be designated as ``Subsample 1-AB'' 
and at the handler's or buyer's option, a second subsample may also be 
extracted from Sample #1. It shall be designated as ``Subsample 1-CD.'' 
Subsample 1-CD may be sent as requested by the handler or buyer, for 
aflatoxin assay, to a laboratory listed on the most recent Committee 
list of approved laboratories that can provide analyses results on such 
samples in 36 hours. Subsample 1-AB shall be analyzed only in USDA or 
designated laboratories. Both Subsamples 1-AB and 1-CD shall be 
accompanied by a notice of sampling signed by the inspector containing, 
at least, identifying information as to the handler (shipper), the 
buyer (receiver), if known, and the positive lot identification of the 
shelled peanuts. A copy of such notice covering each lot shall be sent 
to the Committee office.
    (2) The samples designated as Sample #2 and Sample #3 shall be held 
as aflatoxin check-samples by the Inspection Service or the handler and 
shall not be included in the shipment to the buyer until the analyses 
results from Sample #1 are known. Upon call from the USDA or designated 
laboratory or the Committee, the handler shall cause Sample #2 to be 
ground by the Inspection Service in a ``subsampling mill.'' The 
resultant ground subsample from Sample #2 shall be of the size 
specified by the Committee and it shall be designated as ``Subsample 2-
AB.'' Upon call from the USDA or designated laboratory or the 
Committee, the handler shall cause Sample #3 to be ground by the 
Inspection Service in a ``subsampling mill.'' The resultant ground 
subsample from Sample #3 shall be of the size specified by the 
Committee and it shall be designated as ``Subsample 3-AB.'' Subsamples 
2-AB and 3-AB shall be analyzed only in USDA or designated laboratories 
and each shall be accompanied by a notice of sampling. A copy of each 
such notice shall be sent to the Committee office and the cost of 
delivery of Subsamples 2-AB and 3-AB to the laboratory and the cost of 
assay on them shall be at the Committee's expense.
    (3) All costs involved in sampling and testing Subsample 1-CD shall 
be for the account of the buyer of the lot and at the buyer's expense. 
However, if the handler elects to pay any portion of these cost the 
handler shall charge the buyer accordingly. Aflatoxin sampling and 
testing cost for the AB subsamples shall be included as a separate item 
in the handler's invoice to the buyer at the rate of $0.0027 per pound 
or $0.27 per hundredweight of the peanuts covered by the invoice. When 
any of the samples or subsamples have been lost, misplaced, or spoiled 
and replacement samples are needed, the entire cost of drawing the 
replacement samples shall be for the account of the handler. The 
results of each assay shall be reported to the buyer listed on the 
notice of sampling and, if the handler desires, to the handler. If a 
buyer is not listed on the notice of sampling, the results of the assay 
shall be reported to the handler, who shall promptly cause notice to be 
given to the buyer of the contents thereof, and such handler shall not 
be required to furnish additional samples for assay.
    (4) For the current crop year, ``negative'' aflatoxin content means 
15 parts per billion (ppb) or less for peanuts which have been 
certified as meeting edible quality grade requirements as determined by 
the Committee's sampling plan applicable to the respective grade 
categories.
    (d) Identification. Each lot of shelled or cleaned inshell peanuts, 
in lot sizes not exceeding 200,000 pounds, shall be identified by 
positive lot identification procedures prior to being shipped or 
otherwise disposed of. For the purpose of this regulation, ``positive 
lot

[[Page 51828]]

identification'' of a lot of shelled or inshell peanuts is a means of 
relating the inspection certificate to the lot which has been inspected 
so that there can be no doubt that the peanuts are the same ones 
described on the inspection certificate. The crop year that is shown on 
the positive lot identification tags, or other means of positive lot 
identification shall accurately describe the crop year in which the 
peanuts in the lot were produced. Such procedure on bagged peanuts 
shall consist of attaching a lot numbered tag bearing the official 
stamp of the Federal or Federal-State Inspection Service to each filled 
bag in the lot. The tag shall be sewed (machine sewed if shelled 
peanuts) into the closure of the bag except that in plastic bags the 
tag shall be inserted prior to sealing so that the official stamp is 
visible. Any peanuts moved in bulk or bulk bins shall have their lot 
identity maintained by sealing the conveyance and if in other 
containers by other means acceptable to the Federal or Federal-State 
Inspection Service and to the Committee. All lots of shelled or cleaned 
inshell peanuts shall be handled, stored, and shipped under positive 
lot identification procedures, except that lots which have been 
reconstituted and/or commingled at the request of the receiver. All 
such reconstituted and/or commingled lots will no longer be eligible 
for indemnification or for appeal inspection. Handlers shall keep and 
maintain records of the quantities involved in each reconstituting and/
or commingling procedure, whether in single or multiple lots, and such 
records shall be available to the Committee on request.
    (e) Reinspection. Whenever the Committee has reason to believe that 
peanuts may have been damaged or deteriorated while in storage, the 
Committee may reject the then effective inspection certificate and may 
require the owner of the peanuts to have a reinspection to establish 
whether or not such peanuts may be disposed of for human consumption.
    (f) Further modification of Sec. 998.32.
    (1) The provisions of Sec. 998.32(a) restricting the disposition of 
peanuts which fail to meet the requirements specified heretofore in 
this section to the Commodity Credit Corporation or in such manner as 
may be prescribed by the Committee with the approval of the Secretary, 
is hereby modified to specify that only peanuts which have been 
certified as meeting the requirements specified in paragraphs (a) or 
(b) of this section, which have been sampled pursuant to paragraph (c) 
of this section, and which have been identified pursuant to paragraph 
(d) of this section are eligible for disposition to human consumption 
outlets.
    (2) Lots of peanuts which have not been certified as meeting the 
requirements for disposition to human consumption outlets, may be 
disposed for non-human consumption uses which are not regulated or 
limited by the provisions specified hereinafter in this section: 
Provided, That each such lot is positive lot identified, using red 
tags, and certified as to aflatoxin content (actual numerical count). 
However, on the shipping papers covering the disposition of each such 
lot of inedible quality peanuts, the handler shall cause the following 
statement to be shown: ``The peanuts covered by this bill of lading (or 
invoice, etc.) are not to be used for human consumption.''
    (3) Except for inedible quality peanuts disposed of under the 
provisions of paragraph (f)(2) of this section and peanuts derived from 
the milling for seed of Segregation 2 and 3 farmers stock peanuts, 
peanuts which have not been certified as meeting the standards set 
forth in paragraphs (a) or (b) of this section shall be disposed of as 
prescribed hereinafter in this section.
    (g) Sheller oil stock residuals--for crushing or export. Peanuts 
and portions of peanuts which are separated from edible quality peanuts 
by screening or sorting or other means during the milling process, may 
be segregated into categories or commingled as sheller oil stock 
residuals. Such sheller oil stock residuals shall be identified 
pursuant to paragraph (d) of this section, but using a red tag, and 
such peanuts may be disposed of domestically or to the export market in 
bulk or bags or other suitable containers. Disposition to crushing may 
be to handlers who are crushers or to domestic crushers who are not 
handlers under the Agreement only on the condition that they agree to 
comply with the terms of this paragraph and all other applicable 
requirements of the Agreement. The movement of such peanuts shall be 
reported to the Committee by the shipping handler and the crusher, as 
requested by the Committee.
    (1) If the peanuts have not been tested and certified as to 
aflatoxin content, as prescribed in paragraph (c) of this section, the 
handler shall cause the following statement to be shown on the shipping 
papers: ``The peanuts covered by this bill of lading (or invoice, etc.) 
are limited to crushing only and may contain aflatoxin.''
    (2) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (h) Blanching and remilling peanuts failing quality requirements. 
(1) Handlers may blanch or cause to have blanched positive lot 
identified shelled peanuts, which originated from Segregation 1 
peanuts, that fail to meet the requirements of paragraph (a) of this 
section because of excessive damage, minor defects, moisture, or 
foreign material or are positive as to aflatoxin. Prior to movement of 
such peanuts to a blancher, handlers shall report to the Committee, on 
a form furnished by the Committee, and receive authorization from the 
Committee for movement and blanching of each such lot. Lots of peanuts 
which are moved under these provisions must be accompanied by a valid 
grade inspection certificate and the title shall be retained by the 
handler until the peanuts are blanched and certified by an inspector of 
the Federal or Federal-State Inspection Service as meeting the 
requirements for disposal into human consumption outlets. To be 
eligible for disposal into human consumption outlets, such peanuts 
after blanching, must meet specifications for unshelled peanuts, 
damaged kernels, minor defects, moisture, and foreign material as 
listed in paragraph (a) of this section and be accompanied by an 
aflatoxin certificate determined to be negative by the Committee. The 
residual peanuts, excluding skins and hearts, resulting from blanching 
under these provisions, shall be bagged and red tagged and disposition 
shall be that such peanuts are returned to the handler for further 
disposition; or, in the alternative, such residuals shall be positive 
lot identified by the Federal or Federal-State Inspection Service, and 
shall be disposed of, by the blancher, to handlers who are crushers, or 
to domestic crushers who are not handlers under the Agreement only on 
the condition that they agree to comply with the terms of paragraph (g) 
of this section and all other applicable requirements of the Agreement. 
Blanching under the provisions of this paragraph shall be performed 
only by those firms who agree to procedures acceptable to the Committee 
and who are approved by the Committee to do such blanching.
    (2) Handlers may contract with Committee approved remillers for 
remilling shelled peanuts, which originated from Segregation 1 peanuts, 
that fail to meet the requirements for disposition to human consumption 
outlets heretofore specified in paragraph (a) of this section: 
Provided, That such lots of peanuts contain not in excess of 10 percent 
fall through. Prior to

[[Page 51829]]

movement of such peanuts under these provisions to a Committee approved 
remiller, handlers shall report to the Committee, on a form furnished 
by the Committee, and receive authorization from the Committee for 
movement and remilling of each such lot. Lots of peanuts moved under 
these provisions must be accompanied by a valid grade inspection 
certificate and must be positive lot identified and the title of such 
peanuts shall be retained by the handler until the peanuts have been 
remilled and certified by the Federal or Federal-State Inspection-
Service as meeting the requirements for disposition to human 
consumption outlets specified in paragraph (a) of this section, and be 
accompanied by an aflatoxin certificate determined to be negative by 
the Committee. Remilling under these provisions may include composite 
remilling of more than one such lot of peanuts owned by the same 
handler. However, such peanuts owned by one handler shall be held and 
remilled separate and apart from all other peanuts. The residual 
peanuts resulting from remilling under these provisions, shall be 
bagged and red tagged and disposition shall be that such peanuts are 
returned to the handler for further disposition; or, in the 
alternative, such residuals shall be positive lot identified by the 
Federal or Federal-State Inspection Service, and shall be disposed of, 
by the remiller, to handlers who are crushers, or to domestic crushers 
who are not handlers under the Agreement only on the condition that 
they agree to comply with the terms of paragraph (g) of this section 
and all other applicable requirements of the Agreement. Remilling under 
the provisions of this paragraph shall be performed only by those firms 
who agree to procedures acceptable to the Committee and who are 
approved by the Committee to do such remilling.
    (i) Documentation of compliance. Each handler shall keep and 
maintain records of all receipts and acquisitions and all milling, 
remilling, blanching, use and disposition of peanuts which have not 
been certified as meeting the requirements for disposition to human 
consumption, pursuant to paragraph (a) or (b) of this section, as will 
document and substantiate compliance and performance under this 
agreement.

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

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

    2. Section 999.600 is revised to read as follows:


Sec. 999.600  Regulation governing imports of peanuts.

    (a) Definitions. (1) Peanuts means the seeds of the legume Arachis 
hypogaea and includes both inshell and shelled peanuts produced in 
countries other than the United States, other than those marketed in 
green form for consumption as boiled peanuts.
    (2) Farmers stock peanuts means picked and threshed raw peanuts 
which have not been shelled, crushed, cleaned or otherwise changed 
(except for removal of foreign material, loose shelled kernels, and 
excess moisture) from the form in which customarily marketed by 
producers.
    (3) Inshell peanuts means peanuts, the kernels or edible portions 
of which are contained in the shell.
    (4) Incoming inspection means the sampling and inspection of 
farmers stock peanuts to determine Segregation quality.
    (5) Segregation 1 peanuts, unless otherwise specified, means 
farmers stock peanuts with not more than 2.00 percent damaged kernels 
nor more than 1.00 percent concealed damage caused by rancidity, mold, 
or decay and which are free from visible Aspergillus flavus mold.
    (6) Segregation 2 peanuts, unless otherwise specified, means 
farmers stock peanuts with more than 2.00 percent damaged kernels or 
more than 1.00 percent concealed damage caused by rancidity, mold, or 
decay and which are free from visible Aspergillus flavus mold.
    (7) Segregation 3 peanuts, unless otherwise specified, means 
farmers stock peanuts with visible Aspergillus flavus mold.
    (8) Shelled peanuts means the kernels of peanuts after the shells 
are removed.
    (9) Outgoing inspection means the sampling and inspection of 
either: shelled peanuts which have been cleaned, sorted, sized 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 inedible quality peanuts.
    (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 (Department or USDA) who is, or who may hereafter be, 
authorized to act on behalf of the Secretary.
    (13) Inspection service means the Federal or Federal-State 
Inspection Service, Fruit and Vegetable Division, Agricultural 
Marketing Service, USDA.
    (14) USDA laboratory means laboratories of the Science and 
Technology Division, Agricultural Marketing Service, USDA, that 
chemically analyze peanuts for aflatoxin content.
    (15) PAC approved laboratories means laboratories approved by the 
Peanut Administrative Committee, pursuant to Peanut Marketing Agreement 
No. 146 (7 CFR Part 998), that chemically analyze peanuts for aflatoxin 
content.
    (16) Conditionally released means released from Customs Service 
custody for further handling (sampling, inspection, chemical analysis, 
or storage) before final release.
    (17) Importation means the arrival of a peanut shipment at a port-
of-entry with the intent to enter the peanuts into channels of commerce 
of the United States.
    (b) Incoming regulation: (1) Farmers stock peanuts presented for 
consumption must undergo incoming inspection. Only Segregation 1 
peanuts may be used for human consumption. All foreign produced farmers 
stock peanuts for human consumption must be sampled and inspected at a 
buying point or other handling facility capable of performing incoming 
sampling and inspection. Sampling and inspection shall be conducted by 
the inspection service. Only Segregation 1 peanuts certified as meeting 
the following requirements may be used in human consumption markets:
    (i) Moisture. Except as provided under paragraph (b)(2) Seed 
peanuts, of this section, peanuts may not contain more than 10.49 
percent moisture: Provided, That peanuts of a higher moisture content 
may be received and dried to not more than 10.49 percent moisture prior 
to storage or milling.
    (ii) Foreign material. Peanuts may not contain more than 10.49 
percent foreign material, except that peanuts having a higher foreign 
material content may be held separately until milled, or moved over a 
sand-screen before storage, or shipped directly to a plant for prompt 
shelling. The term ``sand-screen'' means any type of farmers stock 
cleaner which, when in use, removes sand and dirt.
    (iii) Damage. For the purpose of determining damage, other than 
concealed damage, on farmers stock peanuts, all percentage 
determinations

[[Page 51830]]

shall be rounded to the nearest whole number.
    (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. 
Residuals from the shelling of Segregation 1 seed peanuts may be milled 
with other imported peanuts of the importer, and such residuals meeting 
quality requirements specified in paragraph (c)(1) of this section may 
be disposed to human consumption channels. Any portion not meeting such 
quality requirements shall be disposed to inedible peanut channels 
pursuant to paragraphs (f) and (g) of this section. All disposition of 
seed peanuts and residuals from seed peanuts, whether commingled or 
kept separate and apart, shall be reported to the Secretary pursuant to 
paragraphs (f)(2) and (f)(3) of this section. The receiving seed outlet 
must retain records of the transaction, pursuant to paragraph (g)(7) of 
this section.
    (3) Oilstock and exportation. Farmers stock peanuts of lower 
quality than Segregation 1 (Segregation 2 and 3 peanuts) shall be used 
only in inedible outlets. Segregation 2 and 3 peanuts may be commingled 
but shall be kept separate and apart from edible quality peanut lots. 
Commingled Segregation 2 and 3 peanuts and Segregation 3 peanuts shall 
be disposed only to oilstock or exported. Shelled peanuts and cleaned-
inshell peanuts which fail to meet the requirements for human 
consumption in paragraphs (c)(1) or (c)(2), respectively, of 
Sec. 997.600, may be crushed for oil or exported.
    (c) Outgoing regulation. No person shall import peanuts for human 
consumption into the United States unless such peanuts are lot 
identified and certified by the inspection service as meeting one of 
the following requirements:
    (1) Shelled peanuts. (i) No importer shall ship or otherwise 
dispose of shelled peanuts to human consumption markets unless such 
peanuts are lot identified, certified as ``negative'' to aflatoxin, and 
meet the requirements specified in Table 1.

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

    (ii) Shelled peanuts which are lot identified, certified as 
``negative'' to aflatoxin pursuant to paragraph (d)(4)(v) of this 
section, and meet requirements specified in the Table 2, may be shipped 
to human consumption markets prior to the importer receiving such 
aflatoxin certification.

[[Page 51831]]



                                         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                                                  material     Moisture 
                                      kernels       minor        broken kernels      Sound whole kernels          Total          (percent)    (percent) 
                                     (percent)     defects          (percent)             (percent)                                                     
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner U.S. No.1 and better.......         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\ x \3/  4%; both screens....          .10        9.00.
                                                               round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia U.S. No.1 and better.....         1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\ x 1    4.00%; both screens.          .10         9.00
                                                               round screen.         inch, slot screen.                                                 
Spanish and Valencia U.S. No.1 and         1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\ x \3/  4.00%; both screens.          .10         9.00
 better.                                                       round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Runner U.S. Splits (not more than          1.25         2.00  2.00%; \17/64\ inch,  3.00%; \14/64\ x \3/  4.00%; both screens.           20         9.00
 4% sound, whole kernels).                                     round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia U.S. Splits (not less             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \14/64\ x 1    4.00%; both screens.          .20         9.00
 than 90% splits and not more than                             round screen.         inch, slot screen.                                                 
 3.00% sound whole kernels and                                                                                                                          
 portions passing through \20/64\                                                                                                                       
 inch round screen).                                                                                                                                    
Spanish and Valencia U.S. Splits           1.25         2.00  2.00%; \16/64\ inch,  3.00%; \13/64\ x \3/  4.00%; both screens.          .20         9.00
 (not more than 4% sound, whole                                round screen.         4\ inch, slot                                                      
 kernels).                                                                           screen.                                                            
Runner with splits (not more than          1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\ x \3/  4.00%; both screens.          .10         9.00
 15% sound splits).                                            round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia with splits (not more             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\ x 1    4.00%; both screens.          .10         9.00
 than 15% sound splits).                                       round screen.         inch, slot screen.                                                 
Spanish and Valencia with splits           1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\ x \3/  4.00%; both screens.          .10         9.00
 (not more than 15% sound splits).                             round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (iii) The term ``fall through'', as used herein, shall mean sound 
split and broken kernels and whole kernels which pass through specified 
screens. Prior to shipment, appropriate samples for pretesting shall be 
drawn in accordance with paragraph (d) of this section from each lot of 
Superior Quality peanuts.
    (2) Cleaned-inshell peanuts. Peanuts declared as cleaned-inshell 
peanuts may be presented for sampling and outgoing inspection in bags 
at the port-of-entry. Alternatively, peanuts may be conditionally 
released as cleaned-inshell peanuts but shall not subsequently undergo 
any cleaning, sorting, sizing or drying process prior to presentation 
for outgoing inspection as cleaned-inshell peanuts. Cleaned-inshell 
peanuts which fail outgoing inspection may be reconditioned or 
redelivered to the port-of-entry, at the option of the importer. 
Cleaned-inshell peanuts determined to be unprepared farmers stock 
peanuts must be inspected against incoming quality requirements and 
determined to be Segregation 1 peanuts prior to outgoing inspection for 
cleaned-inshell peanuts. Cleaned-inshell peanuts intended for human 
consumption may not contain more than:
    (i) 1.00 percent kernels with mold present, unless a sample of such 
peanuts is drawn by the inspection service and analyzed chemically by a 
USDA or PAC approved laboratory and certified ``negative'' as to 
aflatoxin.
    (ii) 2.00 percent peanuts with damaged kernels;
    (iii) 10.00 percent moisture (carried to the hundredths place); and
    (iv) 0.50 percent foreign material.
    (d) Sampling and inspection. (1) All sampling and inspection, 
quality certification, chemical analysis, and lot identification, 
required under this section, shall be done by the inspection service, a 
USDA laboratory, or a PAC-approved laboratory, as applicable, in 
accordance with the procedures specified herein. The importer shall 
make arrangements with the inspection service for sampling, inspection, 
lot identification and certification of all peanuts accumulated by the 
importer. The importer also shall make arrangements for the appropriate 
disposition of peanuts failing edible quality requirements of this 
section. All costs of sampling, inspection, certification, 
identification, and disposition incurred in meeting the requirements of 
this section shall be paid by the importer. Whenever peanuts are 
offered for inspection, the importer shall furnish any labor and pay 
any costs incurred in moving and opening containers as may be necessary 
for proper sampling and inspection.
    (2) For farmers stock inspection, the importer shall cause the 
inspection service to perform an incoming inspection and to issue an 
CFSA-1007, ``Inspection Certificate and Sales Memorandum'' form 
designating the lot as Segregation 1, 2, or 3 quality peanuts. For 
shelled and cleaned-inshell peanuts,

[[Page 51832]]

the importer shall cause the inspection service to perform an outgoing 
inspection and issue an FV-184-9A, ``Milled Peanut Inspection 
Certificate'' reporting quality and size of the shelled or cleaned-
inshell peanuts, whether the lot meets or fails to meet quality 
requirements for human consumption of this section, and that the lot 
originated in a country other than the United States. The importer 
shall provide to the Secretary copies of all CFSA 1007 and FV-184-9A 
applicable to each peanut lot conditionally released to the importer. 
Such reports shall be submitted as provided in paragraphs (f)(2) and 
(f)(3) of this section.
    (3) Procedures for sampling and testing peanuts. Sampling and 
testing of peanuts for incoming and outgoing inspections of peanuts 
presented for consumption into the United States will be conducted as 
follows:
    (i) Application for sampling. The importer shall request inspection 
and certification services from one of the following inspection service 
offices convenient to the location where the peanuts are presented for 
incoming and/or outgoing inspection. To avoid possible delays, the 
importer should make arrangements with the inspection service in 
advance of the inspection date. A copy of the Customs Service entry 
document specific to the peanuts to be inspected shall be presented to 
the inspection official prior to sampling of the lot.
    (A) The following offices provide incoming farmers stock 
inspection:

Dothan, AL, tel: (334) 792-5185,
Graceville, FL, tel: (904) 263-3204,
Winter Haven, FL, tel: (813) 291-5820, ext 260,
Albany, GA, tel: (912) 432-7505,
Williamston, NC, tel: (919) 792-1672,
Columbia, SC, tel: (803) 253-4597,
Suffolk, VA, tel: (804) 925-2286,
Portales, NM, tel: (505) 356-8393,
Oklahoma City, OK, tel: (405) 521-3864,
Gorman, TX, tel: (817) 734-3006,
Yuma, AZ, tel: (602) 344-3869.

    (B) The following offices, in addition to the offices listed in 
paragraph (d)(3)(i)(A) of this section, provide outgoing sampling and/
or inspection services, and certify shelled and cleaned-inshell peanuts 
as meeting or failing the quality requirements of this section:

Eastern U.S.

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

Central U.S.

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

Western U.S.

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

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

[[Page 51833]]

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, 1557 Reeves St., Dothan, AL 
36303, Tel: (334) 794-5070, Fax: (334) 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
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) For the current peanut quota year, ``negative'' aflatoxin 
content means 15 parts per billion (ppb) or less aflatoxin content for 
peanuts which have been certified as meeting edible quality grade 
requirements. Such lots shall be certified as ``Meets U.S. import 
requirements for edible peanuts under 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 certificate 
of any inedible peanut lot also shall specify the aflatoxin count in 
ppb. The importer shall file USDA Form CSSD-3, or equivalent form, with 
the Secretary, regardless of the test result.
    (5) Appeal inspection. In the event an importer questions the 
results of a quality and size inspection, an appeal inspection may be 
requested by the importer and performed by the inspection service. A 
second sample will be drawn from each container and shall be double the 
size of the original sample. The results of the appeal sample shall be 
final and the fee for sampling, grading and aflatoxin analysis shall be 
charged to the importer.
    (e) Disposition of peanuts failing edible quality requirements. 
Peanuts shelled, sized and sorted in another country prior to arrival 
in the U.S. and shelled peanuts which originated from imported 
Segregation 1 peanuts that fail 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. Residual peanut lots 
resulting from milling or reconditioning of such lots shall be disposed 
of as prescribed below:
    (1) Failing peanut lots may be disposed for non-human consumption 
uses (such as livestock feed, wild animal feed, rodent bait, seed, 
etc.) which are not otherwise regulated by this section; Provided, that 
each such lot is lot identified and certified as to aflatoxin content 
(actual numerical count). On the shipping papers covering the 
disposition of each such lot, the importer shall cause the following 
statement to be shown: ``The peanuts covered by this bill of lading (or 
invoice) are not to be used for human consumption.''
    (2) Peanuts, and portions of peanuts which are separated from 
edible quality peanuts by screening or sorting or other means during 
the milling process (``sheller oilstock residuals''), may be sent to 
inedible peanut markets pursuant to paragraph (e)(1) of this section, 
crushed or exported. Such peanut may be commingled with other milled 
residuals. Such peanuts shall be positive lot identified, red tagged in 
bulk or bags or other suitable containers.
    (i) If such peanuts have not been certified as to aflatoxin 
content, as prescribed in paragraph (d) of this section, disposition is 
limited to crushing and the importer shall cause the following 
statement to be shown on the shipping papers: ``The peanuts covered by 
this bill of lading (or invoice, etc.) are limited to crushing only and 
may contain aflatoxin.''
    (ii) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (3) Shelled peanuts which originated from Segregation 1 peanuts 
that fail quality requirements of Table 1, peanuts derived from the 
milling for seed of Segregation 2 and 3 farmers stock peanuts, and 
peanuts which are positive to aflatoxin may be remilled or blanched. 
Residuals of remilled and/or blanched peanuts which continue to fail 
quality requirements of Table 1 shall be disposed of pursuant to 
paragraphs (e)(1) or (2) of this section.
    (4) All certifications, lot identifications, and movement to 
inedible dispositions, sufficient to account for all peanuts in each 
consumption entry, shall be reported to the Secretary by the importer 
pursuant to paragraphs (f)(2) and (f)(3) of this section.
    (f) Safeguard procedures. (1) Prior to arrival of a foreign 
produced peanut lot

[[Page 51834]]

at a port-of-entry, the importer, or customs broker acting on behalf of 
the importer, shall mail or send by facsimile transmission (fax) a copy 
of the Customs Service entry documentation for the peanut lot or lots 
to the inspection service office that will perform sampling of the 
peanut shipment. More than one lot may be entered on one entry 
document. The documentation shall include identifying lot(s) or 
container number(s) and volume of the peanuts in each lot being 
entered, and the location (including city and street address), date and 
time for inspection sampling. The inspection office shall sign, stamp, 
and return the entry document to the importer. The importer shall 
present the stamped document to the Customs Service at the port-of-
entry and send a copy of the document to the Secretary. The importer 
also shall cause a copy of the entry document to accompany the peanut 
lot and be presented to the inspection service at the inland 
destination of the lot.
    (2) The importer shall file with the Secretary copies of the entry 
document and grade, aflatoxin, and lot identification certifications 
sufficient to account for all peanuts in each lot listed on the entry 
document filed by the importer. Positive lot identification of residual 
lots, transfer certificates, and other documentation showing inedible 
disposition or export, such as bills of lading and sales receipts, 
export declarations, or certificates of burying, which report the 
weight of peanuts being disposed and the name, address and telephone 
number of the inedible peanut receiver, must be sent to the Marketing 
Order Administration Branch, Attn: Report of Imported Peanuts. 
Facsimile transmissions and overnight mail may be used to ensure timely 
receipt of inspection certificates and other documentation. Fax reports 
should be sent to (202) 720-5698. Overnight and express mail deliveries 
should be addressed to USDA, AMS, Marketing Order Administration 
Branch, 14th and Independence Avenue, SW, Room: 2525-S, Washington, 
D.C., 20250, Attn: Report of Imported Peanuts. Regular mail should be 
sent to AMS, USDA, P.O. Box 96456, room 2526-S, Washington, DC 20090-
6456, Attn: Report of Imported Peanuts. Telephone inquiries should be 
made to (202) 720-6862.
    (3) Certificates and other documentation for each peanut lot must 
be filed within 23 days of the date of filing for consumption entry, 
or, if a redelivery notice is issued on the peanut lot, subsequently 
filed prior to conclusion of the redelivery period which will be 60 
days, unless otherwise specified by the Customs Service.
    (4) The Secretary shall ask the Customs Service to issue a 
redelivery demand for foreign produced peanut lots failing to meet 
requirements of this section. Extensions in a redelivery period granted 
by the Customs Service will be correspondingly extended by the 
Secretary, upon request of the importer. Importers unable to account 
for the disposition of all peanuts covered in a redelivery order, or 
redeliver such peanuts, shall be liable for liquidated damages. Failure 
to fully comply with quality and handling requirements or failure to 
notify the Secretary of disposition of all foreign produced peanuts, as 
required under this section, may result in a compliance investigation 
by the Secretary. Falsification of reports submitted to the Secretary 
is a violation of Federal law punishable by fine or imprisonment, or 
both.
    (5) Reinspection. Whenever the Secretary has reason to believe that 
peanuts may have been damaged or deteriorated while in storage, the 
Secretary may reject the then effective inspection 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.
    (6) Early arrival and storage. Peanut lots sampled and inspected 
upon arrival in the United States, but placed in storage for more than 
one month prior to beginning of the quota year for which the peanuts 
will be entered, must be reported to AMS at the time of inspection. The 
importer shall file copies of the Customs Service documentation, copies 
of the lot's grade and aflatoxin certificates, and the city, street 
address and any identifying number of the storage warehouse. Such 
peanuts should be stored in clean, dry warehouses and under cold 
storage conditions consistent with industry standards. Pursuant to 
paragraph (f)(5) of this section, the Secretary may require 
reinspection of the lot at the time the lot is declared for entry with 
the Customs Service.
    (g) Additional requirements. (1) Nothing contained in this section 
shall preclude any importer from milling or reconditioning, prior to 
importation, any shipment of peanuts for the purpose of making such lot 
eligible for importation into the United States. However, all peanuts 
presented for entry for human consumption use must be certified as 
meeting the quality requirements specified in paragraph (c) of this 
section.
    (2) Conditionally released peanut lots of like quality and 
belonging to the same importer may be commingled. Defects in an 
inspected lot may not be blended out by commingling with other lots of 
higher quality. Commingling also must be consistent with applicable 
Customs Service regulations. Commingled lots must be reported and 
disposed of pursuant to paragraphs (f)(2) and (f)(3) of this section.
    (3) Inspection by the Federal or Federal-State Inspection Service 
shall be available and performed in accordance with the rules and 
regulations governing certification of fresh fruits, vegetables and 
other products (7 CFR part 51). The importer shall make each 
conditionally released lot available and accessible for inspection as 
provided herein. Because inspectors may not be stationed in the 
immediate vicinity of some ports-of-entry, importers must make 
arrangements for sampling, inspection, and certification through one of 
the offices and laboratories listed in paragraphs (d)(3) and (d)(4) of 
this section, respectively.
    (4) Imported peanut lots sampled and inspected at the port-of-
entry, or at other locations, shall meet the quality requirements of 
this section in effect on the date of inspection.
    (5) A foreign-produced peanut lot entered for consumption or for 
warehouse may be transferred or sold to another person: Provided, That 
the original importer shall be the importer of record unless the new 
owner applies for bond and files Customs Service documents pursuant to 
19 CFR Secs. 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 (f)(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 inedible disposition, as specified herein. The 
USDA and PAC-approved laboratories shall bill the importer

[[Page 51835]]

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 these 
regulations. Such records and documentation accumulated during entry 
shall be retained for not less than two years after the calendar year 
of acquisition, except that Customs Service documents shall be retained 
as required by that agency. The Secretary, through duly authorized 
representatives, shall have access to any such person's premises during 
regular business hours and shall be permitted, at any such time, to 
inspect such records and any peanuts held by such person.
    (8) The provisions of this section do not supersede any 
restrictions or prohibitions on peanuts under the Federal Plant 
Quarantine Act of 1912, the Federal Food, Drug and Cosmetic Act, any 
other applicable laws, or regulations of other Federal agencies, 
including import regulations and procedures of the Customs Service.

    Dated: October 1, 1996.
Sharon Bomer Lauritsen,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 96-25519 Filed 10-3-96; 8:45 am]
BILLING CODE 3410-02-P