[Federal Register Volume 63, Number 168 (Monday, August 31, 1998)]
[Proposed Rules]
[Pages 46181-46200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23230]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 999

[Docket No. FV98-999-1 PR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule invites comments on several revisions to 
the peanut import regulation effective with the 1999 and subsequent 
peanut import quota periods. The proposed changes would: Relax certain 
quality requirements; modify entry procedures; revise handling 
requirements; reduce the reporting burden; and establish a new 
reporting period for peanuts imported into the United States. Changes 
to the quality and handling requirements are proposed to make the 
import requirements consistent, as required by law, with regulations 
covering domestically-produced peanuts under Marketing Agreement No. 
146 (Agreement). Changes to import procedures and reporting 
requirements are proposed by the Agricultural Marketing Service (AMS) 
to improve efficiency of the importation process, ease the reporting 
burden, and provide importers with more time to meet peanut import 
regulation requirements. This proposal continues safeguard measures 
which prevent non-edible imported peanuts from being used in human 
consumption outlets in the United States. This action would benefit 
peanut importers, handlers, and consumers by helping to ensure that all 
peanuts in the domestic marketplace comply with the same quality 
standards.

DATES: Comments received by September 30, 1998 will be considered prior 
to issuance of a final rule. The comment period for information 
collections under the Paperwork Reduction Act of 1995 continues through 
October 30, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, D.C. 20090-6456; fax: (202) 720-5698, or E-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register. Comments received will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours. Comments concerning the amended information collection under the 
Paperwork Reduction Act of 1995 should also be sent to the Desk Officer 
for Agriculture, Office of Information and Regulatory Affairs, Office 
of Management and Budget, Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, P.O. Box 96456, room 2525-S, Washington, D.C. 20090-6456; 
telephone: (202) 720-6862, or fax: (202) 720-5698. Small businesses may 
request information on compliance with this regulation by contacting: 
Jay Guerber at the same address and fax number, telephone: (202) 720-
2491.

SUPPLEMENTARY INFORMATION: This proposed rule would amend the peanut 
import regulation (7 CFR Part 999.600) issued June 11, 1996, and 
published in the Federal Register (61 FR 31306, June 19, 1996), which 
regulates the quality of peanuts imported into the United States. 
Amendments to the regulation were issued December 31, 1996 (62 FR 1269, 
January 9, 1997) and September 19, 1997 (62 FR 50243, September 25, 
1997).
    The import regulation is effective under subparagraph (f)(2) of 
section

[[Page 46182]]

108B of the Agricultural Act of 1949 (7 U.S.C. 1445c3) (Act), as 
amended November 28, 1990, and August 10, 1993, and section 155 of the 
Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7271). 
These statutes provide that the Secretary of Agriculture (Secretary) 
shall require that all peanuts in the domestic and export markets fully 
comply with all quality standards under Marketing Agreement No. 146 (7 
CFR Part 998) (Agreement), issued pursuant to the Agricultural 
Marketing Agreement Act of 1937 (AMAA), as amended (7 U.S.C. 601-674). 
The handling requirements proposed in this rule are the same as, or 
similar to, those recommended by the Peanut Administrative Committee 
(Committee or PAC), the administrative agency that oversees the 
Agreement's quality assurance program.
    This rule has been determined to be not significant for the 
purposes of Executive Order 12866 and therefore has not been reviewed 
by the Office of Management and Budget.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the regulations, importers of foreign-produced 
peanuts must: Follow certain entry procedures with the U.S. Customs 
Service (Customs Service); obtain certification that such peanuts meet 
edible quality requirements or are disposed to non-edible peanut 
outlets; and report disposition of peanuts to AMS within an established 
time period. This rule proposes several changes to the current 
regulation to relax quality requirements, modify entry procedures, and 
relax reporting requirements. The rule is not intended to have 
retroactive effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule. There are no administrative procedures which 
must be exhausted prior to any judicial challenge to the provisions of 
this rule.

Discussion

    The peanut import regulation was issued June 11, 1996. At that 
time, three duty free peanut quotas for 1996 had been filled and no 
peanuts were entered under duty for the remainder of 1996. Therefore, 
the peanut import regulation had its first practical application on 
January 1, 1997, when the Mexican peanut quota opened, and again on 
April 1, 1997, when Argentine and ``other country'' quotas opened. By 
international agreements, these three duty free peanut quotas increase 
each year, allowing more foreign-produced peanuts duty free access to 
U.S. markets. For the 1999 peanut quota year, the Mexican quota will 
total approximately 8.7 million pounds (3.95 million kilograms). 
Argentina's 1999 peanut quota will total approximately 89 million 
pounds (40.4 million kg.) and the quota for all other countries will be 
approximately 17.7 million pounds (8 million kg.). The total volume 
will be about a 10 percent increase over the combined 1998 peanut 
quotas.
    The Committee met April 29 and 30, 1997, and recommended 
relaxations to the quality and handling requirements of the domestic 
peanut program. Those relaxations have been finalized by the Department 
of Agriculture (USDA) and made effective for domestically-produced 
peanuts. Where applicable, those changes are proposed for imported 
peanuts in this rulemaking. The Committee met a second time on May 27, 
1998, and unanimously recommended no further changes in the domestic 
program's quality requirements or handling procedures. In addition, 
after review of the entry and certification process, AMS proposes 
additional modifications to the import regulation to increase the 
efficiency of the importation procedure and relax reporting 
requirements.
    Therefore, this rulemaking action proposes the following 
modifications to Section 999.600.
    (1) AMS proposes removal of a phrase in the definition of Negative 
aflatoxin content, in Section 999.600, paragraph (a)(10). The phrase, 
``and 25 parts-per-billion (ppb) or less for non-edible quality 
peanuts,'' is proposed to be removed because that action level is no 
longer used for non-edible peanuts. This proposed revision would make 
the requirements under these regulations consistent with those under 
the Agreement. Molds such as Aspergillus flavus (A.flavus) are present 
naturally in soil. Aflatoxin is a carcinogen which may develop from 
A.flavus which is more likely to be found on stressed peanut plants and 
damaged or defective kernels than on sound, whole kernels.
    Also, in paragraph (a)(15), Marketing Agreement No. 146 is referred 
to as the Peanut Marketing Agreement No. 146. The word ``peanut'' is 
not a part of the title of the Agreement and would be removed from the 
definition to make it technically correct.
    (2) AMS proposes to change the definition of Conditionally released 
in Section 999.600, paragraph (a)(16), to conform with Customs Service 
terminology. The current definition states that peanuts are 
conditionally released for further handling ``before final release.'' 
The phrase ``final release'' is not consistent with Customs Service 
terminology and would be removed to avoid confusion. This proposal 
would define conditionally released as ``released from U.S. Customs 
Service custody for further handling, sampling, inspection, chemical 
analysis, storage, and, if necessary, reconditioning.'' These 
activities are conducted to meet the requirements of the import 
regulation. If inspection and certification are not obtained prior to 
application for entry, or if peanuts are not held in Customs Service 
bonded storage facilities when inspected, the peanuts would be 
conditionally released for such inspection and needed reconditioning. 
Conditional release would provide more time for importers to obtain 
inspection certifications and to report compliance with the import 
regulation.
    (3) AMS proposes to remove a redundant sentence in paragraph (b)(1) 
of Section 999.600. The second sentence states that ``only Segregation 
1 peanuts may be used for human consumption.'' This sentence is re-
stated at the end of the paragraph and is more appropriately placed at 
the end of the paragraph.
    (4) Paragraph (c)(1)(i) of the Outgoing regulation in Section 
999.600, currently states that ``no importer shall ship or otherwise 
dispose'' of imported peanuts unless the peanuts meet certain import 
requirements. The introductory sentence would be amended by removing 
the words ``ship or otherwise.'' This change would make the text 
consistent with the revised text of corresponding paragraph (a) of 
Section 998.200 of the Agreement regulations.
    This modification has the effect of removing text which allows 
forwarding of very high quality imported peanuts to buyers before 
receipt of quality certifications. However, the impact of this 
modification is not expected to be significant. Given the quality of 
imported peanuts, importers have been reluctant to forward lots to 
buyers prior to receipt of both grade and aflatoxin certifications. The 
risk of having to have the lot returned for reconditioning is greater 
than the benefit of shipping a few days early. The delays are not 
excessive as aflatoxin analyses are usually completed within two or 
three days, and the results faxed back to importers. Finally, grade and 
aflatoxin certifications often are completed before other Federal 
agency clearances are received. Therefore, this modification would not 
be expected to have an impact on the importation process or on peanut 
importers. This modification is made in conjunction with Recommendation 
6.
    (5) To be consistent with a recent change in the Agreement 
regulation's

[[Page 46183]]

``Other Edible Quality'' table, this rule proposes to relax the 
tolerance for ``Unshelled and damaged kernels'' (from 1.50 to 2.00 
percent) in the ``lots of splits'' categories specified in Table 1, 
``Minimum Grade Requirements'' of paragraph (c)(1)(i). The new 
requirement now matches the tolerance for ``Unshelled and damaged 
kernels'' as specified in the U.S. Grade Standards for Peanuts. Table 1 
shows the current tolerance for unshelled and damaged kernels as 1.50 
percent (the second column under ``Lots of splits''). The tolerance 
would be relaxed to allow for 2.00 percent unshelled and damaged 
kernels in split lots. The relaxation in tolerance of one half of one 
percent could reduce the number of imported peanut lots that need to be 
reconditioned to meet outgoing quality requirements. This could save 
importers reconditioning costs and storage costs. This relaxation 
already has been made effective for domestically-produced peanuts.
    (6) This modification would remove the text of paragraph (c)(1)(ii) 
and the first six grade categories in Table 2--Superior Quality 
Requirements. The Committee established Table 2 in the Agreement 
regulations several years ago to qualify higher grade peanut lots for 
its indemnification program. However, the indemnification coverage has 
been greatly reduced by recent Committee actions and the first six 
grade categories are no longer certified under the Agreement. Thus, 
those grade categories would be removed from the import regulation in 
this rulemaking action.
    The final three grade categories in Table 2 covering domestically-
produced peanuts with not more than 15 percent sound split kernels 
still have a small domestic marketing niche and have been moved to 
Table 1 under the Maximum Limitations category in the Agreement 
regulations. To be consistent with that modification, the last three 
imported ``with splits'' categories covering Runners, Virginias, and 
Spanish and Valencia with ``not more than 15 percent sound splits'' 
would be moved to the Minimum Grade Requirements table in paragraph 
(c)(1)(i) of the import regulation. Also, to be consistent with the 
other maximum tolerances in the ``Unshelled peanuts and damaged 
kernels'' column, and in the ``Minor defects'' column, the percentage 
tolerances for the three transferred categories would be increased 
(relaxed) from 1.25 to 1.50 percent and from 2.00 to 2.50 percent, 
respectively.
    Recommendations 5 and 6 have the effect of relaxing the minimum 
quality requirements of the import regulation, and, together, simplify 
grade requirements by providing only one set of peanut quality 
requirements for human consumption use. While these proposed changes 
remove a provision that allows shipment of high quality lots to buyers 
immediately after grading, given the nature of peanut quality and 
importation processes, the proposed changes would not be expected to 
delay shipments or negatively affect the handling of imported peanuts.
    To effectuate the above three changes, paragraph (c)(1)(i) would be 
modified by removing the words ``ship or otherwise.'' The text and the 
first six grade categories of Table 2 in paragraph (c)(1)(ii) also 
would be deleted from the regulation and the last three grade 
categories would be moved to the table in paragraph (c)(1)(i). 
Paragraph (c)(1)(iii) would be redesignated as paragraph (c)(1)(ii) and 
a conforming change would be made to that paragraph by deleting the 
second sentence which specifies that samples must be taken from 
Superior Quality peanut lots prior to shipment. Finally, because Table 
2 would be deleted, it would not be necessary to refer to the ``Minimum 
Grade Requirements'' table as Table 1, and conforming changes would be 
made in paragraph (c)(1)(i), introductory paragraph (e), and in 
paragraph (e)(3).
    (7) Paragraph (d)(3)(ii) would be changed to specify a maximum lot 
size for farmers stock peanuts. The import regulation currently 
specifies the maximum lot size for farmers stock, cleaned-inshell and 
shelled peanuts as 200,000 pounds (90,720 kilograms). However, the 
200,000 pound size limit is applied only to shelled peanuts under the 
Agreement, and is based on an understanding between the Committee and 
the inspection service, reached some years ago. The maximum lot size 
for domestically-produced, farmers stock peanuts is limited to one 
conveyance, or two or more conveyances with a combined weight not 
exceeding 24,000 pounds (10,886 kilograms). The smaller lot size is 
established for farmers stock peanuts because farmers stock peanuts 
have not undergone extensive cleaning and sorting processes and, 
generally, contain more foreign material and A.flavus mold than lots of 
milled peanuts. Smaller lot sizes help increase the effectiveness of 
sampling variability and assure that the collected sample is 
representative of the entire lot. The 200,000 pound limit for shelled 
peanuts is the maximum volume on which random sampling procedures can 
be systematically and accurately implemented.
    Therefore, under this proposal, foreign-produced peanuts imported 
in farmers stock form would be inspected in single conveyances or 
combined conveyances not exceeding a total of 24,000 pounds. Only a 
small percentage of the peanuts imported during 1997 and 1998 were 
imported in farmers stock form, and all complied with this maximum lot 
size. This inspection practice would help exporters plan their 
shipments and should not have a negative impact on future imports of 
farmers stock peanuts. For these reasons, the second sentence of 
paragraph (d)(3)(ii) would be modified to provide maximum lot size for 
farmers stock peanuts.
    Paragraph (d)(3)(i)(A) would be changed to reflect closing of the 
inspection office in Yuma, Arizona. The introductory sentence in 
paragraph (d)(3)(i)(B) would be changed to more accurately reflect the 
sampling service provided by some inspection service offices.
    (8) AMS proposes strengthening the lot identification requirements 
for shelled peanuts by adding new paragraph (d)(4) of the import 
regulation. The Agreement regulation requires Positive Lot 
Identification (PLI) generally using tags which are sewn on each bag or 
super sack of domestically-produced shelled peanuts. The PLI tag is 
applied after shelling, at the time of packaging and inspection. The 
current import regulation does not require PLI tags sewn at the time of 
first inspection when several hundred thousand pounds of peanuts arrive 
at a port-of-entry at one time. Such a requirement would be a burden on 
importers because of the large volume and lack of equipment, space, and 
time needed to sew tags on individual bags. However, better lot 
identification for imported peanuts is needed to insure integrity of 
the peanut import program.
    Lot identification practices currently applied to imported peanuts 
by the Federal-State Inspection Service (inspection service) provide 
that lots, or pallets within a lot, be identified by a tag which is 
affixed to the lot or pallet. Such identification does not prevent the 
individual bags, sacks, or cartons in the lot from being tampered with 
or exchanged with other bags, sacks, or cartons. The inspection service 
cannot insure integrity of a lot that is only ``lot identified.'' 
Simple lot identity does not guarantee that peanuts drawn in a second 
sample under an appeal process come from the same peanut lot or 
containers from which the first sample was drawn.
    Therefore, AMS proposes a more reliable PLI to be applied to 
shelled peanuts by the inspector at the time of first inspection. This 
may include: (1)

[[Page 46184]]

Wrapping PLI tape around the top layer of bags or boxes in such a way 
that no peanuts could be removed or added; (2) shrink wrapping pallets 
or multiple bags with a PLI sticker applied to the wrapped pallets or 
bags; (3) stamping or stenciling and numbering individual bags or 
boxes; (4) affixing a PLI seal to the door of a shipping container so 
that it could not be opened without breaking the seal; or (5) other 
methods acceptable to the inspection service that clearly identifies 
the lot, is securely affixed to the lot, and prevents peanuts from 
being removed or added to the lot.
    These PLI methods represent substantially less burdensome and less-
costly procedures than PLI tags sewn on individual bags. For instance, 
stenciling bags with a spray paint is a faster and much less expensive 
method of lot identity that represents an acceptable alternative to 
sewing tags on individual bags. The inspection service office in 
Suffolk, Virginia, used stenciling of imported peanuts in bags during 
the 1997 and 1998 quota years. These methods also do not require 
special training or equipment and can be carried out by inspection 
service personnel throughout the U.S. These methods should not require 
substantial extra time or material at the time of first inspection. 
Increased costs to the importer should be in the form of a few extra 
minutes to wrap pallets or stencil bags, and would vary with the size 
and containerization of each lot. These PLI methods could increase 
average storage costs when warehouse space for inspection is very 
limited or when an unusual amount of movement of lots is required 
during lengthy warehouse storage. However, increased costs should not 
be significant in comparison to overall costs of importation. Also, 
importers should benefit from improved lot identity if a lot needs to 
have an appeal inspection or if the Customs Service were to demand 
redelivery.
    The inspection service currently works with domestic peanut 
handlers and storage warehouses to determine the most appropriate PLI 
or lot identity method to be used. The same cooperative relationship 
should apply to importers. Several factors will dictate which PLI 
method should be used: (1) Size of the lot; (2) storage space on the 
wharf or in the warehouse; (3) required, further movement of the lot 
prior to receipt of certification; and (4) other needs of the importer, 
wharf or warehouse operators, or the Customs Service. Any request for 
extension of the reporting period, or appeal inspection, would include 
the PLI number or designation of the lot needing additional reporting 
time.
    AMS believes that these increased lot identity practices outweigh 
the possible minimal increases in handling or inspection costs 
associated with better lot identification. Tighter lot-identity 
requirements would be consistent with practices currently used by the 
inspection service to PLI domestically-produced peanuts. PLI also would 
help importers maintain the integrity of lots, should questions arise 
from the Customs Service after conditional release.
    AMS believes that positive lot identification of inspected lots is 
essential in maintaining the integrity of imported shelled lots after 
first inspection. Lots failing grade and aflatoxin certifications can 
be appealed pursuant to current paragraph (d)(5). In the appeal 
process, the lot is sampled a second time. Without PLI, there is no 
guarantee that peanuts sampled under an appeal inspection are the same 
peanuts as those which failed initial inspection. Therefore, a sentence 
would be added to current paragraph (d)(5) to provide that peanut lots 
which show evidence of tampering or PLI violation, would not be 
eligible for an appeal inspection.
    These PLI methods would be applied to peanut lots at the first 
inspection. If a lot subsequently fails either grade or aflatoxin 
analysis, the lot may be sent to a remilling or blanching operation for 
reconditioning. In such cases, PLI of the lot from the warehouse to the 
reconditioning site and during reconditioning does not have to be 
maintained. However, the importer must maintain information which ties 
the reconditioned lot to the original lot. This information must be 
provided to the inspection service upon inspection after 
reconditioning. Thus, inspection surveillance of the lot does not have 
to be maintained during reconditioning. This lot identity procedure is 
consistent with the handling requirements for domestically produced 
peanuts under the Agreement.
    PLI requirements after reconditioning also would be updated in this 
proposal to make the treatment of reconditioned imported peanuts 
consistent with current industry practice for domestically-produced 
peanuts. Under Agreement requirements, failing lots that are 
reconditioned by remilling or blanching are positive lot identified by 
sewing tags on bags and by taping and tagging bulk bins. For shelled 
peanuts, the tag is sewn into the closure of the bag. In plastic bags, 
the tag is inserted prior to sealing so that the official stamp is 
visible. This is the most efficient PLI procedure and is currently 
carried out by the remiller or blancher at the end of the remilling and 
blanching process. The inspection service certifies the reconditioned 
lot based on the PLI tags applied to bags and bins. Bulk shipments and 
bulk bins would be positive lot identified by sealing the conveyance 
and, if in other containers, sealed by means acceptable to the 
inspection service. This proposal would ensure that the same PLI 
procedures are applied to imported peanuts which are reconditioned by 
remilling or blanching. Costs for these PLI measures are covered in the 
remilling and blanching charges, and, thus, would not be expected to 
increase costs for importers. Indeed, some blanching operations used 
this PLI method on imported peanuts during 1997 and 1998.
    These PLI requirements and procedures would be established in the 
import regulation by adding a new paragraph (d)(4) and redesignating 
current paragraphs (d)(4) and (5) as (d)(5) and (6), respectively. 
Also, references to lot identity in paragraphs (c), (d), (d)(1) and 
(g)(6) would be amended to read ``Positive Lot Identification.''
    It shall be noted that under the Agreement and import programs, a 
failing lot that is reconditioned must be re-certified for both grade 
and aflatoxin content after reconditioning. It does not matter whether 
the original lot fails for grade or aflatoxin analysis; both analyses 
must be conducted a second time. The reconditioned lot is considered to 
be a new lot because the size and quality is different from the 
original lot, and the previous lot identity has been lost. This 
procedure was in effect and properly carried out for reconditioned 
imported peanuts in 1997 and 1998.
    A minor clarification would be added to redesignated paragraphs 
(d)(5)(ii) and (iii). These paragraphs refer to a ``notice of 
sampling'' as the inspection service's grade certification of shelled 
peanuts. The inspection service now commonly uses the ``Milled Peanut 
Inspection Certificate,'' AMS form FV-184-9A, to certify the grade 
quality of shelled peanuts. That form's title would be added to 
paragraphs (d)(5)(ii) and (iii).
    AMS would advise importers that containers of imported lots of 
shelled peanuts may be subdivided prior to inspection. During the 1997 
and 1998 quota years, some containers of shelled peanuts, when off-
loaded and made available for inspection, revealed wet or moldy bags. 
The importers, suspecting such bags would fail quality requirements, 
isolated the wet and moldy bags apart from other bags in the container 
to reduce possible contamination of good peanuts. This practice is 
acceptable and can be done

[[Page 46185]]

at a Customs Service bonded warehouse without inspection service 
oversight. If the moldy bags are held separately in a Customs Services 
bonded warehouse and then re-exported without leaving Customs Service 
custody, those moldy bags do not have to be reported to AMS--except 
that the difference in the volume reported on the stamp-and-fax form 
and the volume inspected must be reported to the inspection service.
    However, if the moldy bags are combined into a separate lot and 
identified on an inspection certificate, or moved out of Customs 
custody, the bags are subject to import requirements and must be 
reported as separate peanut lots. If such a lot fails quality 
requirements, it may be reconditioned, disposed to an non-edible peanut 
outlet pursuant to import requirements, or re-exported pursuant to 
Customs Service procedures. These dispositions must be reported to AMS.
    (9) The second to the last sentence in current paragraph 
(d)(4)(iii) provides that laboratories shall provide aflatoxin assay 
results to the importer. Upon review, USDA determines that this 
sentence is redundant with provisions in current paragraph (d)(4)(v). 
Thus, this proposal would remove the second to last sentence of current 
paragraph (d)(4)(iii).
    (10) Several changes in the regulatory text would be made regarding 
reporting of aflatoxin certifications to AMS. Current paragraph 
(d)(4)(iv)(A) provides that importers ``should'' contact one of the 
laboratories to arrange for chemical analyses of imported peanut lots. 
However, because chemical analysis is required under the regulation, 
the word ``should'' does not convey the mandatory nature of the 
requirement that aflatoxin analysis must be conducted on all imported 
peanut lots intended for human consumption. Thus, the first sentence of 
redesignated paragraph (d)(5)(iv)(A) would be revised to state that 
importers ``shall'' contact one of the laboratories to arrange for 
chemical analyses.
    Current paragraph (d)(4)(v) would be revised to include the 
requirement that importers ``shall cause'' aflatoxin certifications to 
be reported to AMS. The last sentence in current paragraph (d)(4)(v)(B) 
would be revised and moved to redesignated paragraph (d)(5)(v) for more 
appropriate placement of the instructions.
    (11) The list of aflatoxin testing laboratories shown in current 
paragraph (d)(4)(iv)(A) would be updated in this rulemaking action. The 
laboratory in Ashburn, Georgia formerly operated by AMS is now operated 
privately as a PAC-approved laboratory. The USDA laboratory in Dothan, 
Alabama is now operated by the Alabama-Federal State Inspection 
Service. In addition, three new laboratories in Headland, Goshen, and 
Enterprise, Alabama have been certified by AMS and approved by the PAC 
as Alabama-Federal State laboratories. The PAC-approved laboratory in 
San Antonio, Texas should be dropped from the list as that laboratory 
no longer certifies the aflatoxin content of peanut lots. Finally, the 
name of the AMS office that operates USDA laboratories and certifies 
the private laboratories has been changed from Science and Technology 
Division to Science and Technology Programs.
    The import regulation refers to private aflatoxin testing 
laboratories as ``PAC-approved'' because those laboratories are 
approved by the Committee to perform chemical analyses on domestically-
produced peanuts. These PAC-approved laboratories also may be referred 
to as ``designated'' laboratories. Whether a laboratory is referred to 
as ``PAC-approved'' or ``designated,'' only those laboratories listed 
in redesignated paragraph (d)(5)(iv)(A) may conduct aflatoxin content 
analysis on imported peanuts.
    (12) Another Committee recommendation to modify the Agreement 
regulations would provide that shelled peanut lots failing quality 
requirements because of excessive ``fall through'' may be blanched. 
Paragraph (e) of the import regulation prescribes the corresponding 
requirement that imported shelled peanuts failing quality requirements 
because of excessive damage, minor defects, moisture, or foreign 
material may be reconditioned by remilling and/or blanching. This 
proposed change would add peanut lots failing ``fall through'' 
requirements to those lots that can be reconditioned by blanching. 
After blanching, all such lots would have to be sampled and certified 
as meeting minimum ``fall through'' requirements prior to disposition 
to edible peanut outlets.
    This change would be made in paragraph (e) of Section 999.600 by 
adding a new second sentence to the introductory paragraph providing 
that peanuts which fail minimum grade requirements because of excessive 
``fall through'' may be blanched. For consistency, the second to last 
sentence in introductory paragraph (e) also would be revised to include 
minimum ``fall through'' requirements as a condition for human 
consumption.
    (13) A final change to be consistent with Agreement regulations 
would prescribe that shelled peanut lots meeting the minimum grade 
requirements specified in the Minimum Grade Requirements table, but 
which fail aflatoxin requirements, may be roasted during the blanching 
process. After roasting, the peanuts would be sampled and assayed for 
aflatoxin content, and, if meeting aflatoxin requirements (15 ppb or 
less), may be disposed of to human consumption outlets. The lot would 
not have to be re-inspected for grade quality because the lot would 
have already met grade requirements. This modification is a relaxation 
of requirements and would be an optional process for importers who 
intend to roast imported peanuts. It could save time, reduce costs, and 
reduce possibilities for damage or split kernels.
    This process was recommended by the Committee for domestic peanuts 
because blanched peanuts, after sampling and certification, often are 
placed back into the blancher to complete the roasting process. This 
adds costs to the roasting process and can cause additional splits or 
kernel damage due to the extra handling of the peanuts. Also, roasting 
enhances the blanching efforts to eliminate aflatoxin, thus improving 
the wholesomeness of the peanuts.
    Inspection service oversight of the blanching process is necessary 
to maintain lot identity. However, the Department believes that the 
savings involved in blanching and roasting in one step and prevention 
of additional damage and splits due to excessive handling are benefits 
that would outweigh the costs of inspection service oversight. Any 
residual peanuts, excluding skins and hearts, resulting from the 
roasting process, must be red tagged and disposed of to non-edible 
peanut outlets, and so reported to AMS. This proposal is added as new 
paragraph (e)(4) in Section 999.600. Current paragraph (e)(4) would be 
redesignated as (e)(5).
    Paragraph (f) Safeguard procedures of Section 999.600 outlines the 
steps that importers must follow when entering peanuts into U.S. 
commercial markets. The stamp-and-fax process helps assure that AMS 
will be notified of all peanut entries. This rule would modify or 
remove several requirements of the current safeguard procedures and 
reporting requirements to help streamline the entry process, ease 
reporting burdens, and provide more time for importers to obtain human 
consumption certification. The changes are proposed after AMS' review 
of the peanut importation process during the 1997 and 1998 quota 
periods. Where applicable, the changes are proposed

[[Page 46186]]

with the concurrence of the Customs Service.
    (14) Under the ``stamp-and-fax'' procedure, importers notify the 
inspection service of pending peanut shipments by faxing or mailing a 
copy of the Customs Service entry documentation to the inspection 
service office that will sample the imported peanut shipment. The first 
sentence of paragraph (f)(1) provides that such documentation must be 
sent ``prior to arrival'' of the peanuts at the port-of-entry. However, 
experience shows that it may not be possible to send a completed stamp-
and-fax document to the inspection service ``prior to arrival'' of the 
shipment at the port-of-entry. While it is in the importer's interest 
to give the inspection service advance notice of inspection, it is not 
essential that this be done before arrival of the shipment at a port. 
Thus, the first sentence of paragraph (f)(1) would be changed to read 
``Prior to, or upon, arrival * * *''.
    The Customs Service will not release imported peanut lots without 
entry documentation stamped by the inspection service. Further, the 
inspection service will not sample and inspect peanuts that are not 
covered in a stamp-and-faxed entry document.
    (15) AMS proposes revising paragraph (f)(1) to change the 
information that is currently required on the stamp-and-fax document. 
This rule would add the Customs Service entry number(s) for the peanut 
shipment(s) covered in a stamp-and-fax document. The entry number is 
basic Customs Service entry information and appears on Customs Form 
3461 (Entry/Immediate Deliver) which is commonly used as the stamp-and-
fax document. During the 1997 and 1998 quota periods, the inspection 
service recorded the entry number on the grade certificates, enabling 
AMS to monitor imported lots and communicate with the Customs Service 
regarding importers' compliance with program requirements.
    Experience of the last two import years shows that different 
Customs Service forms may be used in the stamp-and-fax process. In most 
cases, Customs Form 3461 has been used. USDA's Animal and Plant Health 
Inspection Service (APHIS) Form 368 (Notice of Arrival) also may be 
used as a stamp-and-fax document. In these cases, the importer or 
customs broker filing the stamp-and-fax document must add the inland 
destination and contact number before sending the document to the 
inspection service.
    The current provision specifies that the destination location, 
including city and street address, be included on the stamp-and-fax 
form. The street address is not necessary as long as the city and 
receiving entity is identified. A telephone contact number also must be 
included. Experience shows that the receiving entities are usually cold 
storage warehouses.
    The current provision specifies that the stamp-and-fax document 
include the date and time that the peanut shipment will be inspected at 
the inland destination. However, a date and time for inspection is not 
always known at the time of entry, and it is not necessary that this 
information be included on the stamp-and-fax document. The purpose of 
the stamp-and-fax is to assure that the inspection service is aware of 
every peanut lot being imported. Arrangements for the time and date of 
the inspection often are made by the cold storage warehouse after 
arrival of the imported lot at the inland destination.
    Therefore, this rule proposes that the information required on the 
stamp-and-fax be amended to include: the Customs Service entry number; 
the volume (weight) of peanuts being imported; the city, and location 
of the entity receiving the peanuts; and a contact name or number at 
the destination. Paragraph (f)(1) would be changed accordingly.
    (16) The ``stamp and fax'' process would be further modified by 
removing the fifth sentence in paragraph (f)(1) that requires importers 
to send a copy of the stamp-and-fax entry document to the Secretary. 
AMS can obtain information on peanut entries from the inspection 
service and from the Customs Service on data tapes. That information 
effectively replaces the need for stamp-and-fax entry documents to be 
reported by importers to AMS' headquarters office. The change would be 
made in the fifth sentence in paragraph (f)(1) by removing the words 
``and send a copy of the document to the Secretary.'' A similar change 
also would be made in the first sentence in paragraph (f)(2) by 
removing the words ``entry document'' from that sentence. This 
modification does not change the requirement that importers must file 
the stamp and fax with the inspection service office as provided in 
paragraph (f)(1).
    Another change regarding the stamp-and-fax reporting would be made 
in paragraph (f)(1). The last sentence provides that the importer shall 
cause a copy of the entry document to accompany the peanut lot and be 
presented to the inspection service ``at the inland destination.'' The 
intent of this requirement was to help inspection service offices 
account for all peanut lots which those offices have authorized entry 
by stamp-and-fax. However, the provision, as currently written, could 
be interpreted as meaning that all peanut lots must be shipped inland 
for inspection. This is not the intent of the provision. Peanuts may be 
inspected and certified for human consumption while at the port-of-
entry, free trade zone, or bonded warehouse adjacent to the port of 
entry. If inspected at the port or free trade zone and certified as 
edible, the lot does not have to be seen again by the inspection 
service and may be transported to its intended destination. Uninspected 
lots and failing lots which are sent inland for inspection or 
reconditioning must be accompanied by Customs Service entry 
documentation relevant to the lots, which must be presented to the 
inspection service at the time of inland inspection.
    The last sentence in paragraph (f)(1) would, therefore, be modified 
to provide that the entry documentation be presented at the time of 
sampling--whether that sampling is at the port of entry or at an inland 
destination. The last sentence of paragraph (d)(3)(i) also would be 
revised to conform with this clarification.
    (17) The import regulation's reporting requirements are specified 
in paragraph (f)(2) of Section 999.600. Currently, importers are 
required to file with the Secretary entry documents, including all 
grade and aflatoxin certifications, showing that imported peanut lots 
meet quality and disposition requirements of the regulation. 
Certifications filed by importers enable AMS to monitor all imported 
peanut shipments and ensure compliance with the regulation's quality 
and disposition requirements. The reporting requirements can be 
burdensome if, as now happens, large volumes of peanuts are entered 
simultaneously when a country's peanut import quota is opened.
    The inspection service performs all inspections of imported 
peanuts, and AMS has access to all of those grade certificates. In 
addition, AMS' Science and Technology Programs' laboratories conduct 
chemical analysis of imported peanut lots, and, thus, AMS has access to 
aflatoxin certificates issued by those laboratories. Through memoranda 
of understanding with these offices, AMS' Marketing Order 
Administration Branch (MOAB), which administers the import regulation, 
can obtain copies of grade and aflatoxin certificates issued by the 
inspection service and the USDA laboratories. Therefore, it is not 
necessary that importers file inspection service grade certifications 
and USDA laboratory aflatoxin certifications on lots which meet 
requirements. Those certifications can be provided to MOAB

[[Page 46187]]

by the inspection service and laboratories. Filing of aflatoxin 
certifications provided by PAC-approved private laboratories is 
addressed below.
    Experience shows that if importers do not have to file 
certifications on peanut lots which meet import requirements, a large 
portion of the reporting burden would be removed. Importer would 
continue to be required to report failing lots and disposition of those 
failing lots. AMS believes such a modification of the reporting 
requirements would not reduce the effectiveness of the regulation's 
safeguard procedures or AMS' program oversight, because its compliance 
efforts focus on failing peanut lots. Therefore, AMS proposes to revise 
paragraph (f)(2) of Section 999.600 to provide that importers file with 
AMS only certificates of imported peanut lots failing quality or 
aflatoxin requirements.
    This proposed rulemaking action would update the kind of 
information required to be filed by importers, or others on behalf of 
importers.
    Importers who choose to use PAC laboratories for aflatoxin 
certification must either file those certifications themselves or 
direct the private laboratory to file the certifications with AMS. 
Similarly, it is the responsibility of the importer to either file, or 
direct the filing of, documentation covering such non-edible peanut 
dispositions. The first sentence of paragraph (f)(2) would be revised 
to require that importers ``shall file, or cause to have filed'' 
documentation showing disposition of peanut lots which fail to meet 
quality requirements. The phrase ``cause to have filed'' would enable 
importers to direct the entity to file the documents on behalf of the 
importer.
    This optional reporting procedure could reduce importers' direct 
reporting burdens because they would not have to file the certificates 
themselves. The cost, if any, of reporting aflatoxin certifications to 
AMS could be included in the cost of testing. Thus, while importers 
would be responsible for the reporting charges, the additional 
reporting costs should be less than the costs of individual importers 
filing the certificates themselves. The certifications would not have 
to be reported individually or on a scheduled basis, but would have to 
be filed by the reporting deadline relevant to each imported lot. A 
laboratory could file certificates from many importers in one mailing.
    As noted above, this proposed rulemaking would continue importers' 
responsibility for reporting, or causing the reporting of, final 
disposition of all failing peanut lots. Proper disposition of a failing 
peanut lot could include: (1) Appeal inspection and analysis which 
results in subsequent certification that the peanut lot meets grade or 
aflatoxin requirements; (2) reconditioning through remilling or 
blanching of the lot to meet grade or aflatoxin requirements; (3) 
disposition to a non-edible peanut outlet such as crushing oilmill, 
animal feed, or seed use; (4) dumping in a landfill or otherwise 
destroying the peanuts; or (5) re-exportation to another country.
    It is the importer's responsibility to insure that the business 
entity disposing of non-edible peanuts uses the peanuts in a non-edible 
product, and that proof of such use is reported to AMS. The business 
entity could be directed to file proof of disposition directly to AMS 
or send the report to the importer who would then forward the report to 
AMS.
    Paragraph (f)(2) would also be modified to clarify the type of 
documentation needed to prove such disposition. AMS requires ``source'' 
documents as proof of disposition. Source documents are documents 
originating from the business entity carrying out the actual 
disposition of the peanuts. For example: proof of crushing must be 
reported by the oilmill performing the crushing; an animal feed 
manufacturer must file proof of receipt of non-edible peanuts and 
certify in writing to the non-edible use of those peanuts; re-exported 
peanuts must be reported on a Customs Service form showing exportation. 
These certifications should be on the business letterhead of the 
disposing entity as proof that it is a ``source'' document; i.e., a 
document prepared by the originator of the disposition action. If such 
a report cannot be obtained from the disposing entity, the inspection 
service may be contacted to assist in documenting the disposition. For 
instance, certification of a landfill dumping may not be provided by 
the landfill. In such case, the inspection service may be contacted to 
observe and certify such disposition. Peanut growers associations in 
the Virginia-Carolina, Southeast, and Southwest also may be contacted, 
particularly with regards to certifying disposition to an oilmill for 
crushing.
    ``Source'' documents must include reference to the lot number or 
Customs Service entry number for the peanut lot(s) and the volume 
(weight) being disposed. For instance, if residual peanuts are crushed 
for oil, the importer must file, or direct the crusher to file, 
documentation which shows the name of the crusher, the failing lot 
number, and the weight of residuals crushed. If crushing is directly 
observed by a regional peanut growers association or the inspection 
service, documentation can be provided by those entities. The volume 
may reflect several residual lots commingled for crushing.
    ``Source'' documentation of a feed lot disposition would include 
certification that the feed company received imported peanuts and has, 
or intends to, use those peanuts as animal feed. Such documentation 
must include, as required by paragraph (e)(2)(ii) of the import 
regulation, an aflatoxin certificate showing that the peanuts did not 
exceed 300 ppb aflatoxin content.
    Non-edible peanuts sent to a landfill also must be reported. If no 
documentation can be obtained from the landfill operator, the 
inspection service may be contacted to certify the dumping.
    Documentation of re-exported peanuts must include a completed 
Customs Service form, specific to the peanuts, verifying exportation 
from the U.S.
    The current regulation specifies bills-of-lading as documentation 
that can be filed in reporting disposition. In reporting dispositions, 
many importers have filed bills of lading showing residual peanuts were 
transported to a crushing facility. However, neither the importers nor 
crushers filed proof of crushing. A bill-of-lading showing shipment to 
an oilmill operation is not sufficient to verify that the residuals 
were received by the oilmill and crushed. Bills-of-lading and transfer 
certificates may be filed in conjunction with other source documents to 
help show movement of non-edible peanuts, but cannot be filed as proof 
of final non-edible disposition. Therefore, the terms ``bills-of-
lading'' and ``transfer certificates'' would be removed from paragraph 
(f)(2) as a document showing proof of disposition.
    Further, some importers have requested appeal analyses on failing 
peanut lots. An appeal inspection involves resampling and reinspection 
by the inspection service and/or aflatoxin testing laboratory. If the 
failing lot is determined to meet requirements upon an appeal analysis, 
the importer must file both the initial failing certificate(s) and the 
appeal certificate(s) showing the same peanut lot ultimately was 
certified as meeting quality requirements on appeal.
    Experience with the 1997 and 1998 imports also shows that most 
failing lots were reconditioned by blanching. After reconditioning, the 
lots are reinspected and, in most cases, certified for edible 
consumption. In reporting reconditioning of a failing peanut lot, the 
importer must account for pickouts

[[Page 46188]]

and other poor quality kernels that are removed from the lot during the 
reconditioning process. For example, if a 40,000 pound container of 
peanuts fails grade requirements, the lot may be blanched. If the 
resulting lot, weighing 30,000 pounds, is certified as edible, the 
importer must file: (1) The first failing grade certificate; (2) the 
first passing aflatoxin certificate (``negative'' to aflatoxin); (3) 
the second passing grade certificate; (4) the second passing aflatoxin 
certificate; and (5) proof of disposition of the non-edible residuals.
    The volume of residual peanuts may not exactly equal the difference 
between the two weights because of ``disappearance'' during the 
reconditioning and re-inspection process. Such disappearance can 
include bag weight, skins, moisture from the blanching, other loss of 
kernels, and differences in weighing scales, which, to the extent 
practical, must be documented.
    Fees charged for disposition of failing peanuts must be borne by 
the importer.
    AMS has found that grade and aflatoxin certificates are the primary 
documentation for monitoring edible and non-edible disposition of 
imported peanuts. Tying a disposition back to an original imported 
peanut lot may be difficult without reference to grade and aflatoxin 
certificate numbers. Thus, for compliance purposes, it is necessary 
that all reporting of non-edible disposition include the grade and 
aflatoxin certificate numbers of the original failing lot(s).
    Residuals from the remilling or blanching of several imported 
peanut lots belonging to the same importer may be commingled into a 
larger, residual lot. Proof of disposition of a commingled residual lot 
must include: (1) The name and telephone number of the disposition 
outlet; (2) lot numbers from which the residuals were removed; and (3) 
the total weight of the disposed residual lot. The report must be 
sufficient to account for all of the residual peanuts and identify the 
lots from which the residuals were taken. Residuals from imported 
peanut lots cannot be commingled with domestically-produced residual 
peanuts because of the separate compliance and recordkeeping 
responsibilities for domestic peanuts (to the Committee) and imported 
peanuts (to AMS). Certification of PLI issued by the inspection service 
may be used to verify commingling of multiple residual peanut lots.
    During the 1997 and 1998 quotas, some customs brokers, warehouse 
operators, and blanchers failed to identify the importer of record when 
requesting inspections. If the warehouse or blancher is shown as the 
applicant for the inspection and the importer's name withheld, AMS has 
difficulty matching up certificates and verifying that the importer has 
satisfied reporting requirements. For AMS recordkeeping purposes, the 
applicant requesting inspection must provide the name of the importer 
to the inspection service. A provision to this effect would be added to 
the first sentence of paragraph (f)(2).
    Because of the extent of these revisions, the first half of 
paragraph (f)(2) would be revised. Crushing, feed, seed, or burying 
would be added as examples of non-edible disposition outlets. Bills-of-
lading and transfer certificates would be removed as proof of final 
disposition. The address to which disposition documentation must be 
filed would remain unchanged. Finally, current paragraph (d)(4)(v)(B), 
which provides that importers file aflatoxin certificates ``regardless 
of the test result'' would be removed to conform with reduced reporting 
of only failing lots.
    (18) Paragraph (f)(3) of the peanut import regulation establishes 
the period for importers to obtain inspection and certification of 
their imported peanut lots and report disposition to AMS. The current 
reporting period is 23 days after Customs Service release of the peanut 
lot. However, based on the experience of the 1997 and 1998 import 
quotas, the 23-day period does not provide enough time for importers to 
meet requirements for all lots and report disposition to AMS. Indeed, 
the 23-day reporting period was extended for the 1997 reports only in a 
separate rulemaking (62 FR 50243, September 25, 1997). Therefore, 
current paragraph (f)(3) and the reporting period would be completely 
revised.
    Because of the high demand for foreign-produced peanuts, the 1997 
Argentine and ``other country'' quotas were filled on the day of 
opening. Among other things, this caused a flood of imported peanuts 
into clearance channels at the same time. For the most part, the 
inspection service and aflatoxin labs were able to provide timely 
sampling and inspection of imported peanuts. However, some importers 
encountered problems obtaining wharfage and storage space in bonded 
warehouses and other delays in other clearance processes. Large volume 
importers had particular difficulty coordinating the paperwork required 
by different Federal government offices, and the quality inspections 
and needed reconditioning to meet requirements of the import 
regulation, 7 CFR Part 999.600.
    Therefore, the period for reporting compliance with the import 
regulation is proposed to be extended in this rulemaking. An extended 
period would help alleviate problems encountered with the large numbers 
of lots entered under Argentine and ``other country'' quotas on April 1 
each year. The extended period also would be helpful for imports of 
Mexican peanuts, some of which are farmers stock peanuts needing the 
extra steps of shelling, sorting, and sizing before certification for 
edible use.
    The reporting period proposed in this rulemaking action would be 
180 days from the date of release of a lot by the Customs Service. 
Lengthening the reporting period would be accomplished by providing 
that all Customs Service releases of peanuts be designated as 
``conditional'' releases. The 180-day period would be established as 
the conditional release period for Customs Service purposes.
    A peanut lot which is inspected and certified as edible in advance 
of a quota's opening day would be conditionally released, and would be 
subject to the 180-day conditional release/reporting period. However, 
importers would be able to dispose of those peanuts after receipt of 
the required edible certifications and after conditional release of the 
lots by the Customs Service.
    Uninspected peanut lots would be conditionally released under bond, 
provided that, within 180 days, those peanuts be inspected and reported 
to AMS as meeting requirements of the import regulation.
    Inspected peanut lots that fail to meet quality requirements would 
be conditionally released for reconditioning and re-inspection. 
Reconditioning and reinspection must be completed and reported to AMS 
within the 180-day conditional release period. Non-edible disposition 
of residual peanuts or pick-outs from the reconditioning process also 
must be reported within the 180-day period. Positive lot identification 
would have to be maintained on these peanuts.
    If AMS finds that, after the 180-day conditional release period 
expires, an uninspected or failing peanut lot has not been reported as 
meeting import requirements, AMS would request the Customs Service to 
issue a Notice of Redelivery to the importer. Subsequent to that 
request, the Customs Service would have 30 days to issue, under the 
terms of the basic importation bond, a valid demand for redelivery. 
Upon receiving the Notice of Redelivery, the importer would have 30 
days to

[[Page 46189]]

redeliver the unreported or failing peanuts to the Customs Service.
    Current paragraph (f)(3) provides for a 60-day extension of the 
redelivery demand period to enable an importer additional time to meet 
a redelivery demand. This provision would be removed from paragraph 
(f)(3) because the Department believes that, with the extended 180-day 
conditional release period, an extension of the redelivery demand 
period would not be needed. A conforming change would be made by 
removing the second sentence in paragraph (f)(4).
    Current paragraph (f)(4) also would be revised to restate the 
redelivery demand process. The paragraph also would continue to include 
the consequences of an importer's failure to comply with import 
regulation, i.e., assessment of liquidated damages equal to the value 
of the peanuts involved, under the terms of the Basic Importation and 
Entry Bond. Further, failure to fully comply with quality and handling 
requirements or failure to notify the AMS of disposition of uninspected 
or failing imported peanuts, as required under this section, may result 
in a compliance investigation by AMS. Finally, revised paragraph (f)(4) 
includes the proviso that falsification of reports submitted to AMS 
also is a violation of Federal law and is punishable by fine or 
imprisonment, or both.
    (19) AMS believes that the need for extension of the 180-day 
conditional release and reporting period should be significantly 
reduced because of the longer reporting period proposed in this 
rulemaking. However, new paragraph (f)(5) would provide for extension 
of the reporting period, should an importer be unable to dispose of a 
particular peanut lot within 180 days. This rule proposes an extension 
of an additional 60 days, giving importers a total of 240 days to meet 
requirements of the import regulation.
    Unusual circumstances could necessitate an extended delay in 
disposition of an imported peanut lot. There have been a few instances 
over the last two years where failing lots were set aside and not 
reconditioned until months after the initial inspections. Disposition 
of farmers stock peanuts which require shelling and final outgoing 
inspection also may require an extended period of time to complete 
shelling and final inspections. In such instances, the importers needed 
an extension of the reporting period. Under this proposal, the length 
of the extension, up to 60 days, would be specified in the extension 
request and would be made by the importer in writing at the end of the 
conditional release period. The extension request also would specify 
the lot's Customs Service entry number, PLI designation, volume or 
weight, and current location. Requests for extension would be made to 
AMS at the address provided in paragraph (f)(2).
    (20) AMS proposes to add a new paragraph (f)(6) to clarify a 
procedural question that arose during the 1997 quota period. Not all 
peanut lots that arrive in the U.S. are entered for consumption. 
Because of the expected overfill of the Argentine quota, some importers 
placed peanuts in bonded storage and did not file consumption entry 
documents (including a stamp-and-fax) until after quota allotments were 
determined by the Customs Service. The excess peanuts had to be either 
exported to another country, held in bonded storage for the next year's 
quota, or entered as admittable. Such peanuts that are held in bonded 
storage and subsequently exported from the U.S. without import 
application or stamp-and-fax communication, need not be reported to 
AMS. However, if a peanut lot is included in a stamp-and-fax document, 
but is subsequently exported without being entered by the Customs 
Service, the importer must notify AMS of the export decision and 
provide proof of export. The lot must be so reported even if it is not 
sampled and inspected by the inspection service.
    With the addition of new paragraphs (f)(5) and (f)(6), current 
paragraphs (f)(5) and (f)(6) would be redesignated as paragraphs (f)(7) 
and (f)(8), respectively, and references to those paragraphs would be 
changed accordingly.
    In addition, minor additions would be made in paragraphs (f)(7) and 
(8) to clarify the current provisions of those paragraphs. In paragraph 
(f)(7), the words ``and aflatoxin'' would be inserted between 
``inspection certificate(s)'' to clarify that the Secretary may reject 
a current aflatoxin certificate as well as grade certificate. The word 
``may'' also would be removed from the sentence to clarify the 
authority of the Secretary to require reinspections of suspect peanut 
lots. In paragraph (f)(8), the second sentence would be changed by 
adding the words ``the storage'' before the word location to clarify 
the requirement that importers advise AMS of the storage location of 
peanuts held in bonded storage for longer than one month prior to quota 
opening.
    (21) A clarification would be made to paragraph (g)(1) Additional 
requirements. The second sentence currently states that all peanuts 
presented for entry for human consumption must be certified as meeting 
import requirements. The phrase ``presented for entry'' can be 
misleading in that, as discussed above, many peanuts presented for 
entry are not subsequently imported. AMS proposes to change the 
sentence by replacing the phrase ``presented for entry'' with the term 
``intended'' for human consumption. This clarifies the purpose for 
importation. Also, the phrase ``prior to such disposition'' would be 
added to the end of the sentence to further state that all peanuts 
imported for edible use meet those requirements prior to movement to 
the receiver or buyer.
    (22) Finally, several minor changes would be made to paragraph 
(g)(6) to clarify and simplify provisions regarding costs incurred in 
meeting the requirements of the import regulation. The changes would 
include clarification that the inspection service and aflatoxin testing 
laboratories bill ``applicants'' making the request for inspection and 
chemical analysis, not only the importer, as currently stated. 
Applicants include customs brokers, storage warehouses, or other 
entities acting of behalf of importers. The list of the types of 
chargeable services would be modified for clarity and simplicity. PLI 
certifications would replace ``certifications of lot identification'' 
to be in conformance with Recommendation 8, above.
    The Department proposes these amendments and modifications to the 
peanut import regulation, Section 999.600 to update and streamline the 
provisions of that regulation.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements contained in this 
proposed rule will be submitted to the Office of Management and Budget 
(OMB) for approval. The information collection requirements in the 
current peanut import regulation were approved by OMB on September 3, 
1996, and assigned OMB number 0581-0176.
    This paperwork burden analysis applies to only AMS' peanut import 
regulation burden in Section 999.600, and does not include or supersede 
other reporting requirements for imported peanuts that may be 
established by APHIS, the Food and Drug Administration (FDA), the 
Customs Service, or other agencies.
    The current burden statement for the peanut import regulation was 
developed and approved before the regulation was put into effect. The 
reporting burden is based on importers, or others acting on behalf of 
importers, filing copies of

[[Page 46190]]

documents necessary to show compliance with program requirements. There 
are no forms to be completed and filed. The import program's current 
reporting and recordkeeping estimates are not broken down in OMB's 
0581-0176 burden statement--making it difficult to apply comparisons 
for the individual changes proposed in this regulation. Also, because 
the duty free quota has increased by approximately 21 percent since the 
current burden statement was approved, savings calculated in this 
proposal are based on 1999 quota volumes.
    The average reporting time for each response is reduced in this 
proposal from 5 minutes to 3.5 minutes. The current burden was 
calculated based on importers filing certificates one at a time. 
However, experience shows that importers generally file documents in 
large groups, thus, saving considerable reporting time. With extended 
reporting periods, importers will be able to collect relevant 
inspection certificates and other needed documents and file them in 
packages. This reduces the response time to an estimated 3.5 minutes 
for each response--which is used in this reporting burden.
    The current reporting burden estimates 25 respondents filing 5,000 
responses, for a total of 300 burden hours--an average of 12 reporting 
hours per importer. The current recordkeeping burden is estimated at 25 
respondents and a total of 125 burden recordkeeping hours--an average 
of 5 recordkeeping hours per importer.
    This rule proposes to revise the current information collection 
burden based on: (1) Experience of the 1997 and 1998 peanut quota 
periods; (2) a two-year increase in peanut quota volume from 94.8 
million to 115.4 million pounds for 1999, as established by trade 
agreements; (3) an estimated 2,650 lots entered (based on lot sizes of 
40,000 pounds for most lots and 200,000 pounds for a small number of 
lots; (4) proposed reductions in information collection requirements; 
(5) reduced response time from 5 minutes per response to 3.5 minutes; 
(6) reduced number of respondents (importers) from 25 to 15; and (7) 
generally good peanut quality, with an estimated 10 percent of the lots 
failing initial quality requirements.
    Reporting burden: The following proposed changes should reduce the 
AMS paperwork reporting burden on peanut importers.
    Recommendation 16: This recommendation would remove from paragraph 
(f)(1) the requirement that importers must send copies of each stamp-
and-fax document to AMS headquarters. The intent of the current 
requirement was to ensure AMS headquarters has knowledge of all peanut 
imports for monitoring and compliance purposes. However, this rule 
proposes that the inspection service and aflatoxin testing laboratories 
provide copies of all inspection certificates issued on imported 
peanuts (Recommendation 17). In addition, AMS receives periodic 
database printouts of all peanut entries from the Customs Service. 
Together, these reports should be sufficient documentation for AMS 
headquarters' purposes. Therefore, it would not be necessary that 
importers send copies of their stamp-and-fax documents to AMS 
headquarters.
    Savings: The burden of filing stamp-and-fax documents with AMS' 
headquarters would be completely eliminated by this proposed rule. The 
current burden for reporting stamp-and-fax documents is factored into 
the total program burden of 5,000 hours. Based on the 1999 quota of 
115.4 million pounds, projected entries of 2,650 lots, and 5 containers 
listed on each stamp-and-fax document, approximately 530 stamp-and-fax 
documents would be filed. This number of responses would be saved if 
AMS headquarters did not have to be notified, as proposed. At 5 minutes 
per filing, the new reporting burden for reporting stamp-and-fax would 
total 44 hours and the savings would be 44 hours.
    Recommendation 17: This recommendation would reduce the number of 
inspection certificates which importers must report to AMS. Currently, 
importers must file copies of both passing and failing grade and 
aflatoxin certificates issued on all imported peanut lots. Those 
certificates are issued by the inspection service and by AMS and 
private laboratories. The certificates can be made available to AMS by 
those entities, thus relieving importers of a significant direct 
reporting burden.
    Because AMS' compliance efforts focus on failing lots, AMS proposes 
that importers continue to be required to file only certificates 
covering failing peanut lots. AMS receives copies of passing 
certificates from the inspection service and laboratories as a check on 
all lots entered. Approximately 2,650 peanut lots are expected to be 
imported under 1999 peanut quotas. For burden-reporting purposes, this 
rule estimates that 10 percent of the imported lots will fail one or 
both inspections. Thus, approximately 265 lots can be expected to fail 
quality requirements and will have to be either reconditioned to meet 
requirements, disposed of to non-edible peanut outlets, or re-exported. 
The other 90 percent of the lots (2,385 lots) can be expected to meet 
quality requirements, and would not have to be reported.
    Recommendation 17 would make two clarifications. First, the name of 
the importer would be entered on filed inspection certificates, which 
are completed by the inspection service. Often the business requesting 
the inspection is not the importer, but another entity acting on behalf 
of the importer. This proposal would clarify that in such cases, the 
importer's identity should be placed on the certificate. This would not 
increase the reporting burden because the name is entered by the 
inspector, not the importer. Secondly, the recommendation clarifies 
that ``source'' documents must be used when reporting disposition of 
failing lots. This also is not an increase in requirements, but a 
clarification to identify the kinds of documentation needed to meet the 
reporting requirements of this regulation. The documentation should be 
available to importers as part of their normal business practices.
    Savings: If importers are not required to file certificates on lots 
meeting program requirements, a savings of approximately 4,770 
responses would be realized (2,385 lots, times 2 certificates per lot) 
and 398 hours saved (4,770 times 5 minutes per response). The new 
reporting burden under Recommendation 17 would be 4 responses for each 
of the 265 imported lots failing requirements, or 1,060 total 
responses. At 3.5 minutes per filing, the total reporting burden for 
filing disposition of failing lots only is projected to be 62 hours. 
The new average would be 70 responses and 4 hours per importer. If this 
proposed regulation does not become effective, the 1,999 reporting 
burden on importers would be approximately 5,830 responses filed, and, 
based on 5 minute reporting time per response, roughly 485 burden 
hours. Thus, Recommendation 17 could result in an estimated savings of 
roughly 4,770 responses and 423 burden hours in 1999.
    Recommendation 18: A small portion of the 5,000 hours under the 
current reporting burden accounts for importers filing requests for 
extension of the reporting period. Recommendation 18 would extend the 
reporting period from 23 days after entry to 180 days after conditional 
release by the Customs Service. The 23-day period proved to be too 
short for reporting most imported lots, forcing importers to request 
extensions on nearly all lots imported during 1997 and 1998. Extension 
of the reporting period to 180 days should

[[Page 46191]]

alleviate the need to file requests for extension for almost all 
imported peanut lots. In addition, extension of the reporting period 
also should affect an importer's reporting burden because, with more 
time to meet requirements, an importer would be able to collect 
certificates as the lots are certified, and file all certificates on 
failing lots at one time, thus saving the burden of reporting 
individual lots. After deadline extensions were granted by AMS during 
the 1997 and 1998 quota periods, importers filed outstanding reports in 
groups.
    Savings: Extending the reporting period from 23 days to 180 days 
means importers would likely not have to request extensions and they 
would be able to combine the failing lot certificates into fewer 
reports. Savings from the proposed reduction in the reporting burden is 
factored into the estimate of Recommendation 17.
    Recommendations 10, 15, and 20 would clarify reporting requirements 
but not change the burden. Recommendation 10 would clarify that 
importers may designate other entities (aflatoxin testing laboratories, 
customs import brokers, warehouses, blanchers, crushers, etc.) to file 
certificates and reports on their behalf. This reporting may be done as 
a part of the business contract between the importer and the service-
provider at little or no cost to the importer, thus relieving the 
importer of the reporting burden. Recommendation 15 would clarify the 
information that is needed on stamp-and-fax documents. This change in 
information needed would not increase the time needed to complete the 
stamp-and-fax document or the reporting burden. Recommendation 20 would 
clarify that if peanuts are not covered in a stamp-and-fax document and 
are not inspected--but are subsequently exported--those peanuts should 
not be reported.
    Total average savings, reporting burden: This proposed rule could 
represent an annual savings of approximately 5,300 responses and 467 
reporting hours.
    The savings may be only a few minutes for small importers who 
import a few containers of peanuts. A large importer of 8 million 
pounds of peanuts--200 lots with 20 lots failing requirements--could 
have the following reporting burden in 1999 (vs. the current burden 
estimate in parentheses): 40 stamp-and-fax notices (80 stamp-and-fax 
notices); 0 certificates on passing lots (360 certificates on passing 
lots); 80 certificates on failing lots (80 certificates on failing 
lots); 0 deadline extensions (40 deadline extensions); total 120 
reports filed (total 560 reports filed); 8 hours reporting burden (46.6 
hours reporting burden). These are rough estimates for general 
comparison purposes only.
    Recordkeeping burden: In addition to the reporting requirements, 
Section 999.600 requires that importers retain copies of certifications 
and entry documentation for not less than two years after the calendar 
year of acquisition. Customs Service document retention requirements 
are five years. While the importers would not file grade and aflatoxin 
certificates on passing lots, they must store that information for AMS 
and the Customs Service. The current recordkeeping burden totals 125 
hours, based on 25 respondents retaining records--an average of 5 
recordkeeping hours per importer. The revised recordkeeping burden, 
based on the 21 percent increase in the quota volume and 15 record 
keepers, would be 151 hours for an average of 10 recordkeeping hours 
per importer.
    Cumulative new burden: This proposed rule would require a new 
annual reporting and total recordkeeping burden for OMB number 0581-
0176 of 1590 responses and 257 hours. This compares to the current 
burden of 5,000 responses and 425 hours. The proposed new burden would 
average 106 annual responses and 17 burden hours for each peanut 
importer. The burden hours per importer is increased because the 
estimated number of importers is sharply reduced.
    Comments to this amended Paperwork Reduction Act burden should 
reference this proposed regulation and the date and page number of this 
Federal Register. Comments should be submitted to the Desk Officer for 
Agriculture, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Washington, D.C., 20503. OMB is required to make 
a decision concerning the collection of information contained in this 
rule between 30 and 60 days after submission to OMB. Therefore, a 
comment to OMB is best assured of having full effect if OMB receives it 
within 30 days of publication. This does not affect the deadline for 
the public to comment on the rule.
    Comments on proposed reduction of the paperwork burden also should 
be submitted to the Department in care of the Docket Clerk, Fruit and 
Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, 
DC 20090-6456; fax: (202) 720-5698, or E-mail: 
[email protected]. All comments received will also become a 
matter of public record.

Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the AMS has considered the economic impact of the import 
regulation on small entities and whether these proposed changes to the 
regulation would disproportionately or unfairly effect small entities. 
The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Accordingly, AMS has 
prepared the following initial regulatory flexibility analysis.
    The import regulation is required by law--subparagraph (f)(2) of 
Section 108B of the Agricultural Act of 1949, as amended, and the 
Federal Agriculture Improvement and Reform Act of 1996. Subparagraph 
(f)(2) mandates that the Secretary shall require that ``all peanuts in 
the domestic and export marketplace fully comply with quality standards 
under Marketing Agreement 146.'' Handling requirements similar to those 
established under the Agreement also are established in the import 
regulation, to the extent necessary to assure comparability of quality 
standards. The import regulation was issued June 11, 1996 (61 FR 31306, 
June 19, 1996) with the intent to minimize the regulatory burden on 
importers. An amendment was issued December 31, 1996, (62 FR 1269, 
January 9, 1997), to conform to changes in the Agreement regulations 
and to add necessary storage reporting requirements.
    Experience of the 1997 and 1998 peanut quota periods shows that 
approximately 15 business entities imported peanuts and were subject to 
this import regulation. Importers appear to cover a broad range of 
business entities, including fresh and processed food handlers, and 
both large and small commodity brokers who buy agricultural products on 
behalf of others. Small agricultural service firms have been defined by 
the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$500,000. Less than one third of the importers appear to be small 
business entities. The majority of peanut importers are large business 
entities under this definition. AMS is not aware of any peanut 
producers (farmers) who imported peanuts during these quota years.
    The 1997 and 1998 peanut quota years were the first two years that 
imported peanuts have been regulated

[[Page 46192]]

under 7 CFR Part 999.600. Analysis of the regulatory impact of the 
regulation is complicated by several factors. Peanuts are imported from 
at least half a dozen countries and can be imported in inshell, 
shelled, or cleaned-inshell forms. This makes it difficult to compare 
the costs of importation with purchase price of the product. The costs 
of importation can vary greatly, with significant cost factors being 
transportation distance, shipment method, wharf fees, demurrage costs, 
storage charges, and the quality of the peanuts imported.
    The proposed amendments to the import regulation in this rulemaking 
action are recommended for the following reasons. Five changes are 
proposed to conform with changing Agreement requirements (relaxing the 
tolerance for unshelled and damaged kernels; allowing lots with 
excessive fall-through peanuts to be blanched; and allowing failing 
lots to be roasted during blanching without requiring grade re-
inspection). Seventeen changes are proposed by AMS to update, clarify, 
and reduce the importation procedures and reporting requirements 
specified in the regulation. Of the 17 changes, three relax reporting 
requirements by removing nearly 90 percent of the documents that must 
be filed and extending the reporting period to ease the time pressures 
for those documents that must be filed. The AMS changes would improve 
oversight of imported peanut lots, increase quality assurance, and 
correct misunderstandings of importation procedures.
    All of these proposed changes are intended to apply uniformly to 
both large and small importers. None are intended to, or are expected 
to, disproportionately affect small importers. The changes would have 
the following regulatory impact on importers.
    Recommendation 1 would make two changes in definitions. The first 
change would remove reference to an out-of-date aflatoxin level for 
non-edible peanuts in paragraph (a)(10) defining Negative aflatoxin 
content. The level of 25 ppb should have been removed in previous 
rulemaking. No imported peanuts have been graded against this old 
quality level. Recommendation 1 also would remove the word ``Peanuts'' 
from the title of Marketing Agreement No. 146 as specified in paragraph 
(a)(15) defining PAC-approved laboratories. The term ``Peanuts'' is not 
a part of the title of the Agreement.
    Recommendation 2 would change the definition of Conditionally 
released in paragraph (a)(16) by removing the words ``before final 
release'' and adding reference to reconditioning. The ``final release'' 
term does not conform with Customs Service terminology. The addition of 
the words ``and, if necessary, reconditioning'' helps complete the 
definition. These changes do not alter the intent or meaning of the 
definition. There would be no regulatory impact on importers.
    Recommendation 3 would remove a redundant sentence in paragraph 
(b)(1) relating to use of Seg. 1 peanuts for human consumption only. 
This reference appears twice in the same paragraph.
    Recommendations 4 and 6 are inter related and are proposed to make 
the import regulation consistent with changes in handling and quality 
requirements to the Agreement. These changes simplify both the import 
and Agreement regulations. Recommendation 6 would remove Table 2, 
Superior Quality Requirements--Peanuts for Human Consumption from 
paragraph (c)(1)(ii). Currently, peanut lots meeting the higher quality 
requirements of Table 2 may be shipped to buyers prior to receiving 
aflatoxin analyses on the lots. Recommendation 4 is a conforming change 
that would have the affect or requiring importers to receive aflatoxin 
analyses on all lots prior to forwarding the peanuts to buyers.
    While these changes represent a tightening of handling 
requirements, the affect on importers is minimal. Under limited 
circumstances, the provisions help reduce, by a few days, the storage 
time for such high quality peanuts. AMS does not have information on 
the number of imported lots that would have been affected by this 
proposal had it been in effect for the last two quota seasons. AMS also 
does not have financial data on storage costs and whether those costs 
are on a daily or weekly basis. However, in conversations between AMS 
and importers and customs brokers during 1997 and 1998, importers did 
not indicate that they shipped superior quality lots without waiting 
for aflatoxin certification. Also, importers did not contact AMS about 
the timeliness of aflatoxin certifications. Given today's overnight 
mail and facsimile technologies, aflatoxin analyses are routinely 
reported within two days. Finally, importers who arranged for arrival, 
inspection, and bonded storage prior to quota opening had quality and 
aflatoxin certifications ready when the peanuts were released by the 
Customs Service. Thus, delays and any regulatory impact due to these 
proposed changes would be negligible.
    Not all categories of peanuts would be removed from Table 2. Three 
``with split'' categories of peanuts would be moved from Table 2 to 
Table 1 to retain the small marketing niche in the domestic market for 
lots with high percentages of split kernels. This change was made to 
the Agreement regulations in 1998 and is proposed in this regulation to 
conform with that change. Any impact on importers would be positive as 
it would allow lots with high split kernel content to continue to be 
imported. AMS does not maintain data on the number of peanut lots that 
were imported under these ``with splits'' categories. Data on the last 
two years' imported peanut lots cannot be used to reliably indicate 
quality of future shipments or the impact of this relaxation.
    Recommendation 5 would relax tolerances in Table 1 for ``unshelled 
and damaged kernels by one half of one percent in split lots. The 
change is made to be consistent with a change already made to the 
Agreement regulations. It should reduce the number of lots that must be 
reconditioned to meet edible quality requirements. Reconditioning a lot 
to remove excessive splits can significantly increase costs by adding 
additional transportation costs, remilling or blanching charges, and 
additional inspection fees. Data on the last two years' imported peanut 
lots cannot be used to reliably indicate the impact on future shipments 
because the quality of imports varies significantly from year to year 
and country to country.
    Recommendation 7 would set a maximum limit on the volume of farmers 
stock peanuts that may comprise one lot. Paragraph (d)(3)(ii) would be 
modified. The volume, 24,000 pounds (10,886 kg), has been in effect for 
domestic peanuts as part of inspection service procedures. The lot size 
is the largest for which optimum sampling procedures can be applied and 
is the industry standard. Buying points where farmers stock peanuts 
must be inspected are set up to handle this maximum lot size. For 
logistical and cost reasons, farmers stock peanuts have been imported 
only from Mexico--in large semi-trailer truck loads. The 24,000 pound 
limit approximates the volume of farmers stock peanuts that are carried 
in semi-trailer trucks. It would be unrealistic to transport a lot 
larger than 24,000 pounds. Only a small percentage of imported peanuts 
were imported in farmers stock form during 1997 and 1998 and all were 
within this maximum lot size. Thus, Recommendation 7 can be expected to 
have no negative impact on peanut importers.

[[Page 46193]]

    Recommendation 8 would add new paragraph (d)(4) to strengthen lot 
identification requirements for imported peanuts. In some situations, 
the proposed modified positive lot identification procedures could take 
additional warehouse personnel and space, as well as inspection service 
time. However, warehouse labor is needed to lay out all bags for 
sampling, so costs in addition to those normally charged should not be 
significant. Additional inspection time could vary from a few minutes 
to wrap PLI tape around containers or stacked bags to 30 minutes or 
more to reassemble bags on pallets and shrink-wrapping pallets or 
stenciling individual bags with spray paint. The PLI requirements could 
increase costs for some, but not all, imported lots. Inspection service 
sampling and grading costs currently are $43 an hour. Inspections 
generally take from one to three hours, including travel time, to 
complete. The costs to importers would be proportionate to the number 
of lots inspected and is not considered to unfairly affect small 
importers.
    The amended PLI requirement would make the import regulation more 
consistent with domestic program PLI requirements, and is consistent 
with the intent of the Act. Importers, as well as domestic peanut 
producers, handlers and manufacturers benefit from quality assurances 
and the integrity of the product--due, in large part, to enforced PLI 
procedures. The benefits of quality assurance and product integrity far 
outweigh the small increased costs of modified PLI methods proposed in 
this rulemaking.
    Recommendation 9 would remove a redundant sentence in paragraph 
(d)(4)(iii) which provides that laboratories provide aflatoxin assay 
results to importers. This reference is repeated in paragraph 
(d)(4)(v). There is no regulatory impact from this change.
    Recommendation 10 would make minor changes in three paragraphs 
regarding the mandatory nature of aflatoxin testing and reporting test 
results. The regulation clearly states throughout that chemical 
analysis is required on imported peanuts. Paragraph (d)(4)(iv)(A) 
clarifies that importers ``shall,'' rather than ``should,'' contact a 
laboratory to arrange for chemical testing. Also under Recommendation 
10, the clarification that laboratories can be designated by the 
importer to report test results to AMS would be moved from paragraph 
(d)(4)(v)(B) to paragraph (d)(5)(v) for better placement of that 
instruction. These changes identify an optional reporting procedure and 
have no regulatory impact on importers.
    Recommendation 11 would amend redesignated paragraph (d)(5)(iv)(A) 
by updating the list of aflatoxin testing laboratories certified to 
conduct chemical analyses on imported peanuts. There is no regulatory 
impact.
    Recommendation 12 would add a new sentence to introductory 
paragraph (e) to provide a blanching option for shelled peanuts failing 
quality requirements because of excessive ``fall through.'' This is a 
relaxation in the regulation and is consistent with Agreement 
requirements. AMS does not maintain records of the number of lots that 
fail ``fall through'' and, thus, cannot estimate the impact of this 
relaxation. However, allowing such lots to be reconditioned offers the 
possibility of increasing the per ton value of the lot from 
approximately $150 for non-edible use to over $500 for edible peanuts.
    Recommendation 13 also would relax requirements by adding a new 
paragraph (e)(4), pursuant to a change in Agreement regulations. The 
change would allow lots meeting grade requirements but failing 
aflatoxin requirements to be blanched until roasted and then 
reinspected only for aflatoxin content. The impact of this relaxation 
can be significant if the importer has many such failing lots which can 
be roasted for the buyer. Savings are accrued because the peanuts do 
not have to be removed from the blanching process for inspection and 
then returned to the blanching process for the remaining portion of the 
roasting process. The original grade certificate would be recognized 
and the only additional inspection charges would be for sampling and 
aflatoxin analyses. AMS does not have data on the actual costs that 
could be saved in this process and cannot estimate the number of 
imported peanuts that may be affected by it in the future.
    Recommendations 14, 15, and 16 would relax requirements relating to 
the stamp-and-fax entry process in paragraph (f)(1). Recommendation 14 
would remove the terms which specify that the stamp-and-fax document be 
filed ``prior to arrival'' at the port-of-entry. Experience shows that 
importers may not have all of the needed information until after 
arrival of the peanuts. Recommendation 15 would amend paragraph (f)(1) 
by reducing, slightly, the information required on stamp-and-fax 
documents. Information on subsequent inspection of the arriving peanuts 
is not necessary for the purposes of the stamp-and-fax. One needed 
piece of information, the Customs Service entry number applicable to 
the lot, is not specified. In total, these changes reduce the reporting 
burden by a few words. The needed information was included on the 
stamp-and-fax documents during 1997 and 1998, but was not so specified 
as part of the entry information in paragraph (f)(1). Recommendation 16 
would remove the requirement in paragraph (f)(1) that a copy of the 
stamp-and-fax document be forwarded to AMS headquarters. This reduces 
one reporting requirement for importers. These three relaxations are 
proposed to make the entry procedure consistent with the reporting 
needs of AMS. The regulatory impact is minimal but does reduce 
requirements on importers.
    Recommendation 17 would reduce the number of lots that have to be 
reported by requiring that only certificates on failing lots be filed 
by importers. If imported peanut quality is the same in 1999 as the 
average in 1997 and 1998, roughly 90 percent of the lots will meet 
quality requirements and will not have to be reported to AMS 
headquarters. This would save an estimated 423 reporting hours. The 
revision is in paragraph (f)(2).
    Recommendation 18 would extend the reporting period specified in 
paragraph (f)(3) from 23 days after entry to 180 days after conditional 
release by the Customs Service. The extended reporting period allows 
importers more time to make good business decisions regarding imported 
lots, particularly failing lots that must be either reconditioned or 
re-exported. Also, with an extended reporting period, importers should 
not have to request extensions of reporting periods and could file all 
failing certifications and dispositions at one time after all 
certifications and reports are acquired. This could save the time of 
filing individual reports as each lot is certified, disposed of, or re-
exported.
    Recommendation 19 provides for up to a 60-day extension of the 
proposed 180 day reporting period. There is no time limit on domestic 
peanut disposition. However, because of Customs Service required 
liquidation of entry documentation, there must be some time limit for 
importers to obtain clearances on failing lots and report to AMS. A 
240-day reporting period represents a compromise between the open-ended 
domestic requirements and Customs Service liquidation schedules. The 
impact of this requirement should be minimal, as continued storage 
costs or successive reconditions would eventually reduce margins and 
force business decisions on lots pending eight months after conditional 
entry. A new paragraph (f)(5) would be added.

[[Page 46194]]

    Recommendations 20, 21, and 22 propose minor changes that would 
have no regulatory impact on importers. Recommendation 20 clarifies 
that if a container or shipment is re-exported without conditional 
entry by the Customs Service, it does not have to be reported to AMS 
and inspected. Such situations were not foreseen in the original import 
regulation and are included for clarity in new paragraph (f)(6) in this 
regulation. Recommendation 21 makes a minor wording change in paragraph 
(g)(1) regarding peanuts that are ``intended'' to be entered but are 
not entered. Recommendation 22 clarifies that those who are billed for 
inspections are those requesting inspections. Customs house brokers and 
storage warehouses often request inspections, and are the entities 
billed for services provided. However, costs of the inspections are 
borne by the importer. These three recommendations clarify current 
provisions and do not change the regulatory aspects of the rule or 
reporting burden already authorized by OMB.
    The relaxation of quality and handling requirements proposed in 
this rulemaking also would result in an overall reduction of the 
information reporting and recordkeeping burden of the peanut import 
regulation, currently assigned as OMB number 0581-0176. The most 
significant reduction in the reporting burden would be that importers 
must file copies of grade and aflatoxin certificates only on failing 
lots, rather than all lots (Recommendation 17) . Using the quality of 
1997 and 1998 imported peanuts as a guide, this proposal could reduce 
that reporting requirement by as much as 90 percent. The proposed 
recordkeeping requirement would be increased by an estimated 21 percent 
because the 1999 duty-free tariff quota is 21 percent higher than the 
1997 quota on which the current recordkeeping burden is based. Thus, 
this proposed rule would establish an annual reporting and 
recordkeeping burden of 1,590 responses and 257 hours. This is a 
reduction from the current burden of 5,000 responses and 425 hours.
    Finally, the Department has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this proposed rule. 
Besides meeting AMS import quality requirements, clearance of each 
imported peanut lot also must be obtained from the Customs Service, 
FDA, and APHIS. Program requirements of those entities do not overlap 
the quality requirements of this regulation. AMS has consulted with the 
Customs Service to assure that the proposed changes are consistent with 
its entry procedures.
    Based on available information, the Administrator of the AMS has 
determined that this proposed rule could impose very small additional 
costs (PLI) on affected importers, but could save considerable 
reconditioning, storage, and reporting expenses. The benefits of 
maintaining a high quality product should exceed any additional costs 
which could be incurred in meeting these requirements. On balance, the 
proposed changes would be expected to reduce program costs incurred by 
importers.
    This proposal provides a 30-day period for interested persons to 
comment on the proposed changes in quality and handling requirements, 
on import procedures, and on the impacts of this action on small 
businesses. The proposed changes should be put into effect by January 
1, 1999, when the next (Mexican) peanut quota period opens. Comments on 
the proposed reduction in paperwork reporting and recordkeeping burden 
must be submitted to both OMB and AMS within 60 days of publication of 
this proposal.
    Upon publication, this proposal will be distributed to the 
Washington, D.C. embassies of peanut exporting countries, all known 
peanut exporters and importers, customs house brokers, storage 
warehouses, and reconditioning facilities. This proposal also will be 
electronically disseminated on the Internet and comments may be 
received electronically. Comments should be submitted to the mailing 
address, fax number, or E-mail address listed under ADDRESSES at the 
beginning of this document. All written comments timely received will 
be considered before a final determination is made on the 
recommendations proposed herein.

List of Subjects in 7 CFR Part 999

    Dates, Food grades and standards, Hazelnuts, Imports, Nuts, 
Peanuts, Prunes, Raisins, Reporting and recordkeeping requirements, 
Walnuts.

    For the reasons set forth in the preamble, 7 CFR Part 999 is 
proposed to be amended as follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

    Authority: 7 U.S.C. 601-674, 7 U.S.C. 1445c-3, and 7 U.S.C. 
7271.

    2. Section 999.600 is revised to read as follows:


Sec. 999.600  Regulation governing imports of peanuts.

    (a) Definitions. (1) Peanuts means the seeds of the legume Arachis 
hypogaea and includes both inshell and shelled peanuts produced in 
countries other than the United States, other than those marketed in 
green form for consumption as boiled peanuts.
    (2) Farmers stock peanuts means picked and threshed raw peanuts 
which have not been shelled, crushed, cleaned or otherwise changed 
(except for removal of foreign material, loose shelled kernels, and 
excess moisture) from the form in which customarily marketed by 
producers.
    (3) Inshell peanuts means peanuts, the kernels or edible portions 
of which are contained in the shell.
    (4) Incoming inspection means the sampling and inspection of 
farmers stock peanuts to determine Segregation quality.
    (5) Segregation I peanuts, unless otherwise specified, means 
farmers stock peanuts with not more than 2.00 percent damaged kernels 
nor more than 1.00 percent concealed damage caused by rancidity, mold, 
or decay and which are free from visible Aspergillus flavus mold.
    (6) Segregation 2 peanuts, unless otherwise specified, means 
farmers stock peanuts with more than 2.00 percent damaged kernels or 
more than 1.00 percent concealed damage caused by rancidity, mold, or 
decay and which are free from visible Aspergillus flavus mold.
    (7) Segregation 3 peanuts, unless otherwise specified, means 
farmers stock peanuts with visible Aspergillus flavus mold.
    (8) Shelled peanuts means the kernels of peanuts after the shells 
are removed.
    (9) Outgoing inspection means the sampling and inspection of 
either: shelled peanuts which have been cleaned, sorted, sized, or 
otherwise prepared for human consumption markets; or, inshell peanuts 
which have been cleaned, sorted and otherwise prepared for inshell 
human consumption markets.
    (10) Negative aflatoxin content means 15 parts-per-billion (ppb) or 
less for peanuts which have been certified as meeting edible quality 
grade requirements.
    (11) Person means an individual, partnership, corporation, 
association, or any other business unit.
    (12) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the U.S. Department of Agriculture 
(Department or USDA) who is, or who may hereafter

[[Page 46195]]

be, authorized to act on behalf of the Secretary.
    (13) Inspection service means the Federal or Federal-State 
Inspection Service, Fruit and Vegetable Programs, Agricultural 
Marketing Service, USDA.
    (14) USDA laboratory means laboratories of the Science and 
Technology Programs, Agricultural Marketing Service, USDA, that 
chemically analyze peanuts for aflatoxin content.
    (15) PAC-approved laboratories means laboratories approved by the 
Peanut Administrative Committee, pursuant to Marketing Agreement No. 
146 (7 CFR part 998), that chemically analyze peanuts for aflatoxin 
content.
    (16) Conditionally released means released from U.S. Customs 
Service custody for further handling, sampling, inspection, chemical 
analysis, storage, and, if necessary, reconditioning.
    (17) Importation means the arrival of a peanut shipment at a port-
of-entry with the intent to enter the peanuts into channels of commerce 
of the United States.
    (b) Incoming regulation. (1) Farmers stock peanuts presented for 
consumption must undergo incoming inspection. All foreign-produced 
farmers stock peanuts for human consumption must be sampled and 
inspected at a buying point or other handling facility capable of 
performing incoming sampling and inspection. Sampling and inspection 
shall be conducted by the inspection service. Only Segregation 1 
peanuts certified as meeting the following requirements may be used in 
human consumption markets:
    (i) Moisture. Except as provided under paragraph (b)(2) of this 
section, peanuts may not contain more than 10.49 percent moisture: 
Provided, That peanuts of a higher moisture content may be received and 
dried to not more than 10.49 percent moisture prior to storage or 
milling.
    (ii) Foreign material. Peanuts may not contain more than 10.49 
percent foreign material, except that peanuts having a higher foreign 
material content may be held separately until milled, or moved over a 
sand-screen before storage, or shipped directly to a plant for prompt 
shelling. The term ``sand-screen'' means any type of farmers stock 
cleaner which, when in use, removes sand and dirt.
    (iii) Damage. For the purpose of determining damage, other than 
concealed damage, on farmers stock peanuts, all percentage 
determinations shall be rounded to the nearest whole number.
    (2) Seed peanuts. Farmers stock peanuts determined to be 
Segregation l quality, and shelled peanuts certified negative to 
aflatoxin (15 ppb or less), may be imported for seed purposes. 
Residuals from the shelling of Segregation l seed peanuts may be milled 
with other imported peanuts of the importer, and such residuals meeting 
quality requirements specified in paragraph (c)(1) of this section may 
be disposed to human consumption channels. Any portion not meeting such 
quality requirements shall be disposed to non-edible peanut channels 
pursuant to paragraphs (f) and (g) of this section. All disposition of 
seed peanuts and residuals from seed peanuts, whether commingled or 
kept separate and apart, shall be reported to the Secretary pursuant to 
paragraphs (f)(2) and (f)(3) of this section. The receiving seed outlet 
must retain records of the transaction, pursuant to paragraph (g)(7) of 
this section.
    (3) Oilstock and exportation. Farmers stock peanuts of lower 
quality than Segregation 1 (Segregation 2 and 3 peanuts) shall be used 
only in non-edible outlets. Segregation 2 and 3 peanuts may be 
commingled but shall be kept separate and apart from edible quality 
peanut lots. Commingled Segregation 2 and 3 peanuts and Segregation 3 
peanuts shall be disposed only to oilstock or exported. Shelled peanuts 
and cleaned-inshell peanuts which fail to meet the requirements for 
human consumption in paragraphs (c)(1) or (c)(2), respectively, of this 
section, may be crushed for oil or exported.
    (c) Outgoing regulation. No person shall import peanuts for human 
consumption into the United States unless such peanuts are Positive Lot 
Identified and certified by the inspection service as meeting the 
following requirements:
    (1) Shelled peanuts. (i) No importer shall dispose of shelled 
peanuts to human consumption markets unless such peanuts are Positive 
Lot Identified pursuant to paragraph (d)(4) of this section, certified 
as ``negative'' to aflatoxin, pursuant to paragraph (d)(5)(v)(A) of 
this section, and meet the requirements specified in the following 
table.

                                                Minimum Grade Requirements--Peanuts for Human Consumption                                               
                                                     [Whole kernels and splits: maximum limitations]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through                                                    
                                     Unshelled     peanuts,  ------------------------------------------------------------------                         
                                    peanuts and    damaged                                                                        Foreign               
      Type and grade category         damaged    kernels and                                                                     materials     Moisture 
                                      kernels       minor        Sound split and    Sound whole  kernels    Total  (percent)     (percent)    (percent) 
                                     (percent)     defects       broken kernels                                                                         
                                                  (percent)                                                                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Excluding lots of ``splits''                                                              
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner............................         1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00; both screens..          .20         9.00
                                                               round screen.         4\ inch slot screen.                                               
Virginia (except No. 2)...........         1.50         2.50  3.00%; \17/64\ inch   3.00%; \15/64\ x 1    4.00; both screens..          .20         9.00
                                                               round screen.         inch slot screen.                                                  
Spanish and Valencia..............         1.50         2.50  3.00%; \16/64\ inch   3.00%; \15/64\ x \3/  4.00; both screens..          .20         9.00
                                                               round screen.         4\ inch slot screen.                                               
No. 2 Virginia....................         1.50         3.00  6.00%; \17/64\ inch   6.00%; \15/64\ x 1    6.00; both screens..          .20         9.00
                                                               round screen.         inch slot screen.                                                  
Runner with splits (not more than          1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00; both screens..          .10         9.00
 15% sound splits).                                            round screen.         4\ inch slot screen.                                               
Virginia with splits (not more             1.50         2.50  3.00% \17/64\ inch    3.00%; \15/64\ inch   4.00; both screens..          .10         9.00
 than 15% sound splits).                                       round screen.         slot screen.                                                       

[[Page 46196]]

                                                                                                                                                        
Spanish & Valencia with splits             1.50         2.50  3.00%; \16/64\ inch   2.00%; \15/64\ inch   4.00; both screens..          .10         9.00
 (not more than 15% sound splits).                             round screen.         slot screen.                                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Lots of ``splits''                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner (not more than 4% sound             2.00         2.50  3.00%; \17/64\ inch   3.00%; \14/64\  x     4.00; both screens..          .20         9.00
 whole kernels).                                               round screen.         \3/4\ inch slot                                                    
                                                                                     screen.                                                            
Virginia (not less than 90%                2.00         2.50  3.00%; \17/64\ inch   3.00; \14/64\  x  1   4.00; both screens..          .20         9.00
 splits).                                                      round screen.         inch slot screen.                                                  
Spanish & Valencia (not more than          2.00         2.50  3.00%; \16/64\ inch   3.00%; \13/64\  x     4.00; both screens..          .20         9.00
 4% sound whole kernels).                                      round screen.         \3/4\ inch slot                                                    
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

Dothan, AL, tel: (334) 792-5185,
Graceville, FL, tel: (904) 263-3204,
Winter Haven, FL, tel: (941) 291-5820, ext 260,
Albany, GA, tel: (912) 432-7505,
Williamston, NC, tel: (919) 792-1672,
Columbia, SC, tel: (803) 253-4597,
Suffolk, VA, tel: (757) 925-2286,
Portales, NM, tel: (505) 356-8393,
Oklahoma City, OK, tel: (405) 521-3864,
Gorman, TX, tel: (817) 734-3006.


[[Page 46197]]


    (B) The following offices, in addition to the offices listed in 
paragraph (d)(3)(i)(A) of this section, provide outgoing sampling for 
certification of shelled and cleaned in-shell peanuts:

Eastern U.S.

Mobile, AL, tel: (334) 415-2531,
Jacksonville, FL, tel: (904) 359-6430,
Miami, FL, tel: (305) 870-9542,
Tampa, FL, tel: (813) 272-2470,
Presque Isle, ME, tel: (207) 764-2100,
Baltimore/Washington, tel: (301) 317-4387,
Boston, MA, tel: (617) 389-2480,
Newark, NJ, tel: (201) 645-2636,
New York, NY, tel: (718) 991-7665,
Buffalo, NY, tel: (800) 262-4810,
Philadelphia, PA, tel: (215) 336-0845.

Central U.S.

New Orleans, LA, tel: (504) 589-6741,
Detroit, MI, tel: (313) 226-6059,
St. Paul, MN, tel: (612) 296-8557,
Las Cruces, NM, tel: (505) 646-4929,
Alamo TX, tel: (956) 787-4091,
El Paso, TX, tel: (915) 540-7723,
Houston, TX, tel: (713) 923-2557.

Western U.S.

Nogales, AZ, tel: (520) 281-4719,
Los Angeles, CA, tel: (213) 894-2489,
San Francisco, CA, tel: (415) 876-9313,
Honolulu, HI, tel: (808) 973-9566,
Salem, OR, tel: (503) 986-4620,
Seattle, WA, tel: (206) 859-9801.

    (C) Questions regarding inspection services or requests for further 
assistance may be obtained from: Fresh Products Branch, P.O. Box 96456, 
room 2049-S, Fruit and Vegetable Programs, AMS, USDA, Washington, D.C. 
20090-6456, telephone (202) 690-0604, fax (202) 720-0393.
    (ii) Sampling. Sampling of bulk farmers stock lots shall be 
performed at a facility that utilizes a pneumatic sampler or approved 
automatic sampling device. The maximum lot size of farmers stock 
peanuts shall be one conveyance, or two or more conveyances not 
exceeding a combined weight of 24,000 pounds. Shelled peanut lots and 
cleaned-inshell lots, in bulk or bags, shall not exceed 200,000 pounds. 
For farmers stock, shelled and cleaned-inshell lots not completely 
accessible for sampling, the applicant shall be required to have lots 
made accessible for sampling pursuant to inspection service 
requirements. The importer shall cause appropriate samples of each lot 
of edible quality shelled peanuts to be drawn by the inspection 
service. The amount of such peanuts drawn shall be large enough to 
provide for a grade and size analysis, for a grading check-sample, and 
for three 48-pound samples for aflatoxin assay. Because there is no 
acceptable method of drawing official samples from bulk conveyances of 
shelled peanuts, the importer shall arrange to have bulk conveyances of 
shelled peanuts sampled during the unloading process. A bulk lot 
sampled in this manner must be Positive Lot Identified by the 
inspection service and held in a sealed bin until the associated 
inspection and aflatoxin test results have been reported.
    (4) Positive Lot Identification (PLI) shall be applied to all 
shelled and cleaned-inshell peanut lots during or immediately after 
first inspection by the inspection service or under the guidance of the 
inspection service. Positive Lot Identification of a lot may be 
accomplished by: Wrapping PLI tape around bags or boxes on pallets; 
shrink wrapping pallets or multiple bags and applying a PLI sticker; 
stenciling and numbering of individual bags or boxes; affixing PLI 
seals on shipping container doors; or by other methods acceptable to 
the inspection service that clearly identifies the lot, is securely 
affixed to the lot, and prevents peanuts from being removed or added to 
the lot. Such positive lot identification methods may be dictated by 
the size and containerization of the lot, by warehouse storage or space 
requirements, or, by necessary further movement of the lot prior to 
receipt of certification. Failing lots that are reconditioned shall be 
positive lot identified by sewing tags on bags or affixing a seal and 
taping bulk bin containers after such reconditioning or by other means 
acceptable to the inspection service that clearly identifies the 
peanuts in the lot, is securely affixed to the lot, and which prevents 
peanuts from being removed or added to the lot.
    (5) Aflatoxin assay. (i) The importer shall cause appropriate 
samples of each lot of shelled peanuts intended for edible consumption 
to be drawn by the inspection service. The three 48-pound samples shall 
be designated by the inspection service as ``Sample 1IMP,'' ``Sample 
2IMP,'' and ``Sample 3IMP'' and each sample shall be placed in a 
suitable container and lot identified by the inspection service. Sample 
1IMP may be prepared for immediate testing or Samples 1IMP, 2IMP and 
3IMP may be returned to the importer for testing at a later date, under 
Positive Lot Identification procedures.
    (ii) The importer shall cause Sample 1IMP to be ground by the 
inspection service or a USDA or PAC-approved laboratory in a 
subsampling mill. The resultant ground subsample shall be of a size 
specified by the inspection service and shall be designated as 
``Subsample 1-ABIMP.'' At the importer's option, a second subsample may 
also be extracted from Sample 1IMP and designated ``Subsample 1-CDIMP'' 
which may be sent for aflatoxin assay to a USDA or PAC-approved 
laboratory. Both subsamples shall be accompanied by a Milled Peanut 
Inspection Certificate or Notice of Sampling signed by the inspector 
containing identifying information as to the importer, the lot 
identification of the shelled peanut lot, and other information deemed 
necessary by the inspection service. Subsamples 1-ABIMP and 1-CDIMP 
shall be analyzed only in a USDA or PAC-approved laboratory. The 
methods prescribed by the Instruction Manual for Aflatoxin Testing, SD 
Instruction-1, August 1994, shall be used to assay the aflatoxin level. 
The cost of testing and notification of Subsamples 1-ABIMP and 1-CDIMP 
shall be borne by the importer.
    (iii) The samples designated as Sample 2IMP and Sample 3IMP shall 
be held as aflatoxin check-samples by the inspection service or the 
importer until the analyses results from Sample 1IMP are known. Upon 
call from the USDA or PAC-approved laboratory, the importer shall cause 
Sample 2IMP to be ground by the inspection service in a subsampling 
mill. The resultant ground subsample from Sample 2IMP shall be 
designated as ``Subsample 2--ABIMP.'' Upon further call from the 
laboratory, the importer shall cause Sample 3IMP to be ground by the 
inspection service in a subsampling mill. The resultant ground 
subsample shall be designated as ``Subsample 3--ABIMP.'' The importer 
shall cause Subsamples 2--ABIMP and 3--ABIMP to be sent to and analyzed 
only in a USDA or PAC-approved laboratory. Each subsample shall be 
accompanied by a Milled Peanut Inspection Certificate or a Notice of 
Sampling. All costs involved in the sampling, shipment and assay 
analysis of subsamples required by this section shall be borne by the 
importer.
    (iv)(A) To arrange for chemical analysis, importers shall contact 
one of the following USDA or PAC-approved laboratories:

Science and Technology Programs, AMS, 301 West Pearl St., Aulander, 
NC 27805 (P.O. Box 279), Tel: (919) 345-1661 Ext. 156, Fax: (919) 
345-1991
Science and Technology Programs, AMS, 1211 Schley Ave., Albany, GA 
31707, Tel: (912) 430-8490 / 8491, Fax: (912) 430-8534
Science and Technology Programs, AMS, 610 North Main St., Blakely, 
GA 31723, Tel: (912) 723-4570, Fax: (912) 723-3294
Science and Technology Programs, AMS, 107 South Fourth St., Madill, 
OK 73446, Tel: (405) 795-5615, Fax: (405) 795-3645
Science and Technology Programs, AMS, 715 North Main St., Dawson, GA 
31742 (P.O. Box 272), Tel: (912) 995-7257, Fax: (912) 995-3268

[[Page 46198]]

Science and Technology Programs, AMS, 308 Culloden St., Suffolk, VA 
23434 (P.O. Box 1130), Tel: (757) 925-2286, Fax: (757) 925-2285
Federal-State Inspection Service Laboratory, 1557 Reeves St., 
Dothan, AL 36303 (P.O. Box 1368, ZIP 36302), Tel: (334) 792-5185, 
Fax: (334) 671-7984
Federal-State Inspection Service Laboratory, 201 Broad St., 
Headland, AL 36345 (P.O. Box 447, ZIP 36345-0447), Tel: (334) 693-
2729, Fax: (334) 693-2183
Federal-State Inspection Service Laboratory, 103 Greenville Ave., 
Goshen, AL 36035 (P.O. Box 204), Tel: (334) 484-3340, Fax: (334) 
484-3340
Federal-State Inspection Service Laboratory, 805 North Main St., 
Enterprise, AL 36330 (P.O. Box 310926), Tel: (334) 347-6525
ABC Research, 3437 SW 24th Ave., Gainesville, FL 32607, Tel: (904) 
372-0436, Fax: (904) 378-6483
J. Leek Associates, Inc., 200 Wyandotte, Albany, GA 31705 (P.O. Box 
50395, ZIP 31703), Tel: (912) 889-8293, Fax: (912) 888-1166
J. Leek Associates, Inc., 139 South Lee St., Ashburn, GA 31714, Tel: 
(912) 567-3703, Fax: (912) 567-8055
J. Leek Associates, Inc., 402 S.E. 3rd Street, Anadarko, OK 73005, 
Tel: (405) 247-3266, Fax: (405) 247-3270
J. Leek Associates, Inc., 502 West Navarro St., DeLeon, TX 76444 
(P.O. Box 6), Tel: (817) 893-3653, Fax: (817) 893-3640
Pert Laboratories, 145 Peanut Drive, Edenton, NC 27932 (P.O. Box 
267), Tel: (919) 482-4456, Fax: (919) 482-5370
Pert Laboratory South, Hwy 82 East, Seabrook Drive, Sylvester, GA 
31791 (P.O. Box 129), Tel: (912) 776-1256, Fax: (912) 776-1029
Southern Cotton Oil Company, 600 E. Nelson Street, Quanah, TX 79252 
(P.O. Box 180), Tel: (817) 663-5323, Fax: (817) 663-5091
Quanta Lab, 9330 Corporate Drive, Suite 703, Selma, TX 78154-1257, 
Tel: (210) 651-5799, Fax: (210) 651-9271

    (B) Further information concerning the chemical analyses required 
pursuant to this section may be obtained from: Science and Technology 
Programs, AMS, USDA, P.O. Box 96456, room 3507-S, Washington, DC 20090-
6456, Tel. (202) 720-5231, or Fax (202) 720-6496.
    (v) Reporting aflatoxin assays. A separate aflatoxin assay 
certificate, Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' or equivalent PAC-approved laboratory form, shall be issued 
by the laboratory performing the analysis for each lot. The assay 
certificate shall identify the importer, the volume of the peanut lot 
assayed, date of the assay, and numerical test result of the assay. The 
importer shall file, or cause to be filed, with the Secretary, all USDA 
Form CSSD-3, or equivalent chemical assay forms issued on failing 
peanuts. The importer shall cause the results of all chemical assays 
issued by PAC-approved laboratories to be filed with the Secretary. The 
results of the assay shall be reported as follows:
    (A) For the current peanut quota year, ``negative'' aflatoxin 
content means 15 parts per billion (ppb) or less aflatoxin content for 
peanuts which have been certified as meeting edible quality grade 
requirements. Such lots shall be certified as ``Meets U.S. import 
requirements for edible peanuts under Section 999.600 with regard to 
aflatoxin.''
    (B) Lots containing more than 15 ppb aflatoxin content shall be 
certified as ``Fails to meet U.S. import requirements for edible 
peanuts under Section 999.600 with regard to aflatoxin.'' The 
certificate of any non-edible peanut lot also shall specify the 
aflatoxin count in ppb.
    (6) Appeal inspection. In the event an importer questions the 
results of a quality and size inspection, an appeal inspection may be 
requested by the importer and performed by the inspection service. A 
second sample will be drawn from each container and shall be double the 
size of the original sample. The results of the appeal sample shall be 
final and the fee for sampling, grading and aflatoxin analysis shall be 
charged to the importer. Lots that show evidence of PLI violation or 
tampering, as determined by the inspection service, are not eligible 
for appeal inspection.
    (e) Disposition of peanuts failing edible quality requirements. 
Peanuts shelled, sized, and sorted in another country prior to arrival 
in the U.S. and shelled peanuts which originated from imported 
Segregation 1 peanuts that fail minimum grade requirements specified in 
the table in paragraph (c)(1)(i) of this section (excessive damage, 
minor defects, moisture, or foreign material) or are positive to 
aflatoxin may be reconditioned by remilling and/or blanching. Peanuts 
that fail minimum grade requirements because of excessive ``fall 
through'' may be blanched. After such reconditioning, peanuts meeting 
the minimum grade requirements in the table, including minimum ``fall 
through'' requirements, and which are negative to aflatoxin (15 ppb or 
less), may be disposed for edible use. Residual peanuts resulting from 
milling or reconditioning of such lots shall be disposed of as follows:
    (1) Failing peanut lots may be disposed for non-human consumption 
uses (such as livestock feed, wild animal feed, rodent bait, seed, 
etc.) which are not otherwise regulated by this section; Provided, That 
each such lot is Positive Lot Identified and certified as to aflatoxin 
content (actual numerical count). On the shipping papers covering the 
disposition of each such lot, the importer shall cause the following 
statement to be shown: ``The peanuts covered by this bill of lading (or 
invoice) are not to be used for human consumption.''
    (2) Peanuts, and portions of peanuts which are separated from 
edible quality peanuts by screening or sorting or other means during 
the milling process (``sheller oilstock residuals''), may be sent to 
non-edible peanut markets pursuant to paragraph (e)(1) of this section, 
crushed or exported. Such peanuts may be commingled with other milled 
residuals. Such peanuts shall be positive lot identified, red tagged in 
bulk or bags or other suitable containers.
    (i) If such peanuts have not been certified as to aflatoxin 
content, as prescribed in paragraph (d) of this section, disposition is 
limited to crushing and the importer shall cause the following 
statement to be shown on the shipping papers: ``The peanuts covered by 
this bill of lading (or invoice, etc.) are limited to crushing only and 
may contain aflatoxin.''
    (ii) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (3) Shelled peanuts which originated from Segregation 1 peanuts 
that fail minimum grade requirements specified in the table in 
paragraph (c)(1)(i) of this section, peanuts derived from the milling 
for seed of Segregation 2 and 3 farmers stock peanuts, and peanuts 
which are positive to aflatoxin, may be remilled or blanched. Residuals 
of remilled and/or blanched peanuts which continue to fail minimum 
grade requirements in the table shall be disposed pursuant to 
paragraphs (e)(1) or (2) of this section.
    (4) Shelled peanuts that are certified as meeting minimum grade 
requirements specified in the table in paragraph (c)(1)(i) of this 
section and which are positive to aflatoxin may be roasted during 
blanching. After roasting, such peanuts certified as meeting aflatoxin 
requirements (15 ppb or less), and which are positive lot identified, 
may be disposed to human consumption outlets without further grade 
analysis. The residual peanuts, excluding skins and hearts, resulting 
from roasting process, shall be red tagged and disposed of to non-
edible outlets pursuant to paragraphs (e)(1) or (2) of this section.
    (5) All certifications, lot identifications, and movement to non-
edible dispositions, sufficient to account for all peanuts in each 
consumption entry, shall be reported to the Secretary

[[Page 46199]]

by the importer pursuant to paragraphs (f)(2) and (f)(3) of this 
section.
    (f) Safeguard procedures. (l) Prior to, or upon, arrival of a 
foreign-produced peanut lot at a port-of-entry, the importer, or 
customs broker acting on behalf of the importer, shall mail or send by 
facsimile transmission (fax) a copy of the Customs Service entry 
documentation for the peanut lot or lots to the inspection service 
office that will perform sampling of the peanut shipment. More than one 
lot may be entered on one entry document. The documentation shall 
include: the Customs Service entry number; the container number(s) or 
other identification of the lot(s); the volume of peanuts in each lot 
being entered; the inland shipment destination where the lot will be 
made available for inspection; and a contact name or telephone number 
at the destination. The inspection office shall sign, stamp, and return 
the entry document to the importer. The importer shall cause a copy of 
the relevant entry documentation to accompany each peanut lot and be 
presented to the inspection service at the time of sampling.
    (2) The importer shall file, of cause to have filed, with the 
Secretary, copies of failing grade and aflatoxin certificates and non-
edible disposition documents which identify the importer and the 
disposition outlet for failing quality peanuts. Such reports shall be 
sufficient to account for all peanuts failing quality requirements of 
this section: Provided That: importers shall cause all certificates of 
peanuts meeting aflatoxin requirements issued by PAC-approved 
laboratories to be filed with the Secretary. Proof of non-edible 
disposition must include documentation from the disposing entity or 
other entity on behalf of the importer, certifying to the crushing, 
feed or seed use, burying, or other non-edible disposition. Such 
documentation must include the weight of peanuts being disposed and the 
name and telephone number of the disposing entity. Proof of export must 
include U.S. Customs Service documentation showing exportation from the 
United States. These documents must be sent to the Marketing Order 
Administration Branch, Attn: Report of Imported Peanuts. Facsimile 
transmissions and overnight mail may be used to ensure timely receipt 
of inspection certificates and other documentation. Fax reports should 
be sent to (202) 205-6623. Overnight and express mail deliveries should 
be addressed to USDA, AMS, FV, Marketing Order Administration Branch, 
1400 Independence Avenue, SW, Room: 2525-S, Washington, D.C., 20250, 
Attn: Report of Imported Peanuts. Regular mail should be sent to FV, 
AMS, USDA, P.O. Box 96456, Room 2525-S, Washington, D.C. 20090-6456, 
Attn: Report of Imported Peanuts.
    (3) All peanuts imported into the United States subject to this 
part shall be conditionally released by the U.S. Customs Service for a 
period of 180 days following the date of Customs Service release, for 
the purpose of determining whether such peanuts meet the quality 
requirements for human consumption or non-edible disposition and 
reporting such certification or non-edible disposition to the 
Secretary.
    (4) If the Secretary finds during, or upon termination, of the 
conditional release period that a lot of peanuts is not entitled to 
admission into the commerce of the United States, the Secretary shall 
request the Customs Service, within 30 days after close of the 
conditional release period, to demand return of said lot of peanuts to 
Customs Service custody. Failure to comply with a redelivery demand 
within 30 days of the date of the redelivery demand, may result in the 
assessment against the importer of record and surety, jointly and 
severally of liquidated damages equal to the value of the peanuts 
involved. Failure to fully comply with quality and handling 
requirements or failure to notify the Secretary of disposition of all 
foreign-produced peanuts, as required under this section, may result in 
a compliance investigation by the Secretary. Falsification of reports 
submitted to the Secretary is a violation of Federal law punishable by 
fine or imprisonment, or both.
    (5) An extension of the 180-day conditional release period may be 
granted by the Secretary upon request of the importer. Extension shall 
not exceed an additional 60 calendar days. Requests for extension shall 
be specific to each peanut lot and shall include the lot's Customs 
Service entry number, the positive lot identification, weight or 
volume, and current storage location. Requests for extension of the 
conditional release period shall be made in writing pursuant to 
paragraph (f)(2) of this section.
    (6) Peanuts for which an import application is filed with the 
Customs Service but which are subsequently exported without sampling or 
inspection by the inspection service, need not be reported to the 
Secretary.
    (7) Reinspection. Whenever the Secretary has reason to believe that 
peanuts may have been damaged or deteriorated while in storage, the 
Secretary may reject the then effective inspection and aflatoxin 
certificates and require the importer to have the peanuts reinspected 
to establish whether or not such peanuts may be disposed of for human 
consumption.
    (8) Early arrival and storage. Peanut lots sampled and inspected 
upon arrival in the United States, but placed in storage for more than 
one month prior to beginning of the quota year for which the peanuts 
will be entered, must be reported to AMS at the time of inspection. The 
importer shall file copies of the Customs Service documentation showing 
the volume of peanuts placed in storage and the storage location, 
including any identifying number of the storage warehouse. Such peanuts 
should be stored in clean, dry warehouses and under cold storage 
conditions consistent with industry standards. Pursuant to paragraph 
(f)(7) of this section, the Secretary may require reinspection of the 
lot at the time the lot is declared for entry with the Customs Service.
    (g) Additional requirements. (1) Nothing contained in this section 
shall preclude any importer from milling or reconditioning, prior to 
importation, any shipment of peanuts for the purpose of making such 
peanuts eligible for importation into the United States. However, all 
peanuts intended for human consumption use must be certified as meeting 
the quality requirements specified in paragraph (c) of this section, 
prior to such disposition.
    (2) Conditionally released peanut lots of like quality and 
belonging to the same importer may be commingled. Defects in an 
inspected lot may not be blended out by commingling with other lots of 
higher quality. Commingling also must be consistent with applicable 
Customs Service regulations. Commingled lots must be reported and 
disposed of pursuant to paragraphs (f)(2) and (f)(3) of this section.
    (3) Inspection by the Federal or Federal-State Inspection Service 
shall be available and performed in accordance with the rules and 
regulations governing certification of fresh fruits, vegetables and 
other products (7 CFR part 51). The importer shall make each 
conditionally released lot available and accessible for inspection as 
provided in this section. Because inspectors may not be stationed in 
the immediate vicinity of some ports-of-entry, importers must make 
arrangements for sampling, inspection, and certification through one of 
the offices and laboratories listed in paragraphs (d)(3) and (d)(5) of 
this section, respectively.
    (4) Imported peanut lots sampled and inspected at the port-of-
entry, or at other locations, shall meet the quality

[[Page 46200]]

requirements of this section in effect on the date of inspection.
    (5) A foreign-produced peanut lot entered for consumption or for 
warehouse may be transferred or sold to another person: Provided, That 
the original importer shall be the importer of record unless the new 
owner applies for bond and files Customs Service documents pursuant to 
19 CFR 141.113 and 141.20: Provided further, That such peanuts must be 
certified and reported to the Secretary pursuant to paragraphs (f)(2) 
and (f)(3) of this section.
    (6) Payment of the cost of transportation, sampling, inspection, 
certification, chemical analysis, and Positive Lot Identification, as 
well as remilling and blanching, and further inspection of remilled and 
blanched lots, and disposition of failing peanuts, shall be the 
responsibility of the importer. Whenever an applicant presents peanuts 
for inspection, the applicant shall furnish any labor and pay any costs 
incurred in moving, opening containers for sampling, and the shipment 
of samples as may be necessary for proper sampling and inspection. The 
inspection service shall bill the applicant for fees covering quality 
inspections and other certifications as may be necessary to certify 
edible quality or non-edible disposition. USDA and PAC-approved 
laboratories shall bill the applicant separately for aflatoxin assay 
fees. The importer also shall pay Customs Service costs as required by 
that agency.
    (7) Each person subject to this section shall maintain true and 
complete records of activities and transactions specified in these 
regulations. Such records and documentation accumulated during entry 
shall be retained for not less than two years after the calendar year 
of acquisition, except that Customs Service documents shall be retained 
as required by that agency. The Secretary, through duly authorized 
representatives, shall have access to any such person's premises during 
regular business hours and shall be permitted, at any such time, to 
inspect such records and any peanuts held by such person.
    (8) The provisions of this section do not supersede any 
restrictions or prohibitions on peanuts under the Federal Plant 
Quarantine Act of 1912, the Federal Food, Drug and Cosmetic Act, any 
other applicable laws, or regulations of other Federal agencies, 
including import regulations and procedures of the Customs Service.

    Dated: August 24, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-23230 Filed 8-28-98; 8:45 am]
BILLING CODE 3410-02-P