[Federal Register Volume 63, Number 247 (Thursday, December 24, 1998)]
[Rules and Regulations]
[Pages 71346-71367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33933]



[[Page 71345]]

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Part II





Department of Agriculture





_______________________________________________________________________



Agricultural Marketing Service



_______________________________________________________________________



7 CFR Part 999



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

  Federal Register / Vol. 63, No. 247 / Thursday, December 24, 1998 / 
Rules and Regulations  

[[Page 71346]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 999

[Docket No. FV98-999-1 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, with several modifications, the provisions of a proposed 
rule relaxing certain quality requirements; modifying entry procedures; 
revising handling requirements; reducing the reporting burden; and 
establishing a new reporting period for peanuts imported into the 
United States. Seven comments were received and are addressed in this 
final rule. Changes to the quality and handling requirements make the 
import requirements consistent, as required by law, with regulations 
covering domestically-produced peanuts under Marketing Agreement No. 
146 (Agreement). Changes to import procedures and reporting 
requirements by the Agricultural Marketing Service (AMS) will improve 
efficiency of the importation process, ease the reporting burden, and 
provide importers with more time to meet peanut import regulation 
requirements. This final rule continues safeguard measures which 
prevent non-edible imported peanuts from being used in human 
consumption outlets in the United States. This rule will benefit peanut 
importers, handlers, and consumers by helping to ensure that all 
peanuts in the domestic marketplace comply with the same quality 
standards.

EFFECTIVE DATE: January 1, 1999.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor, Marketing Specialist, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, PO Box 96456, room 2525-S, Washington, DC 20090-6456; 
telephone: (202) 720-6862, or fax: (202) 720-5698. Small businesses may 
request information on compliance with this regulation by contacting: 
Jay Guerber at the same address and fax number, telephone: (202) 720-
2491. You may also view the marketing agreements and orders small 
business compliance guide at the following website: http://
www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This final rule amends the peanut import 
regulation (7 CFR 999.600) issued June 11, 1996, and published in the 
Federal Register (61 FR 31306, June 19, 1996), which regulates the 
quality of peanuts imported into the United States. Amendments to the 
regulation were issued December 31, 1996 (62 FR 1269, January 9, 1997) 
and September 19, 1997 (62 FR 50243, September 25, 1997).
    The import regulation is effective under subparagraph (f)(2) of 
section 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c3) (Act), 
as amended November 28, 1990, and August 10, 1993, and section 155 of 
the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 
7271). These statues provide that the Secretary of Agriculture 
(Secretary) shall require that all peanuts in the domestic and export 
markets fully comply with all quality standards under Marketing 
Agreement No. 146 (7 CFR part 998) (Agreement), issued pursuant to the 
Agricultural Marketing Agreement Act of 1937 (AMAA), as amended (7 
U.S.C. 601-674). The handling requirements in this rule are the same 
as, or similar to, those recommended by the Peanut Administrative 
Committee (Committee or PAC), the administrative agency that oversees 
the Agreement's quality assurance program.
    This rule has been determined to be not significant for the 
purposes of Executive Order 12866 and therefore has not been reviewed 
by the Office of Management and Budget.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the regulations, importers of foreign-produced 
peanuts must: Follow certain entry procedures with the U.S. Customs 
Service (Customs Service); obtain certification that such peanuts meet 
edible quality requirements or are disposed to non-edible peanut 
outlets; and report disposition of peanuts to AMS within an established 
time period. This rule finalizes several proposed changes to the 
current regulation to relax quality requirements, modify entry 
procedures, and relax reporting requirements. This rule is not intended 
to have retroactive effect. This rule will not preempt any State or 
local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule. There are no administrative 
procedures which must be exhausted prior to any judicial challenge to 
the provisions of this rule.
    The proposed rule was published in the Federal Register of August 
31, 1998 (63 FR 46181). Over 350 copies of the proposed rule were 
mailed to: (1) Embassies of exporting countries and the National 
Institute for Technical Standards (NIST) which forwards such notices to 
the World Trade Organization; known exporters, importers, and customs 
house brokers; (2) the domestic peanut industry entities including 
grower associations, handlers, manufacturers, blanchers, and warehouse 
operators; and (3) Customs Service ports and headquarters offices, the 
Food and Drug Administration (FDA), Federal-State Inspection Service 
(inspection service) offices, and Federal and private aflatoxin 
laboratories. The rule was available on the Internet at the Federal 
Register website and at the homepage of AMS' Marketing Order 
Administration Branch--which offered a direct link for submitting 
comments electronically. Finally, AMS issued a press release announcing 
the proposed rule on August 27, 1998.
    A 30-day comment period was provided for interested parties to 
comment on the recommended changes to quality requirements and import 
procedures and on regulatory impact of the recommended changes. A 60-
day comment period was provided for interested parties to comment on 
proposed changes to the reporting and recordkeeping requirements.

Comments Received

    Seven comments were received on the proposed changes to importation 
procedures. Six of the commenters represented major sectors of the 
domestic peanut industry: the Peanut Administrative Committee, the 
three grower associations, a state peanut commission, and a domestic 
peanut handler association whose members also import peanuts. One 
importer filed a comment. The comments generally supported the proposed 
changes to the import regulation, particularly the addition of positive 
lot identification requirements and changes to make the import 
regulation consistent with Agreement regulations. The comments 
recommended changes to, and in a few cases opposed, specific technical 
and procedural requirements in the peanut regulation. The comments are 
addressed below.
    A growers' association representative commented on Recommendation 2 
concerning the revised definition of paragraph (a)(16) Conditionally 
released. He commented that the proposed definition and the wording in 
proposed new paragraph (f)(3) ``may imply that imported peanuts could 
be forwarded to buyers, remillers or blanchers without being inspected, 
certified or positive lot identified.'' The commenter suggested that 
the regulation be modified to require that all lots be

[[Page 71347]]

sampled before conditional release by the Customs Service.
    While AMS appreciates the commenter's concerns that imported lots 
could be sent to buyers, remillers or blanchers before inspection, AMS 
does not believe that sampling before conditional release, in and of 
itself, will guarantee that all lots are inspected. The stamp-and-fax 
procedure--which occurs before the sampling process--is the procedure 
which helps guarantee notification of the inspection service and 
assures subsequent sampling and inspection of the peanuts.
    Requiring sampling before conditional release by the Customs 
Service could result in overflow situations at ports when quotas open. 
It also could substantially increase inspection costs for some 
importers. For instance, at quota opening, a port facility may not be 
able to hold the large number of containers that have been landed at 
the port. Experience from 1997 shows that some containers waited for 
several days at dockside, exposed to the weather, while various 
government clearances were issued. AMS does not want its sampling and 
inspection requirements to delay onward movement of peanuts.
    Further, importers ship the conditionally released peanuts inland 
for inspection, or ship the lots to Customs bonded warehouses that are 
closer to inspection offices. Among other things, this lowers 
inspection costs. The stamp-and-fax process enables this movement with 
the assurance that the inspection service has been notified and will 
follow up with an inspection.
    The commenter does raise an important point that should be 
incorporated into the final rule. The commenter suggested that the 
proposed conditional release definition implies that peanuts may be 
sent directly to remilling or blanching facilities without first being 
inspected and positive lot identified (PLI). However, the Agreement 
regulations specify that any lots moved to a remiller or blanching 
operation must be accompanied by a valid grade certificate (with PLI). 
This requirement was not established in Part 999.600 because AMS did 
not contemplate that importers would risk the costs involved in 
shipping peanuts to the U.S. unless they were reasonably certain that 
the peanuts would meet outgoing quality requirements.
    However, it is possible that some imported peanuts may not be of 
the highest quality or may deteriorate while in storage--before initial 
inspection is conducted. In such cases, the importer may be inclined to 
send the stored lot directly to reconditioning before obtaining an 
initial inspection, thus, avoiding initial inspection costs. Indeed, 
since publication of the proposed rule, two instances of this practice 
have come to the attention of AMS.
    After review of the comment, AMS concurs with the commenter's 
suggestion for two reasons. First, movement of an uninspected lot from 
a storage facility directly to a remiller or blancher is movement that 
is likely not under Customs Service bond (as was the initial shipment 
to the bonded warehouse). Secondly, AMS compliance monitoring and 
oversight is more difficult to maintain because there is no valid 
paperwork to tie the reconditioned lot directly back to a container or 
lot specified on a stamp-and-fax entry. Initial inspection and PLI 
establishes needed lot identity, and should be carried out before the 
lot is broken down into two or more parts during reconditioning.
    Therefore, to assure that imported peanuts are inspected prior to 
reconditioning, this final rule removes the phrase ``* * * and, if 
necessary, reconditioning.'' from the proposed definition of 
Conditionally released in paragraph (a)(16). The definition will now 
read ``Conditionally released means released from U.S. Customs Service 
custody for further handling, sampling, inspection, chemical analysis, 
or storage.'' For further clarification, the following sentence will be 
inserted as the new fourth sentence in new paragraph (d)(4) on Positive 
Lot Identification: ``All lots forwarded to a reconditioning facility 
must be accompanied by valid PLI certification.''
    The manager of the Peanut Administrative Committee (Committee--
responsible for daily oversight of the domestic Agreement program) 
filed a comment on Recommendation 5 requesting a minor change in the 
grade requirements of the revised ``Minimum Grade Requirements'' table 
proposed in paragraph (c)(1). He requested the modification to make the 
import requirements consistent with domestic industry practice. The 
manager acknowledged that when the Committee recommended, for the 
domestic program, removing Table 2 and incorporating the last three 
categories (Runner, Virginia and Spanish/Valencia ``splits with not 
more than 15 percent sound splits'') into Table 1, the Committee 
``inadvertently'' failed to recommend modification of the tolerance for 
Foreign Material in the three categories which are moved. The foreign 
material content in the three moved categories was .10 percent in old 
Table 2 but should be relaxed to .20 percent to be consistent with the 
foreign material contents of the other peanut categories already listed 
in the Minimum Grade Requirements table. The manager commented that the 
foreign material content for all categories in the revised table should 
be the same, i.e., .20 percent. It is our understanding that this 
matter will be reviewed by the Committee and considered at its next 
meeting. If recommended and implemented for the domestic program, a 
corresponding change would be made in the import regulation. Further, 
this change was not proposed for comment in this proposed rulemaking 
action.
    Two commenters addressed Recommendation 7 that proposed a maximum 
size for farmers stock lots. The commenters correctly stated that the 
proposed maximum size of 24,000 pounds was based on dryer wagons used 
in the domestic industry to move farmers stock peanuts from fields to 
buying points. They pointed out that proposed size is, indeed, too 
small for semi-trailer trucks used to transport farmers stock peanuts 
from Mexico. They suggested that the maximum size should be 50,000 
pounds, which is the approximate load capacity of a semi-trailer. One 
commenter stated that, when collecting farmers stock samples from the 
semi-trailers at incoming inspection, the inspection service uses 
different probe patterns specifically for the larger volume trailers.
    After review and consultation with the inspection service, AMS 
agrees that the 24,000 pound maximum weight is incorrect. AMS concurs 
with the recommendation from the two commenters that the maximum size 
of farmers stock lots should be 50,000 pounds (22,680 kilograms). This 
change is made to the proposed new second sentence added to paragraph 
(d)(3)(C)(ii).
    Two commenters questioned the accuracy of a statement in the 
discussion of Recommendation 8 on positive lot identification. Page 
46184 of the preamble reads, in part:

    ``It shall be noted that under the Agreement and import 
programs, a failing lot that is reconditioned must be re-certified 
for both grade and aflatoxin content after reconditioning. It does 
not matter whether the original lot fails for grade or aflatoxin 
analysis: both analyses must be conducted a second time. The 
reconditioned lot is considered to be a new lot because the size and 
quality is different from the original lot, and the previous lot 
identity has been lost.''

The accuracy of this statement has been confirmed. Reconditioned lots 
must receive both grade and aflatoxin

[[Page 71348]]

certifications. This is a requirement of the Agreement program. No 
regulatory text needs to be changed.
    Two commenters requested a modification of the ``source'' documents 
proposal added to paragraph (f)(2) in Recommendation 17. The proposal 
would have required that ``source'' documents be used to prove 
disposition of failing peanuts to non-edible outlets. Source documents 
are documents originating from the business entity carrying out the 
actual disposition of the peanuts. One commenter stated: ``* * * trying 
to obtain documents from entities not associated with the normal 
activities of the peanut business will be difficult and in some cases 
impossible.'' The commenters pointed out that bills-of-lading filed by 
Committee-approved blanchers and remillers are acceptable to the 
Committee as sufficient proof of proper non-edible disposition (most 
often to oilmills). The commenters also pointed out that the same 
standard should be applied to importers under the import regulation. 
This change will not alter the volume of reports required under the 
information collection burden, but it can ease the difficulty importers 
might have had in obtaining the information to be reported.
    Committee-approved blanchers and remillers are: American Blanching 
in Fitzgerald, GA; Cargill Peanut Products in Dawson, GA; Clint 
Williams Co. in Madill, OK; Coastal Cold Storage in Albany and 
Donalsonville, GA; Doster Warehouse, Inc. in Rochelle, GA; Peanut 
Processors, Inc. in Dublin NC and Sherman, TX; Seabrook Enterprises, 
Inc. in Edenton, NC and Sylvester, GA; Tidewater Blanching Corp. in 
Suffolk, VA; Tom's Foods, Inc. in Columbus, GA; and Universal Blanchers 
in Blakely, GA, Ozark, AL, and Dublin, TX. In addition, any domestic 
peanut sheller may be contracted to remill imported peanuts, provided 
that sheller agree to comply with import program reporting 
requirements, including certification as to the disposition of residual 
peanuts from the remilling operation.
    After careful review, AMS concurs with the comments filed on this 
proposal. Committee-approved blanchers and remillers are the same 
entities used by importers. Experience shows that they are the primary, 
if not the only, entities filing bills-of-lading on imported peanuts 
sent to oilmills. The importer is responsible for assuring the filing 
of bills-of-lading by any blancher or remiller used by the importer. 
The receiving entity, such as an oilmill or feedlot, would not have to 
file proof of crushing or feed use.
    Likewise, bills-of-lading filed by the importers and other 
entities, such as bonded warehouses, also are acceptable as valid 
certification of non-edible disposition. The regulation provides a 
safeguard against edible use by requiring that shipments of non-edible 
peanuts be positive lot identified and red tagged for non-edible use 
only. The bill-of-lading must also show the weight of the non-edible 
peanuts, the name and location of the entity receiving the peanuts, and 
transfer certificates or inspection certificate numbers which tie the 
residuals back to failing lots. When applicable, the volume reported 
must reflect residual lots commingled prior to such shipment. 
Therefore, the proposed amendment to require source documents is 
withdrawn in this final rule.
    Two commenters opposed Recommendation 19 which proposed, in new 
paragraph (f)(5), a 60-day extension of the reporting period. Both 
commenters believe that lengthening the reporting period to 180 days 
(Recommendation 18) should be sufficient for importers to meet program 
requirements. One commenter suggested that an extension of the 
reporting period beyond 180 days would be necessitated by management 
decisions that have nothing to do with congestion in shelling and 
reconditioning facilities. The commenter's analysis is correct. 
However, the extension is not offered only to alleviate congestions 
that occur at remilling and blanching facilities. Domestic peanut 
handlers are not restricted by reporting deadlines under the Agreement 
and non-signer peanut programs. The Act specifies that, to the extent 
practicable, peanut importers should be provided similar opportunities 
to make appropriate management decisions regarding disposition of 
imported peanuts. Extending the deadline an additional 60 days beyond 
the revised 180 day reporting period should help importers in this 
regard.
    The original reporting time period was established at 30 days, with 
an extension period of 60 days at the request of the importer. The 
initial 30-day period was too short and extensions were necessary for 
nearly all peanut lots imported during 1997 and 1998. Even with the new 
180 day reporting period established in this rulemaking, AMS believes 
that, on occasion, importers will need additional time to dispose of 
some lots. AMS is not concerned that the extended reporting period will 
jeopardize safeguard procedures. Importers, as well as domestic peanut 
handlers, understand that the longer peanuts remain in storage the more 
chance there is for deterioration of product and the higher the risk of 
failure to ultimately meet quality requirements.
    Also, under this rule, AMS would not automatically grant extensions 
at the end of the 180-day reporting period. Extensions must be 
requested in writing and provide information specific to the lot, 
including proof that positive lot identification has been maintained. 
AMS will not lose track of imported peanuts held in storage for 
extended periods.
    One of the commenters suggested that the total 240-day reporting 
period is unfair because ``a domestic producer has only 24 hours to 
recondition a load of peanuts * * * '' A domestic producer's submission 
of farmers stock peanuts at a buying point is not comparable to 
importers obtaining final, outgoing inspection on milled peanuts. The 
commenter evidently is referring to the period time following 
submission raw, farmers stock peanuts for grading at a buying point. 
Under recently revised USDA Farm Service Agency (FSA) procedures, 
farmers stock peanuts graded as less profitable Segregation 3 peanuts, 
subject to certain conditions, may be cleaned by the producer and 
resubmitted, as a new farmers stock lot, for Segregation determination. 
The Segregation grade determines the support price that FSA will 
purchase the peanuts, if so demanded by the producer. The ``24 hour 
rule,'' as it is known in the domestic peanut industry, relates to FSA 
procedures and may impact prices paid to producers under its peanut 
price support program. Finally, domestic handlers are not subject to 
some other ``24 hour rule'' when preparing Segregation 1 peanuts for 
edible market. That is, the ``24 hour rule'' is not applicable to 
imported farmers stock peanuts. AMS believes the 60-day extension 
period, as proposed, is reasonable and necessary to maintain conformity 
with the Agreement program. The comments on this issue are not adopted.
    Two commenters questioned a phrase in the discussion of 
Recommendation 20 regarding treatment of peanuts which are landed in 
the U.S. in excess of the quota. The new paragraph states that such 
peanuts may be either exported, held in bonded storage for the next 
quota year, or ``entered as admittable.'' The commenters questioned the 
phrase ``entered as admittable.'' This phrase was inserted to cover an 
importer's option to pay tariff charges on the peanuts entered in 
excess of the quota. The Department believes that the discussion of new 
paragraph (f)(6) should be clarified by restating that peanuts which 
are landed in the U.S. in excess of the quota may be either

[[Page 71349]]

exported, held in bonded storage for the next quota year, or entered 
under tariff charges. Peanuts entered under tariff charges are subject 
to the stamp-and-fax procedure and inspection requirements--as are all 
peanuts entered for consumption.
    The importer commented that incoming inspection of imported farmers 
stock peanuts should be sufficient for meeting import quality 
requirements. AMS already has established that imported peanuts 
intended for edible consumption must be certified as meeting outgoing 
quality requirements and contain not more than 15 ppb aflatoxin 
content.
    The importer suggested that country of origin designation should 
not be included on outgoing certificates of lots originating from 
imported farmers stock. The inspection service enters the country of 
origin on the inspection certificates, so there is no additional burden 
on importers. AMS already has established that country of origin 
designation enables AMS to carry out its compliance responsibilities. 
Customs Service requirements also apply.
    The importer commented on farmers stock peanuts imported under bond 
as non-quota peanuts for the purposes of shelling and re-export. The 
importer complained that the ``shells, foreign material, and oilstock'' 
from such shelling should not have to be re-exported with the shelled 
peanuts. AMS believes the commenter is referring to merchandise that is 
entered as Temporary Importation Under Bond, found in Customs Service 
regulations 19 CFR 10.31 through 10.40. This, however, is not an AMS 
requirement.
    Two commenters questioned the last sentence in redesignated 
paragraph (f)(8) Early arrival and storage, pursuant to which the 
Secretary may require reinspection of a lot at the time the lot is 
declared for entry. This requirement was already in the regulation. The 
commenters appear to interpret this statement as a requirement that 
lots held in storage for more than one month prior to quota opening 
must be reinspected at the time of entry declaration. This is not the 
case. The intent of paragraph (f)(8) is just the opposite--inspection 
certificates on lots held in storage for more than one month prior to 
quota opening are good at the time of entry. The sentence questioned by 
the commenters simply refers to provisions in the preceding paragraph 
that USDA (the Secretary) has the right to require reinspection on any 
imported lot at any time during the importation process. In the case of 
lots held in storage for long periods before quota opening, AMS thought 
it appropriate to remind importers that such lots, with cause, may be 
required to be re-inspected.
    Finally, no comments were received that addressed the proposed 
rule's Regulatory Flexibility Analysis on the impact on small business 
or the reduction in the Reporting and Recordkeeping Burden.

Discussion

    The peanut import regulation was issued June 11, 1996. At that 
time, three duty free peanut quotas for 1996 had been filled and no 
peanuts were entered under duty for the remainder of 1996. Therefore, 
the peanut import regulation had its first practical application on 
January 1, 1997, when the Mexican peanut quota opened, and again on 
April 1, 1997, when Argentine and ``other country'' quotas opened. By 
international agreements, these three duty free peanut quotas increase 
each year, allowing more foreign-produced peanuts duty free access to 
U.S. markets. For the 1999 peanut quota year, the Mexican quota will 
total approximately 8.7 million pounds (3.95 million kilograms). 
Argentina's 1999 peanut quota will total approximately 89 million 
pounds (40.4 million kg.) and the quota for all other countries will be 
approximately 17.7 million pounds (8 million kg.). The total volume 
will be about a 10 percent increase over the combined 1998 peanut 
quotas.
    The Committee met April 29 and 30, 1997, and recommended 
relaxations to the quality and handling requirements of the domestic 
peanut program. Those relaxations have been finalized by the Department 
of Agriculture (USDA) and made effective for domestically-produced 
peanuts. Where applicable, those changes are proposed for imported 
peanuts in this rulemaking. The Committee met a second time on May 27, 
1998, and unanimously recommended no further changes in the domestic 
program's quality requirements or handling procedures. In addition, 
after review of the entry and certification process, AMS proposed 
additional modifications to the import regulation to increase the 
efficiency of the importation procedure and relax reporting 
requirements.
    Based on the comments received and discussed above, this rulemaking 
action finalizes the following modifications to Sec. 999.600.
    (1) This action removes a phrase in the definition of Negative 
aflatoxin content, in Section 999.600, paragraph (a)(10). The phrase, 
``and 25 parts-per-billion (ppb) or less for non-edible quality 
peanuts,'' is removed because that action level is no longer used for 
non-edible peanuts. This revision makes the requirements under these 
regulations consistent with those under the Agreement. Molds such as 
Aspergillus flavus (A.flavus) are present naturally in soil. Aflatoxin 
is a carcinogen which may develop from A.flavus, which is more likely 
to be found on stressed peanut plants and damaged or defective kernels 
than on sound, whole kernels.
    Also, in paragraph (a)(15), Marketing Agreement No. 146 was 
referred to as the Peanut Marketing Agreement No. 146. The word 
``peanut'' is not a part of the title of the Agreement and is removed 
from the definition to make it technically correct.
    (2) This final rule changes the definition of Conditionally 
released in Sec. 999.600, paragraph (a)(16), to conform with Customs 
Service terminology. The previous definition stated that peanuts were 
conditionally released for further handling ``before final release.'' 
The phrase ``final release'' is not consistent with Customs Service 
terminology and should be removed to avoid confusion. This rule defines 
conditionally released as ``released from U.S. Customs Service custody 
for further handling, sampling, inspection, chemical analysis, and 
storage.'' These activities are conducted to meet the requirements of 
the import regulation. If inspection and certification are not obtained 
prior to application for entry, or if peanuts are not held in Customs 
Service bonded storage facilities when inspected, the peanuts shall be 
conditionally released for such inspection and needed reconditioning. 
Conditional release provides more time for importers to obtain 
inspection certifications and to report compliance with the import 
regulation.
    The definition in the proposed rule included an ending phrase 
``and, if necessary, reconditioning.'' Based on comments received and 
discussed under the ``Comments'' section, above, this phrase is removed 
from the definition.
    (3) This rule removes a redundant sentence in paragraph (b)(1) of 
Sec. 999.600. The second sentence stated that ``only Segregation 1 
peanuts may be used for human consumption.'' This sentence is re-stated 
at the end of the paragraph and is more appropriately placed at the end 
of the paragraph.
    (4) Paragraph (c)(1)(i) of the Outgoing regulation in Sec. 999.600, 
currently states that ``no importer shall ship or otherwise dispose'' 
of imported peanuts unless the peanuts meet certain import 
requirements. The introductory sentence is amended by removing the 
words ``ship or otherwise.'' This change makes the text consistent with 
the

[[Page 71350]]

revised text of corresponding paragraph (a) of Sec. 998.200 of the 
Agreement regulations.
    This modification has the effect of removing text which allowed 
forwarding of very high quality imported peanuts to buyers before 
receipt of quality certifications. However, the impact of this 
modification is not expected to be significant. Given the quality of 
imported peanuts, importers have been reluctant to forward lots to 
buyers prior to receipt of both grade and aflatoxin certifications. The 
risk of having to have the lot returned for reconditioning is greater 
than the benefit of shipping a few days early. The delays are not 
excessive as aflatoxin analyses are usually completed within two or 
three days, and the results faxed back to importers. Finally, grade and 
aflatoxin certifications often are completed before other Federal 
agency clearances are received. Therefore, this modification will not 
have an impact on the importation process or on peanut importers. This 
modification is made in conjunction with Recommendation 6.
    (5) To be consistent with a recent change in the Agreement 
regulation's ``Other Edible Quality'' table, this final rule relaxes 
the tolerance for ``Unshelled and damaged kernels'' (from 1.50 to 2.00 
percent) in the ``lots of splits'' categories specified in Table 1, 
``Minimum Grade Requirements'' of paragraph (c)(l)(i). The new 
requirement now matches the tolerance for ``Unshelled and damaged 
kernels'' as specified in the U.S. Grade Standards for Peanuts. Table l 
shows the current tolerance for unshelled and damaged kernels as 1.50 
percent (the second column under ``Lots of splits''). The tolerance 
will be relaxed to allow for 2.00 percent unshelled and damaged kernels 
in split lots. The relaxation in tolerance of one half of one percent 
will reduce the number of imported peanut lots that need to be 
reconditioned to meet outgoing quality requirements. This will save 
importers reconditioning costs and storage costs. This relaxation 
already has been made effective for domestically-produced peanuts.
    (6) This modification removed the text of paragraph (c)(1)(ii) and 
the first six grade categories in Table 2--Superior Quality 
Requirements. The Committee established Table 2 in the Agreement 
regulations several years ago to qualify higher grade peanut lots for 
its indemnification program. However, the indemnification coverage has 
been greatly reduced by recent Committee actions, and the first six 
grade categories are no longer certified under the Agreement. Thus, 
those grade categories are removed from the import regulation in this 
rulemaking action.
    The final three grade categories in Table 2, covering domestically-
produced peanuts with not more than 15 percent sound split kernels, 
still have a small domestic marketing niche and have been moved to 
Table 1 under the Maximum Limitations category in the Agreement 
regulations. To be consistent with that modification, the last three 
imported ``with splits'' categories covering Runners, Virginias, and 
Spanish and Valencia with ``not more than 15 percent sound splits'' are 
moved to the Minimum Grade Requirements table in paragraph (c)(1)(i) of 
the import regulation. Also, to be consistent with the other maximum 
tolerances in the ``Unshelled peanuts and damaged kernels'' column, and 
in the ``Minor defects'' column, the percentage tolerances for the 
three transferred categories are increased (relaxed) from 1.25 to 1.50 
percent and from 2.00 to 2.50 percent, respectively.
    Recommendations 5 and 6 have the effect of relaxing the minimum 
quality requirements of the import regulation, and, together, simplify 
grade requirements by providing only one set of peanut quality 
requirements for human consumption use. While these changes remove a 
provision that allows shipment of high quality lots to buyers 
immediately after grading, given the nature of peanut quality and 
importation processes, the changes are not expected to delay shipments 
or negatively affect the handling of imported peanuts.
    To effectuate the above three changes, paragraph (c)(1)(i) is 
modified by removing the words ``ship or otherwise.'' The text and the 
first six grade categories of Table 2 in paragraph (c)(l)(ii) also are 
deleted from the regulation, and the last three grade categories are 
moved to the table in paragraph (c)(1)(i). Paragraph (c)(1)(iii) is 
redesignated as paragraph (c)(l)(ii) and a conforming change is made to 
that paragraph by deleting the second sentence which specifies that 
samples must be taken from Superior Quality peanut lots prior to 
shipment. Finally, because Table 2 is deleted, it is not necessary to 
refer to the ``Minimum Grade Requirements'' table as Table 1. 
Conforming changes are made in paragraph (c)(1)(i), introductory 
paragraph (e), and in paragraph (e)(3).
    (7) Paragraph (d)(3)(ii) is changed to specify a maximum lot size 
for farmers stock peanuts. The import regulation currently specifies 
the maximum lot size for farmers stock, cleaned-inshell and shelled 
peanuts as 200,000 pounds (90,720 kilograms). However, the 200,000 
pound size limit is applied only to shelled peanuts under the 
Agreement, and is based on an understanding between the Committee and 
the inspection service, reached some years ago. The maximum lot size 
for domestically-produced, farmers stock peanuts is limited to one 
conveyance, or two or more conveyances with a combined weight not 
exceeding 24,000 pounds (10,886 kilograms). The smaller lot size is 
established for farmers stock peanuts because that is the standard size 
of wagons used to transport domestically produced farmers stock peanuts 
from the field to buying points. Peanuts in this form have not 
undergone extensive cleaning and sorting processes and, generally, 
contain more foreign material and A.flavus mold than lots of milled 
peanuts. Smaller lot sizes help increase the effectiveness of 
inspection by reducing sampling variability and increasing the 
likelihood that the collected sample is representative of the entire 
lot. The 200,000 pound limit for shelled peanuts is the maximum volume 
on which random sampling procedures can be systematically and 
accurately implemented.
    The proposed rule suggested the maximum farmers stock lot size to 
be 24,000 pounds. However, two comments requested that the maximum lot 
size for farmers stock peanuts be increased to 50,000 pounds. Their 
argument is included in the ``Comments'' section above. AMS believes 
this change has merit. Therefore, under this final rule, foreign-
produced peanuts imported in farmers stock form will be inspected in 
single conveyances or combined conveyances not exceeding a total of 
50,000 pounds. Only a small percentage of the peanuts imported during 
1997 and 1998 were imported in farmers stock form, and all complied 
with this maximum lot size. This inspection practice will help 
exporters plan their shipments and will not have a negative impact on 
future imports of farmers stock peanuts. For these reasons, the second 
sentence of paragraph (d)(3)(ii) is modified to provide a maximum lot 
size of 50,000 pounds (22,680 kilos) for farmers stock peanuts.
    Paragraph (d)(3)(i)(A) is changed to reflect closing of the 
inspection office in Yuma, Arizona. The introductory sentence in 
paragraph (d)(3)(i)(B) is changed to more accurately reflect the 
sampling service provided by some inspection service offices.
    (8) This final rule strengthens the lot identification requirements 
for shelled peanuts by adding new paragraph (d)(4) of the import 
regulation. The Agreement regulation requires Positive Lot

[[Page 71351]]

Identification (PLI), generally using tags which are sewn on each bag 
or super sack of domestically-produced shelled peanuts. The PLI tag is 
applied after shelling, at the time of packaging and inspection. The 
previous import regulation did not require PLI tags sewn at the time of 
first inspection when several hundred thousand pounds of peanuts 
arrived at a port-of-entry at one time. Such a requirement would be a 
burden on importers because of the large volume and lack of equipment, 
space, and time needed to sew tags on individual bags. However, better 
lot identification for imported peanuts is needed to insure integrity 
of the peanut import program.
    Lot identification practices currently applied to imported peanuts 
by the Federal-State Inspection Service (inspection service) provide 
that lots, or pallets within a lot, be identified by a tag which is 
affixed to the lot or pallet. Such identification does not prevent the 
individual bags, sacks, or cartons in the lot from being tampered with 
or exchanged with other bags, sacks, or cartons. The inspection service 
cannot insure integrity of a lot that is only ``lot identified.'' 
Simple lot identity does not guarantee that peanuts drawn in a second 
sample under an appeal process come from the same peanut lot or 
containers from which the first sample was drawn.
    This rule provides a more reliable PLI to be applied to shelled 
peanuts by the inspector at the time of first inspection. This may 
include: (1) Wrapping PLI tape around the top layer of bags or boxes in 
such a way that no peanuts could be removed or added; (2) shrink 
wrapping pallets or multiple bags with a PLI sticker applied to the 
wrapped pallets or bags; (3) stamping or stenciling and numbering 
individual bags or boxes; (4) affixing a PLI seal to the door of a 
shipping container so that it cannot be opened without breaking the 
seal; or (5) other methods acceptable to the inspection service that 
clearly identify the lot, is securely affixed to the lot, and prevents 
peanuts from being removed or added to the lot.
    These PLI methods represent substantially less burdensome and less 
costly procedures than PLI tags sewn on individual bags. For instance, 
stenciling bags with a spray paint is a faster and much less expensive 
method of lot identity that represents an acceptable alternative to 
sewing tags on individual bags. The inspection service office in 
Suffolk, Virginia, used stenciling of imported peanuts in bags during 
the 1997 and 1998 quota years. These methods also do not require 
special training or equipment and can be carried out by inspection 
service personnel throughout the U.S. These methods do not require 
substantial extra time or material at the time of first inspection. 
Increased costs to the importer will be in the form of a few extra 
minutes to wrap pallets or stencil bags, and would vary with the size 
and containerization of each lot. These PLI methods may increase 
average storage costs when warehouse space for inspection is very 
limited or when an unusual amount of movement of lots is required 
during lengthy warehouse storage. However, increased costs should not 
be significant in comparison to overall costs of importation. Also, 
importers benefit from improved lot identity if they request an appeal 
inspection on the lot or if the Customs Service demands redelivery of 
the lot.
    The inspection service currently works with domestic peanut 
handlers and storage warehouses to determine the most appropriate PLI 
or lot identity method to be used. The same cooperative relationship 
should apply to importers. Several factors dictate which PLI method 
should be used: (1) Size of the lot; (2) storage space on the wharf or 
in the warehouse; (3) required further movement of the lot prior to 
receipt of certification; and (4) other needs of the importer, wharf or 
warehouse operators, or the Customs Service. Any request for extension 
of the reporting period, or appeal inspection, must include the PLI 
number or designation of the lot needing additional reporting time.
    AMS believes that these increased lot identity practices outweigh 
the possible minimal increases in handling or inspection costs 
associated with better lot identification. Tighter lot identity 
requirements are consistent with practices currently used by the 
inspection service to PLI domestically-produced peanuts. PLI also helps 
importers maintain the integrity of lots, should questions arise from 
the Customs Service after conditional release.
    AMS believes that positive lot identification of inspected lots is 
essential in maintaining the integrity of imported shelled lots after 
first inspection. Lots failing grade and aflatoxin certifications can 
be appealed pursuant to current paragraph (d)(5). In the appeal 
process, the lot is sampled a second time. Without PLI, there is no 
guarantee that peanuts sampled under an appeal inspection are the same 
peanuts as those which failed initial inspection. Therefore, a sentence 
will be added to current paragraph (d)(5) to provide that peanut lots 
which show evidence of tampering or PLI violation, will not be eligible 
for an appeal inspection.
    These PLI methods will be applied to peanut lots at the first 
inspection. If a lot subsequently fails either grade or aflatoxin 
analysis, the lot may be sent to a remilling or blanching operation for 
reconditioning. In such cases, PLI of the lot from the warehouse to the 
reconditioning site and during reconditioning does not have to be 
maintained. However, the importer must maintain information which ties 
the reconditioned lot to the original lot. This information must be 
provided to the inspection service upon inspection after 
reconditioning. Thus, inspection surveillance of the lot does not have 
to be maintained during reconditioning. This lot identity procedure is 
consistent with the handling requirements for domestically-produced 
peanuts under the Agreement.
    PLI requirements after reconditioning also are updated in this 
final rule to make the treatment of reconditioned imported peanuts 
consistent with current industry practice for domestically-produced 
peanuts. Under Agreement requirements, failing lots that are 
reconditioned by remilling or blanching are positive lot identified by 
sewing tags on bags and by taping and tagging bulk bins. For shelled 
peanuts, the tag is sewn into the closure of the bag. In plastic bags, 
the tag is inserted prior to sealing so that the official stamp is 
visible. This is the most efficient PLI procedure and is currently 
carried out by the remiller or blancher at the end of the remilling and 
blanching process. The inspection service certifies the reconditioned 
lot based on the PLI tags applied to bags and bins. Bulk shipments and 
bulk bins are positive lot identified by sealing the conveyance and, if 
in other containers, sealed by means acceptable to the inspection 
service. This rule ensures that the same PLI procedures are applied to 
imported peanuts which are reconditioned by remilling or blanching. 
Costs for these PLI measures are covered in the remilling and blanching 
charges, and, thus, will not be expected to increase costs for 
importers. Indeed, some blanching operations used this PLI method on 
imported peanuts during 1997 and 1998.
    These PLI requirements and procedures are established in the import 
regulation by adding a new paragraph (d)(4) and redesignating original 
paragraphs (d)(4) and (5) as (d)(5) and (6), respectively. Also, 
references to lot identity in paragraphs (c), (d), (d)(1) and (g)(6) 
are amended to read ``Positive Lot Identification.''
    It should be noted that under the Agreement and import programs, a 
failing lot that is reconditioned must be

[[Page 71352]]

re-certified for both grade and aflatoxin content after reconditioning. 
It does not matter whether the original lot fails for grade or 
aflatoxin analysis; both analyses must be conducted a second time. The 
reconditioned lot is considered to be a new lot because the size and 
quality is different from the original lot, and the previous lot 
identity has been lost. This procedure was in effect and properly 
carried out for reconditioned imported peanuts in 1997 and 1998. 
Comments received indicate some confusion among handlers with the 
accuracy of this paragraph. As discussed previously in the Comments 
Received section, above, the paragraph does conform with the 
requirements of the Agreement, and, in general, FSA limitations can 
apply in some cases. A clarification is included in the Comments 
Received section, above.
    A minor clarification is added to redesignated paragraphs 
(d)(5)(ii) and (iii). These paragraphs refer to a ``notice of 
sampling'' as the inspection service's grade certification of shelled 
peanuts. The inspection service now commonly uses the ``Milled Peanut 
Inspection Certificate,'' AMS form FV-184-9A, to certify the grade 
quality of shelled peanuts. That form's title is added to paragraphs 
(d)(5)(ii) and (iii).
    It should also be noted that containers of imported lots of shelled 
peanuts may be subdivided prior to inspection. During the 1997 and 1998 
quota years, some containers of shelled peanuts, when off-loaded and 
made available for inspection, revealed wet or moldy bags. The 
importers, suspecting such bags would fail quality requirements, 
isolated the wet and moldy bags apart from other bags in the container 
to reduce possible contamination of good peanuts. This practice is 
acceptable and can be done at a Customs Service bonded warehouse 
without inspection service oversight. If the moldy bags are held 
separately in a Customs Services bonded warehouse and then re-exported 
without leaving Customs Service custody, those moldy bags do not have 
to be reported to AMS--except that the difference in the volume 
reported on the stamp-and-fax form and the volume inspected must be 
reported to the inspection service.
    However, if the moldy bags are combined into a separate lot and 
identified on an inspection certificate, or moved out of Customs 
custody, the bags are subject to import requirements and must be 
reported as a separate peanut lot. If such a lot fails quality 
requirements, it may be reconditioned, disposed to an non-edible peanut 
outlet pursuant to import requirements, or re-exported pursuant to 
Customs Service procedures. These dispositions must be reported to AMS.
    Four of the seven comments received agreed with implementation of 
positive lot identification procedures.
    (9) The second to the last sentence in original paragraph 
(d)(4)(iii) provides that laboratories shall provide aflatoxin assay 
results to the importer. Upon review, USDA determines that this 
sentence is duplicative of provisions in original paragraph (d)(4)(v). 
Thus, this rule removes the second to last sentence of original 
paragraph (d)(4)(iii).
    (10) Several changes in the regulatory text are made regarding 
reporting of aflatoxin certifications to AMS. Original paragraph 
(d)(4)(iv)(A) provides that importers ``should'' contact one of the 
laboratories to arrange for chemical analyses of imported peanut lots. 
However, because chemical analysis is required under the regulation, 
the word ``should'' does not convey the mandatory nature of the 
requirement that aflatoxin analysis must be conducted on all imported 
peanut lots intended for human consumption. Thus, the first sentence of 
redesignated paragraph (d)(5)(iv)(A) is revised to state that importers 
``shall'' contact one of the laboratories to arrange for chemical 
analyses.
    Original paragraph (d)(4)(v) is revised to include the requirement 
that importers ``shall cause'' aflatoxin certifications to be reported 
to AMS. The last sentence in original paragraph (d)(4)(v)(B) is revised 
and moved to redesignated paragraph (d)(5)(v) for more appropriate 
placement of the instructions.
    (11) The list of aflatoxin testing laboratories shown in original 
paragraph (d)(4)(iv)(A) is updated in this rulemaking action. The 
laboratory in Ashburn, Georgia formerly operated by AMS is now operated 
privately as a PAC-approved laboratory. The USDA laboratory in Dothan, 
Alabama is now operated by the Alabama-Federal State Inspection 
Service. In addition, three new laboratories in Headland, Goshen, and 
Enterprise, Alabama have been certified by AMS and approved by the PAC 
as Alabama-Federal State laboratories. The PAC-approved laboratory in 
San Antonio, Texas is dropped from the list as that laboratory no 
longer certifies the aflatoxin content of peanut lots. The name of the 
AMS office that operates USDA laboratories and certifies the private 
laboratories has been changed from Science and Technology Division to 
Science and Technology Programs.
    Since publication of the proposed rule, AMS has been notified of a 
location change and two new laboratories. The Pert laboratory in 
Sylvester, Georgia has moved to Colquitt, Georgia. A Pert laboratory 
has been opened in Blakely, Georgia and a Leek laboratory has been 
opened in Headland, Alabama. Contact information for these laboratories 
is added to paragraph (d)(4)(iv)(A). In addition, area code numbers 
have been updated in this paragraph and in inspection offices in 
paragraph (d)(3)(i)(A).
    The import regulation refers to private aflatoxin testing 
laboratories as ``PAC-approved'' because those laboratories are 
approved by the Committee to perform chemical analyses on domestically-
produced peanuts. These PAC-approved laboratories also may be referred 
to as ``designated'' laboratories. Whether a laboratory is referred to 
as ``PAC-approved'' or ``designated,'' only those laboratories listed 
in redesignated paragraph (d)(5)(iv)(A) may conduct aflatoxin content 
analysis on imported peanuts.
    (12) Another Committee recommendation to modify the Agreement 
regulations provides that shelled peanut lots failing quality 
requirements because of excessive ``fall through'' may be blanched. 
Paragraph (e) of the import regulation prescribes the corresponding 
requirement that imported shelled peanuts failing quality requirements 
because of excessive damage, minor defects, moisture, or foreign 
material may be reconditioned by remilling and/or blanching. This rule 
adds peanut lots failing ``fall through'' requirements to those lots 
that can be reconditioned by blanching. After blanching, all such lots 
must to be sampled and certified as meeting minimum ``fall through'' 
requirements prior to disposition to edible peanut outlets.
    This change is made in paragraph (e) of Sec. 999.600 by adding a 
new second sentence to the introductory paragraph providing that 
peanuts which fail minimum grade requirements because of excessive 
``fall through'' may be blanched. For consistency, the second to last 
sentence in introductory paragraph (e) also is revised to include 
minimum ``fall through'' requirements as a condition for human 
consumption.
    (13) A final change to be consistent with Agreement regulations 
prescribes that shelled peanut lots meeting the minimum grade 
requirements specified in the Minimum Grade Requirements table, but 
which fail aflatoxin requirements, may be roasted during the blanching 
process. After roasting, the peanuts must be sampled and assayed for 
aflatoxin content, and, if meeting

[[Page 71353]]

aflatoxin requirements (15 ppb or less), may be disposed of to human 
consumption outlets. The lot does not have to be re-inspected for grade 
quality because the lot will have already met grade requirements. This 
modification is a relaxation of requirements and is an optional process 
for importers who intend to roast imported peanuts. It will save time, 
reduce costs, and reduce possibilities for damage or split kernels.
    This process was recommended by the Committee for domestic peanuts 
because blanched peanuts, after sampling and certification, often are 
placed back into the blancher to complete the roasting process. This 
adds costs to the roasting process and can cause additional splits or 
kernel damage due to the extra handling of the peanuts. Also, roasting 
enhances the blanching efforts to eliminate aflatoxin, thus improving 
the wholesomeness of the peanuts.
    Inspection service oversight of the blanching process is necessary 
to maintain positive lot identity. However, the Department believes 
that the savings involved in blanching and roasting in one step and 
prevention of additional damage and splits due to excessive handling 
are benefits that would outweigh the costs of inspection service 
oversight. Any residual peanuts, excluding skins and hearts, resulting 
from the roasting process, must be red tagged and disposed of to non-
edible peanut outlets, and so reported to AMS. This rule will add a new 
paragraph (e)(4) in Sec. 999.600. Original paragraph (e)(4) would be 
redesignated as (e)(5).
    Paragraph (f) Safeguard procedures of Sec. 999.600 outlines the 
steps that importers must follow when entering peanuts into U.S. 
commercial markets. The stamp-and-fax process helps assure that AMS 
will be notified of all peanut entries. This rule modifies or removes 
several requirements of the original safeguard procedures and reporting 
requirements to help streamline the entry process, ease reporting 
burdens, and provide more time for importers to obtain human 
consumption certification. The changes were proposed after AMS' review 
of the peanut importation process during the 1997 and 1998 quota 
periods. Where applicable, the changes are made with concurrence of the 
Customs Service.
    (14) Under the ``stamp-and-fax'' procedure, importers notify the 
inspection service of pending peanut shipments by faxing or mailing a 
copy of the Customs Service entry documentation to the inspection 
service office that will sample the imported peanut shipment. The first 
sentence of paragraph (f)(1) provides that such documentation must be 
sent ``prior to arrival'' of the peanuts at the port-of-entry. However, 
experience shows that it may not be possible to send a completed stamp-
and-fax document to the inspection service ``prior to arrival'' of the 
shipment at the port-of-entry. While it is in the importer's interest 
to give the inspection service advance notice of inspection, it is not 
essential that this be done before arrival of the shipment at a port. 
Thus, the first sentence of paragraph (f)(1) is changed to read ``Prior 
to, or upon, arrival* * *.''
    The Customs Service will not release imported peanut lots without 
entry documentation stamped by the inspection service. Further, the 
inspection service will not sample and inspect peanuts that are not 
covered in a stamp-and-fax entry document.
    (15) This final rule revises paragraph (f)(1) to change the 
information that was originally required on the stamp-and-fax document. 
This rule adds the Customs Service entry number(s) for the peanut 
shipment(s) covered in a stamp-and-fax document. The entry number is 
basic Customs Service entry information and appears on Customs Form 
3461 (Entry/Immediate Deliver) which is commonly used as the stamp-and-
fax document. During the 1997 and 1998 quota periods, the inspection 
service recorded the entry number on the grade certificates, enabling 
AMS to monitor imported lots and communicate with the Customs Service 
regarding importers' compliance with program requirements.
    Experience of the last two import years shows that different 
Customs Service forms may be used in the stamp-and-fax process. In most 
cases, Customs Form 3461 has been used. USDA's Animal and Plant Health 
Inspection Service (APHIS) Form 368 (Notice of Arrival) also may be 
used as a stamp-and-fax document. In these cases, the importer or 
customs broker filing the stamp-and-fax document must add the inland 
destination and contact number before sending the document to the 
inspection service.
    The original provision specifies that the destination location, 
including city and street address, be included on the stamp-and-fax 
form. The street address is not necessary as long as the city and 
receiving entity is identified. A telephone contact number also must be 
included. Experience shows that the receiving entities are usually cold 
storage warehouses.
    The previous provision specified that the stamp-and-fax document 
include the date and time that the peanut shipment will be inspected at 
the inland destination. However, a date and time for inspection is not 
always known at the time of entry, and it is not necessary that this 
information be included on the stamp-and-fax document. The purpose of 
the stamp-and-fax is to assure that the inspection service is aware of 
every peanut lot being imported. Arrangements for the time and date of 
the inspection often are made by the cold storage warehouse after 
arrival of the imported lot at the inland destination.
    Therefore, this rule establishes that the information required on 
stamp-and-fax documents include: the Customs Service entry number; the 
container number or other identification of the lot; the volume 
(weight) of peanuts in each lot; and the location, contact name and 
number where the lot will be in storage or made available for 
inspection. Paragraph (f)(1) is changed accordingly.
    (16) The ``stamp-and-fax'' process is further modified by removing 
the fifth sentence in paragraph (f)(1) that requires importers to send 
a copy of the stamp-and-fax entry document to the Secretary. AMS can 
obtain information on peanut entries from the inspection service and 
from the Customs Service on data tapes. That information effectively 
replaces the need for stamp-and-fax entry documents to be reported by 
importers to AMS' headquarters office. The change is made in the fifth 
sentence in paragraph (f)(1) by removing the words ``and send a copy of 
the document to the Secretary.'' A similar change also is made in the 
first sentence in paragraph (f)(2) by removing the words ``entry 
document'' from that sentence. This modification does not change the 
requirement that importers must file the stamp-and-fax with the 
inspection service office as provided in paragraph (f)(1).
    Another change regarding the stamp-and-fax reporting is made in 
paragraph (f)(1). The last sentence provides that the importer shall 
cause a copy of the entry document to accompany the peanut lot and be 
presented to the inspection service ``at the inland destination.'' The 
intent of this requirement was to help inspection service offices 
account for all peanut lots for which those offices have authorized 
entry by stamp-and-fax. However, the provision could have been 
interpreted as meaning that all peanut lots must be shipped inland for 
inspection. This is not the intent of the provision. Peanuts may be 
inspected and certified for human consumption while at the port-of-
entry, free trade zone, or bonded warehouse adjacent to the port of 
entry. If inspected at the port or free trade zone and certified as

[[Page 71354]]

edible, the lot does not have to be seen again by the inspection 
service and may be transported to its intended destination. Uninspected 
lots and failing lots which are sent inland for inspection or 
reconditioning must be accompanied by Customs Service entry 
documentation relevant to the lots, which must be presented to the 
inspection service at the time of inland inspection.
    The last sentence in paragraph (f)(1), therefore, is modified to 
provide that the entry documentation be presented at the time of 
sampling--whether that sampling is at the port of entry or at an inland 
destination. The last sentence of paragraph (d)(3)(i) also is revised 
to conform with this clarification.
    (17) The import regulation's reporting requirements are specified 
in paragraph (f)(2) of Sec. 999.600. Importers are required to file 
with the Secretary entry documents, including all grade and aflatoxin 
certifications, showing that imported peanut lots meet quality and 
disposition requirements of the regulation. Certifications filed by 
importers enable AMS to monitor all imported peanut shipments and 
ensure compliance with the regulation's quality and disposition 
requirements. The reporting requirements can be burdensome if, as now 
happens, large volumes of peanuts are entered simultaneously when a 
country's peanut import quota is opened.
    The inspection service performs all inspections of imported 
peanuts, and AMS has access to all of those grade certificates. In 
addition, AMS' Science and Technology Programs' laboratories conduct 
chemical analysis of imported peanut lots, and, thus, AMS has access to 
aflatoxin certificates issued by those laboratories. Through memoranda 
of understanding with these offices, AMS' Marketing Order 
Administration Branch (MOAB), which administers the import regulation, 
can obtain copies of grade and aflatoxin certificates issued by the 
inspection service and the USDA laboratories. Therefore, it is not 
necessary that importers file inspection service grade certifications 
and AMS laboratory aflatoxin certifications on lots which meet 
requirements. Those certifications can be provided to MOAB by the 
inspection service and laboratories. Filing of aflatoxin certifications 
provided by PAC-approved private laboratories is addressed below.
    Experience shows that if importers do not have to file 
certifications on peanut lots which meet import requirements, a large 
portion of the reporting burden would be removed. Importer would 
continue to be required to report failing lots and disposition of those 
failing lots. AMS believes such a modification of the reporting 
requirements will not reduce the effectiveness of the regulation's 
safeguard procedures or AMS' program oversight, because its compliance 
efforts focus on failing peanut lots. Therefore, AMS revises paragraph 
(f)(2) of Sec. 999.600 to provide that importers file with AMS only 
certificates of imported peanut lots failing quality or aflatoxin 
requirements.
    This rulemaking action updates the kind of information required to 
be filed by importers, or others on behalf of importers.
    Importers who choose to use PAC-approved laboratories for aflatoxin 
certification must either file those certifications themselves or 
direct the private laboratory to file the certifications with AMS. 
Similarly, it is the responsibility of the importer to either file, or 
direct the filing of, documentation covering such non-edible peanut 
dispositions. The first sentence of paragraph (f)(2) is revised to 
require that importers ``shall file, or cause to have filed'' 
documentation showing disposition of peanut lots which fail to meet 
quality requirements. The phrase ``cause to have filed'' enables 
importers to direct the entity to file the documents on behalf of the 
importer.
    This optional reporting procedure reduces importers' direct 
reporting burdens because they do not have to file the certificates 
themselves. The cost, if any, of reporting aflatoxin certifications to 
AMS is included in the cost of testing. Thus, while importers are 
responsible for the reporting charges, the additional reporting costs 
should be less than the costs of individual importers filing the 
certificates themselves. The certifications do not have to be reported 
individually or on a scheduled basis, but do have to be filed by the 
reporting deadline relevant to each imported lot. A laboratory may file 
certificates from many importers in one mailing.
    As noted above, this rulemaking continues importers' responsibility 
for reporting, or causing the reporting of, final disposition of all 
failing peanut lots. Proper disposition of a failing peanut lot 
includes: (1) Edible certification through an appeal inspection; (2) 
edible certification after reconditioning; (3) disposition to a non-
edible peanut outlet such as crushing, animal feed, or seed use; (4) 
dumping in a landfill or otherwise destroying the peanuts; or (5) re-
exportation to another country.
    The proposed rule recommended that paragraph (f)(2) be modified to 
require ``source'' documents as proof of non-edible disposition. As 
discussed above in the Comments Received section, two commenters 
pointed out: (1) The difficulty of obtaining source documents from 
entities not directly regulated by the import regulation, and (2) that 
the Agreement regulation does not require source documents, but accepts 
bills-of-lading from Committee-approved blanchers and remillers as 
proof of non-edible disposition. After reviewing the reporting 
requirements under the Agreement, AMS believes the comments have merit. 
Thus, entities such as remillers, blanchers, and bonded warehouses may 
file, on behalf of importers, bills-of-lading certifying that failing 
quality peanuts were shipped to a non-edible peanut outlet. 
Documentation filed showing disposition to animal feed must include, as 
required by paragraph (e)(2)(ii), an aflatoxin certificate showing that 
the peanuts do not exceed 300 ppb aflatoxin content. Failing lots and 
commingled residuals that are re-exported must be documented with a 
completed Customs Service form, specific to the peanuts being shipped, 
verifying exportation from the U.S.
    Thus, the third sentence of proposed new paragraph (f)(2) is 
modified in this final rule to read as follows: ``Proof of non-edible 
disposition may include bills-of-lading, transfer certificates, and 
other documentation showing shipment from the importer, blancher, 
remiller, warehouse, or other entity, to crushing, feed or seed use, 
burying, or other non-edible disposition. Such documentation must 
include the weight of peanuts being disposed and the name and telephone 
number of the disposing entity. Proof of export must include U.S. 
Customs Service documentation showing exportation from the United 
States.''
    Further, some importers have requested appeal analyses on failing 
peanut lots. An appeal inspection involves resampling and reinspection 
by the inspection service and/or aflatoxin testing laboratory. If the 
failing lot is determined to meet requirements upon an appeal analysis, 
the importer must file both the initial failing certificate(s) and the 
appeal certificate(s) showing the same peanut lot ultimately was 
certified as meeting quality requirements on appeal.
    Experience with the 1997 and 1998 imports also shows that most 
failing lots were reconditioned by blanching. After reconditioning, the 
lots are reinspected and, in most cases, certified for edible 
consumption. In reporting reconditioning of a failing peanut lot, the 
importer must account for pickouts

[[Page 71355]]

and other poor quality kernels that are removed from the lot during the 
reconditioning process. For example, if a 40,000 pound container of 
peanuts fails grade requirements, the lot may be blanched. If the 
resulting lot, weighing 30,000 pounds, is certified as edible, the 
importer must file: (1) The first failing grade certificate; (2) the 
first passing aflatoxin certificate (``negative'' to aflatoxin); (3) 
the second passing grade certificate; (4) the second passing aflatoxin 
certificate; and (5) proof of shipment (such as a bill-of-lading) of 
the non-edible residuals to an oilmill or to a port facility (with 
Customs documentation showing actual exportation).
    The volume of residual peanuts may not exactly equal the difference 
between the two weights because of ``disappearance'' during the 
reconditioning and reinspection process. Such disappearance can include 
bag weight, skins, moisture from the blanching, other loss of kernels, 
and differences in weighing scales, which, to the extent practical, 
must be documented.
    Fees charged for disposition of failing peanuts must be borne by 
the importer.
    AMS has found that grade and aflatoxin certificates are the primary 
documentation for monitoring edible and non-edible disposition of 
imported peanuts. Tying a disposition back to an original imported 
peanut lot is difficult without reference to grade and aflatoxin 
certificate numbers. Thus, for compliance purposes, it is necessary 
that all reporting of non-edible disposition include the grade and 
aflatoxin certificate numbers of the original failing lot(s).
    Residuals from the remilling or blanching of several imported 
peanut lots belonging to the same importer may be commingled into a 
larger, residual lot. Proof of disposition of a commingled residual lot 
must include: (1) The name and telephone number of the disposition 
outlet; (2) lot numbers from which the residuals were removed; and (3) 
the total weight of the disposed residual lot. The report must be 
sufficient to account for all of the residual peanuts and identify the 
lots from which the residuals were taken. Residuals from imported 
peanut lots cannot be commingled with domestically-produced residual 
peanuts because of the separate compliance and recordkeeping 
responsibilities for domestic peanuts (to the Committee) and imported 
peanuts (to AMS). Certification of PLI issued by the inspection service 
may be used to verify commingling of multiple residual peanut lots.
    During the 1997 and 1998 quotas, some customs brokers, warehouse 
operators, and blanchers failed to identify the importer of record when 
requesting inspections. If the warehouse or blancher is shown as the 
applicant for the inspection and the importer's name withheld, AMS has 
difficulty matching up certificates and verifying that the importer has 
satisfied reporting requirements. For AMS recordkeeping purposes, the 
applicant requesting inspection must provide the name of the importer 
to the inspection service. A provision to this effect is added to the 
first sentence of paragraph (f)(2).
    Because of the extent of these revisions, the first half of 
paragraph (f)(2) is revised. Crushing, feed, seed, or burying are added 
as examples of non-edible disposition outlets. The address to which 
disposition documentation must be filed remains unchanged. Finally, 
original paragraph (d)(4)(v)(B), which provided that importers file 
aflatoxin certificates ``regardless of the test result'' is removed to 
conform with reduced reporting of only failing lots.
    (18) Paragraph (f)(3) of the peanut import regulation establishes 
the period for importers to obtain inspection and certification of 
their imported peanut lots and report disposition to AMS. The original 
reporting period was 23 days after Customs Service release of the 
peanut lot. However, based on the experience of the 1997 and 1998 
import quotas, the 23-day period does not provide enough time for 
importers to meet requirements for all lots and report disposition to 
AMS. Indeed, the 23-day reporting period was extended for the 1997 
reports only in a separate rulemaking (62 FR 50243, September 25, 
1997). Therefore, original paragraph (f)(3) and the reporting period is 
completely revised.
    Because of the high demand for foreign-produced peanuts, the 1997 
Argentine and ``other country'' quotas were filled on the day of 
opening. Among other things, this caused a flood of imported peanuts 
into clearance channels at the same time. For the most part, the 
inspection service and aflatoxin labs were able to provide timely 
sampling and inspection of imported peanuts. However, some importers 
encountered problems obtaining wharfage and storage space in bonded 
warehouses and other delays in other clearance processes. Large volume 
importers had particular difficulty coordinating the paperwork required 
by different Federal government offices, the quality inspections, and 
needed reconditioning to meet requirements of the import regulation, 7 
CFR 999.600.
    Therefore, the period for reporting compliance with the import 
regulation is extended in this rulemaking. An extended period helps 
alleviate problems encountered with the large numbers of lots entered 
under Argentine and ``other country'' quotas on April 1 each year. The 
extended period also is helpful for imports of Mexican peanuts, some of 
which are farmers stock peanuts needing the extra steps of shelling, 
sorting, and sizing before certification for edible use.
    The reporting period is established in this rule as 180 days from 
the date of release of a lot by the Customs Service. Lengthening the 
reporting period is accomplished by providing that all Customs Service 
releases of peanuts be designated as ``conditional'' releases. The 180-
day period is established as the conditional release period for Customs 
Service purposes.
    A peanut lot which is inspected and certified as edible in advance 
of a quota's opening day may be conditionally released and subject to 
the 180-day conditional release/reporting period. However, importers 
are able to dispose of those peanuts after receipt of the required 
edible certifications and after conditional release of the lots by the 
Customs Service.
    Uninspected peanut lots may be conditionally released under bond, 
provided that, within 180 days, those peanuts be inspected and reported 
to AMS as meeting requirements of the import regulation.
    Inspected peanut lots that fail to meet quality requirements may be 
conditionally released for reconditioning and reinspection. 
Reconditioning and reinspection must be completed and reported to AMS 
within the 180-day conditional release period. Disposition of the non-
edible, residual peanuts or pick-outs from reconditioning processes 
also must be reported within the 180-day period. Positive lot 
identification must be maintained on these peanuts.
    If AMS finds that, after the 180-day conditional release period 
expires, an uninspected or failing peanut lot has not been reported as 
meeting import requirements, AMS will request the Customs Service to 
issue a Notice of Redelivery to the importer. Subsequent to that 
request, the Customs Service has 30 days to issue, under the terms of 
the basic importation bond, a valid demand for redelivery. Upon 
receiving the Notice of Redelivery, the importer has 30 days to 
redeliver the unreported or failing peanuts to the Customs Service.
    Original paragraph (f)(3) provided for a 60-day extension of the 
redelivery demand period to enable an importer

[[Page 71356]]

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

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements contained in this 
final rule were submitted to the Office of Management and Budget (OMB) 
for approval. The information collection requirements in the original 
peanut import regulation were approved by OMB on September 3, 1996, and 
assigned OMB number 0581-0176.
    This paperwork burden analysis applies to only AMS' peanut import 
regulation burden in Sec. 999.600, and does not include or supersede 
other reporting requirements for imported peanuts that may be 
established by APHIS, the Food and Drug Administration (FDA), the 
Customs Service, or other agencies.
    The original burden statement for the peanut import regulation was 
developed and approved before the regulation was put into effect. The 
reporting burden is based on importers, or others acting on behalf of 
importers, filing copies of documents necessary to show compliance with 
program requirements. There are no forms to be completed and filed. The 
import program's original reporting and recordkeeping estimates were 
not broken down in OMB's 0581-0176 burden statement--making it 
difficult to apply comparisons for the individual changes proposed in 
this regulation. Also, because the duty free

[[Page 71357]]

quota has increased by approximately 21 percent since the original 
burden statement was approved, savings calculated in this rule are 
based on 1999 quota volumes.
    The proposed rule incorrectly addressed the average time needed to 
file the different documents required under the import regulation. 
Stamp-and-fax documents are filed separately and, thus, are estimated 
to take 5 minutes for each submission. The average reporting time for 
filing individual certificates is estimated in this final rule as 3.5 
minutes because importers may accumulate relevant documents and submit 
them at one time. The response time, therefore, is estimated 3.5 
minutes for each response. These estimates are used in the discussions 
of the recommended changes immediately below.
    The original reporting burden estimated 25 respondents filing 5,000 
responses, for a total of 300 burden hours--an average of 12 reporting 
hours per importer. The original recordkeeping burden was estimated at 
25 respondents and a total of 125 burden recordkeeping hours--an 
average of 5 recordkeeping hours per importer.
    This final rule revises the original information collection burden 
based on: (1) Experience of the 1997 and 1998 peanut quota periods; (2) 
a two-year increase in peanut quota volume from 94.8 million to 115.4 
million pounds for 1999, as established by trade agreements; (3) an 
estimated 2,650 lots entered (based on lot sizes of 40,000 pounds for 
most lots and 200,000 pounds for a small number of lots; (4) reduced 
information collection requirements; (5) reduced response time from 5 
minutes per response to 3.5 minutes; (6) reduced number of respondents 
(importers) from 25 to 15; and (7) generally good peanut quality, with 
an estimated 10 percent of the lots failing initial quality 
requirements.
    Reporting burden: The following changes reduce the AMS paperwork 
reporting burden on peanut importers.
    Recommendation 16: This modification removes from paragraph (f)(1) 
the requirement that importers must send copies of each stamp-and-fax 
document to AMS headquarters. The intent of the original requirement 
was to ensure AMS headquarters has knowledge of all peanut imports for 
monitoring and compliance purposes. However, this change requires that 
the inspection service and aflatoxin testing laboratories provide 
copies of all inspection certificates issued on imported peanuts 
(Recommendation 17). In addition, AMS receives periodic database 
printouts of all peanut entries from the Customs Service. Together, 
these reports are sufficient documentation for AMS headquarters' 
purposes. Therefore, it is not necessary that importers send copies of 
their stamp-and-fax documents to AMS headquarters.
    Savings: The burden of filing stamp-and-fax documents with AMS' 
headquarters is completely eliminated by this final rule. The original 
burden for reporting stamp-and-fax documents was factored into the 
total program burden of 5,000 hours. Based on the 1999 quota of 115.4 
million pounds, projected entries of 2,650 lots, and 5 containers 
listed on each stamp-and-fax document, approximately 530 stamp-and-fax 
documents will be filed. This number of responses will be saved because 
AMS headquarters does not have to be notified. At 5 minutes per filing, 
the estimated burden for reporting stamp-and-fax documents in 1999 will 
total 44 hours.
    Recommendation 17: This rule reduces the number of inspection 
certificates which importers must report to AMS. Previously, importers 
filed copies of both passing and failing grade and aflatoxin 
certificates issued on all imported peanut lots. Those certificates are 
issued by the inspection service and by AMS and private laboratories. 
The certificates can be made available to AMS by those entities, thus 
relieving importers of a significant direct reporting burden.
    Because AMS' compliance efforts focus on failing lots, this rule 
establishes that importers be required to file only certificates 
covering failing peanut lots. AMS receives copies of passing 
certificates from the inspection service and laboratories as a check on 
all lots entered. Approximately 2,650 peanut lots are expected to be 
imported under 1999 peanut quotas. For burden-reporting purposes, this 
rule estimates that 10 percent of the imported lots will fail one or 
both inspections. Thus, approximately 265 lots can be expected to fail 
quality requirements and will have to be either reconditioned to meet 
requirements, disposed of to non-edible peanut outlets, or re-exported. 
The other 90 percent of the lots (2,385 lots) can be expected to meet 
quality requirements, and will not have to be reported by the 
importers.
    Recommendation 17 makes two clarifications. First, the name of the 
importer will be entered on filed inspection certificates, which are 
completed by the inspection service. Often the business requesting the 
inspection is not the importer, but another entity acting on behalf of 
the importer. This rule clarifies that in such cases, the importer's 
identity should be placed on the certificate. This does not increase 
the reporting burden because the name is entered by the inspector, not 
the importer. The second proposed recommendation would have required 
that ``source'' documents be used when reporting disposition of failing 
lots. However, based on comments received and further review by AMS, 
the recommendation has been withdrawn. The new, amended provision 
specifies the same requirement as the original regulation, i.e., bills-
of-lading and other transport certificates to be submitted by the 
importer or contractors of the importer. The provision requires that 
contact information of the disposing entity be specified in the 
documents filed. An adjustment in the proposed burden is not needed 
because the use of source documents would not have increased the volume 
of paperwork required to be reported. However, removal of the source 
document requirement may ease the difficulty importers might have had 
in obtaining ``source'' documents.
    Savings: If importers are not required to file certificates on lots 
meeting program requirements, the savings in 1999 will be approximately 
4,770 responses (2,385 lots, times 2 certificates per lot) and 398 
hours saved (4,770 times 5 minutes per response). The new reporting 
burden under Recommendation 17 is an estimated 4 responses for each of 
the 265 imported lots failing requirements, or 1,060 total responses. 
At 3.5 minutes per filing, the total reporting burden for filing 
disposition of failing lots only in 1999 is projected to be 62 hours. 
The new average will be 70 responses and 4 hours per importer. If this 
regulation was not effectuated, the 1999 reporting burden on importers 
would have been approximately 5,830 responses filed, and, based on 5 
minute reporting time per response, roughly 485 burden hours. Thus, 
Recommendation 17 results in an estimated savings of 4,770 responses 
and 423 burden hours in 1999.
    Recommendation 18: A small portion of the 5,000 hours under the 
original reporting burden accounts for importers filing requests for 
extension of the reporting period. Recommendation 18 extends the 
reporting period from 23 days after entry to 180 days after conditional 
release by the Customs Service. The 23-day period proved to be too 
short for reporting most imported lots, forcing importers to request 
extensions on nearly all lots imported during 1997 and 1998. Extension 
of the reporting period to 180 days alleviates the need to file 
requests for extension

[[Page 71358]]

for almost all imported peanut lots. In addition, extension of the 
reporting period also enables importers to collect certificates as the 
lots are certified, and file all certificates on failing lots at one 
time, thus saving the burden of reporting lots individually. After 
deadline extensions were granted by AMS during the 1997 and 1998 quota 
periods, importers filed outstanding reports in groups.
    Savings: Extending the reporting period from 23 days to 180 days 
means importers do not have to request as many extensions and they are 
able to combine the failing lot certificates into fewer reports. 
Savings from the reduction in the reporting burden is factored into the 
estimate of Recommendation 17.
    Recommendations 10, 15, and 20 clarify reporting requirements but 
do not change the burden. Recommendation 10 clarifies that importers 
may designate other entities (aflatoxin testing laboratories, customs 
import brokers, warehouses, blanchers, crushers, etc.) to file 
certificates and reports on their behalf. This reporting is done as a 
part of the business contract between the importer and the service-
provider at little or no cost to the importer, thus relieving the 
importer of the reporting burden. Recommendation 15 clarifies the 
information that is needed on stamp-and-fax documents. This change in 
information does not increase the time needed to complete the stamp-
and-fax document or the reporting burden. Recommendation 20 clarifies 
that if peanuts are not covered in a stamp-and-fax document and are not 
inspected--but are subsequently exported--those peanuts should not be 
reported.
    Total average savings, reporting burden: The modifications in this 
final rule represent an annual savings of approximately 5,300 responses 
and 467 reporting hours.
    The savings is only a few minutes for small importers who import a 
few containers of peanuts. A large importer of 8 million pounds of 
peanuts--200 lots with 20 lots failing requirements--has the following 
reporting burden in 1999 (vs. the original burden estimate in 
parentheses): 40 (80) stamp-and-fax notices; 0 (360) certificates on 
passing lots; 80 (80) certificates on failing lots; 0 (40) deadline 
extensions; total 120 (560) reports filed; 8 (46.6) hours reporting 
burden. These are rough estimates for general comparison purposes only.
    Recordkeeping burden: In addition to the reporting requirements, 
Section 999.600 requires that importers retain copies of certifications 
and entry documentation for not less than two years after the calendar 
year of acquisition. Customs Service document retention requirements 
are five years. While importers no longer file grade and aflatoxin 
certificates on passing lots, they must store that information for AMS 
and the Customs Service. The original recordkeeping burden totals 125 
hours, based on 25 respondents retaining records--an average of 5 
recordkeeping hours per importer. The revised recordkeeping burden, 
based on the 21 percent increase in the quota volume is 151 hours. With 
only 15 record keepers, the average recordkeeping hours per importer is 
10 hours.
    Cumulative new burden: This rulemaking establishes a new total 
annual reporting and recordkeeping burden for OMB number 0581-0176 of 
1,590 responses and 257 hours. This compares to the original burden of 
5,000 responses and 425 hours. The new burden averages 106 annual 
responses and 17 burden hours for each peanut importer. The burden 
hours per importer is increased because the estimated number of 
importers is sharply reduced from the original estimate.
    Comments to this amended Paperwork Reduction Act burden were 
requested in the proposed rule (63 FR 46191, August 31, 1998). Comments 
were to be submitted to the Desk Officer for Agriculture, Office of 
Information and Regulatory Affairs, Office of Management and Budget and 
to AMS. The comment period was 60 days, ending October 30, 1998. Two 
comments were received on one proposed reporting requirement change 
(``source'' documents) and, as previously discussed, that proposed 
change has not been made to section 999.600. That one reporting 
requirement remains as previously approved. This final rule does not 
alter the number of responses or reporting burden hours from those in 
the proposed rule. The new reporting and recordkeeping burden for OMB 
No. 0581-176 has been submitted to OMB and has been approved under that 
number.

Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the AMS has considered the economic impact of this peanut 
import regulation on small entities and whether the proposed changes to 
the regulation disproportionately or unfairly effect small entities. 
The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened.
    An initial regulatory flexibility analysis was prepared and 
published with the proposed rule (63 FR 46191, August 31, 1998). A 
comment period of 30 days was provided for comments to the proposal and 
the initial regulatory flexibility analysis. No comments were received 
that made specific reference to the analysis or questioned the impact 
of the proposed changes on small business entities. Accordingly, AMS 
has prepared the following final regulatory flexibility analysis.
    The import regulation is required by law--subparagraph (f)(2) of 
Section 108B of the Agricultural Act of 1949, as amended, and the 
Federal Agriculture Improvement and Reform Act of 1996. Subparagraph 
(f)(2) mandates that the Secretary shall require that ``all peanuts in 
the domestic and export marketplace fully comply with quality standards 
under Marketing Agreement 146.'' Handling requirements similar to those 
established under the Agreement also are established in the import 
regulation, to the extent necessary to assure comparability of quality 
standards. The import regulation was issued June 11, 1996 (61 FR 31306, 
June 19, 1996) with the intent to minimize the regulatory burden on 
importers. An amendment was issued December 31, 1996, (62 FR 1269, 
January 9, 1997), to conform to changes in the Agreement regulations 
and to add necessary storage reporting requirements.
    Experience of the 1997 and 1998 peanut quota periods shows that 
approximately 15 business entities imported peanuts and were subject to 
this import regulation. Importers appeared to cover a broad range of 
business entities, including fresh and processed food handlers, and 
both large and small commodity brokers who buy agricultural products on 
behalf of others. Small agricultural service firms have been defined by 
the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$500,000. Less than one third of the importers appear to be small 
business entities. The majority of peanut importers are large business 
entities under this definition. AMS is not aware of any peanut 
producers (farmers) who imported peanuts during these quota years.
    The 1997 and 1998 peanut quota years were the first two years that 
imported peanuts have been regulated under 7 CFR 999.600. Analysis of 
the regulatory impact of the regulation is

[[Page 71359]]

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

[[Page 71360]]

by increasing the maximum lot size for imported farmers stock peanuts 
to 50,000 pounds. This volume more accurately reflects the weight of 
farmers stock peanuts in standard sized semi-trailer trucks. The 
inspection service adjusts incoming inspection probe patters when 
collecting samples from the larger sized trucks. Only a small 
percentage of imported peanuts were in farmers stock form during 1997 
and 1998 and all were within this maximum lot size. The impact of 
Recommendation 7, as now modified, would be positive for peanut 
importers.
    Recommendation 8 adds new paragraph (d)(4) to strengthen lot 
identification requirements for imported peanuts. In some situations, 
the proposed modified positive lot identification procedures could take 
additional warehouse personnel and space, as well as inspection service 
time. However, warehouse labor is needed to lay out all bags for 
sampling, so costs in addition to those normally charged will not be 
significant. Additional inspection time will vary from a few minutes to 
wrap PLI tape around containers or stacked bags to 30 minutes or more 
to reassemble bags on pallets and shrink-wrapping pallets or stenciling 
individual bags with spray paint. The PLI requirements may increase 
costs for some, but not all, imported lots. Inspection service sampling 
and grading costs currently are $43 an hour. Inspections generally take 
from one to three hours, including travel time, to and from the 
inspection. Any increased costs to importers will be proportionate to 
the number of lots inspected and is not expected to unfairly affect 
small importers.
    The modified PLI methods make the import regulation more consistent 
with domestic program PLI requirements, and is consistent with the 
intent of the Act. Importers, as well as domestic peanut producers, 
handlers and manufacturers benefit from quality assurances and the 
integrity of the product--due, in large part, to enforced PLI 
procedures. The benefits of quality assurance and product integrity far 
outweigh the small increased costs that the modified PLI methods may 
entail.
    Recommendation 9 removes a redundant sentence in paragraph 
(d)(4)(iii) which provided that laboratories provide aflatoxin assay 
results to importers. This reference is repeated in paragraph 
(d)(4)(v). There is no regulatory impact from this change.
    Recommendation 10 makes minor changes in three paragraphs regarding 
the mandatory nature of aflatoxin testing and reporting test results. 
The regulation clearly states throughout that chemical analysis is 
required on imported peanuts. Paragraph (d)(4)(iv)(A) clarifies that 
importers ``shall,'' rather than ``should,'' contact a laboratory to 
arrange for chemical testing. Also under Recommendation 10, the 
clarification that laboratories can be designated by the importer to 
report test results to AMS is moved from paragraph (d)(4)(v)(B) to 
paragraph (d)(5)(v) for better placement of that instruction. These 
changes identify an optional reporting procedure and have no regulatory 
impact on importers.
    Recommendation 11 amends redesignated paragraph (d)(5)(iv)(A) by 
updating the list of aflatoxin testing laboratories certified to 
conduct chemical analyses on imported peanuts. There is no regulatory 
impact.
    Recommendation 12 adds a new sentence to introductory paragraph (e) 
to provide a blanching option for shelled peanuts failing quality 
requirements because of excessive ``fall through.'' The change is 
consistent with an amendment of the Agreement regulations. The change 
represents a relaxation in imported requirements by providing more 
opportunities for reconditioning certain failing peanut lots. 
Reconditioned offers the possibility of increasing the per ton value of 
the lot from approximately $150 for non-edible use to over $500 for 
edible peanuts. AMS does not have data on the possible positive impact 
had this relaxation been in effect under previous quotas. The future 
impact will be relative to the quality of imported peanuts--which is 
not possible to reliably predict.
    Recommendation 13 also relaxes requirements by adding a new 
paragraph (e)(4), pursuant to the same change in Agreement regulations. 
The modification allows lots meeting grade, but failing aflatoxin 
requirements to be blanched until roasted and then reinspected only for 
aflatoxin content. The impact of this relaxation can be significant if 
the importer has many such failing lots which the buyer wants roasted. 
Savings are accrued because the peanuts do not have to be removed from 
the blanching process for inspection and then returned to the blanching 
process for the remaining portion of the roasting process. The original 
grade certificate is recognized and the only additional inspection 
charges will be for sampling and aflatoxin analyses. AMS does not have 
data on the actual costs that could be saved in this process and cannot 
estimate the number of imported peanuts that may be affected by it in 
the future.
    Recommendations 14, 15, and 16 relax requirements relating to the 
stamp-and-fax entry process in paragraph (f)(1). Recommendation 14 
removes the terms which specify that the stamp-and-fax document be 
filed ``prior to arrival'' at the port-of-entry. Experience shows that 
importers may not have all of the needed information until after 
arrival of the peanuts. Recommendation 15 amends paragraph (f)(1) by 
reducing slightly, the information required on stamp-and-fax documents. 
Information on subsequent inspections of the arriving peanuts is not 
necessary for the purposes of the stamp-and-fax. One needed piece of 
information, the Customs Service entry number applicable to the lot, is 
added. In total, these changes reduce the reporting burden by a few 
words. The needed information was included on the stamp-and-fax 
documents during 1997 and 1998, but was not so specified as part of the 
entry information in original paragraph (f)(1). Recommendation 16 
removes the requirement in paragraph (f)(1) that a copy of the stamp-
and-fax document be forwarded to AMS headquarters. This reduces one 
reporting requirement for importers. These three relaxations make the 
entry procedure consistent with the reporting needs of AMS. The 
regulatory impact is minimal but does reduce requirements on importers.
    Recommendation 17 reduces the number of lots that have to be 
reported by requiring that only certificates on failing lots be filed 
by importers. If imported peanut quality is the same in 1999 as the 
average in 1997 and 1998, roughly 90 percent of the lots should not 
have to be reported to AMS headquarters. This should save an estimated 
398 reporting hours. The revision is in paragraph (f)(2).
    Recommendation 18 extends the reporting period specified in 
paragraph (f)(3) from 23 days after entry to 180 days after conditional 
release by the Customs Service. The extended reporting period allows 
importers more time to make good business decisions regarding imported 
lots, particularly failing lots that must be either reconditioned, sold 
at substantially lower costs, or re-exported. Also, with an extended 
reporting period, importers should not have to request extensions of 
reporting periods and could file all failing certifications and 
dispositions at one time. This should save the time of filing 
individual reports as each lot is certified, disposed of, or re-
exported.
    Recommendation 19 provides for up to a 60-day extension of the 
proposed 180-day reporting period. There is no time limit on domestic 
peanut disposition. However, because of Customs Service required 
liquidation of entry documentation, there must be

[[Page 71361]]

some time limit for importers to obtain clearances on failing lots and 
report to AMS. A total 240-day reporting period represents a compromise 
between the open-ended domestic requirements and Customs Service 
liquidation schedules. The impact of this requirement will be minimal, 
as continued storage costs or successive reconditioning attempts 
eventually reduce profit margins and force business decisions on lots 
pending eight months after conditional entry. A new paragraph (f)(5) is 
added.
    Recommendations 20, 21, and 22 make minor changes that will have no 
regulatory impact on importers. Recommendation 20 clarifies that if a 
container or shipment is re-exported without conditional entry by the 
Custom Service, it does not have to be reported to AMS and inspected. 
Such situations were not foreseen in the original import regulation and 
are included for clarity in new paragraph (f)(6) in this regulation. 
Recommendation 21 makes a minor wording change in paragraph (g)(1) 
regarding peanuts that are ``intended'' to be entered but are not 
entered. Recommendation 22 clarifies that the entities billed for 
inspections are those requesting inspections. Customs house brokers and 
storage warehouses often request inspections, and are the entities 
billed for services provided. However, costs of the inspections are 
borne by the importer. These three recommendations clarify original 
provisions and do not change the regulatory aspects of the rule or the 
reporting burden already authorized by OMB.
    The changes established in this final rule should result in an 
overall reduction in the information reporting burden of the peanut 
import regulation, currently assigned as OMB number 0581-0176. The most 
significant reduction in the reporting burden provides that importers 
file copies of grade and aflatoxin certificates only on failing lots, 
rather than all lots (Recommendation 17). Using the quality of 1997 and 
1998 imported peanuts as a guide, this proposal should reduce that 
reporting requirement by as much as 90 percent. The recordkeeping 
requirement is increased by an estimated 21 percent because the 1999 
duty-free tariff quota is 21 percent higher than the 1997 quota on 
which the original recordkeeping burden was based. Thus, this final 
rule establishes an annual reporting and recordkeeping burden of 1,590 
responses and 257 hours. This is a reduction from the original burden 
of 5,000 responses and 425 hours.
    Finally, the Department has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this final rule. 
Besides meeting AMS import quality requirements, clearance of each 
imported peanut lot also must be obtained from the Customs Service, 
FDA, and APHIS. Program requirements of those entities do not overlap 
the quality requirements of this regulation. AMS has consulted with the 
Customs Service to assure that the proposed changes are consistent with 
its entry procedures.
    Based on available information, the Administrator of the AMS has 
determined that this final rule imposes very minimal additional costs 
on affected importers, but should save considerable reconditioning, 
storage, and reporting expenses. The benefits of maintaining a high 
quality product should exceed any additional costs which may be 
incurred in meeting these requirements. On balance, the proposed 
changes are expected to reduce program costs incurred by importers.
    The proposed rule concerning this action was published in Federal 
Register (63 FR 46181) on August 31, 1998. Copies of the rule were 
mailed to over 350 foreign and domestic peanut entities. A press 
release was issued and the proposal was made available through the 
Internet. The proposed rule provided for 30-day comment period which 
ended September 30, 1998. Seven comments were received and are 
addressed above. Several proposed changes have been modified in this 
final rule.
    After consideration of all relevant material presented, it is found 
that finalizing the proposed rule as published in the Federal Register 
(63 FR 46181, August 31, 1998), with appropriate modifications, will 
tend to effectuate the declared policy of the Act.
    It is also found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Reigister because: (1) The changes need to be effective when 
the 1999 Mexican peanut import quota opens on January 1, 1999, so that 
all peanut importers are treated equally during 1999, as required by 
international trade agreements; (2) the rule relaxes requirements 
currently in place; (3) all known peanut importers and related industry 
sectors were sent copies of the proposed rule and they, as well as all 
other interested persons, were given 30 days to file comments on the 
recommended changes; and (4) all comments received have been considered 
and no changes have been made to increase the requirements proposed.

List of Subjects in 7 CFR Part 999

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

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

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

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

    2. Section 999.600 is revised to read as follows:


Sec. 999.600  Regulation governing imports of peanuts.

    (a) Definitions. (1) Peanuts means the seeds of the legume Arachis 
hypogaea and includes both inshell and shelled peanuts produced in 
countries other than the United States, other than those marketed in 
green form for consumption as boiled peanuts.
    (2) Farmers stock peanuts means picked and threshed raw peanuts 
which have not been shelled, crushed, cleaned or otherwise changed 
(except for removal of foreign material, loose shelled kernels, and 
excess moisture) from the form in which customarily marketed by 
producers.
    (3) Inshell peanuts means peanuts, the kernels or edible portions 
of which are contained in the shell.
    (4) Incoming inspection means the sampling and inspection of 
farmers stock peanuts to determine Segregation quality.
    (5) Segregation I peanuts, unless otherwise specified, means 
farmers stock peanuts with not more than 2.00 percent damaged kernels 
nor more than 1.00 percent concealed damage caused by rancidity, mold, 
or decay and which are free from visible Aspergillus flavus mold.
    (6) Segregation 2 peanuts, unless otherwise specified, means 
farmers stock peanuts with more than 2.00 percent damaged kernels or 
more than 1.00 percent concealed damage caused by rancidity, mold, or 
decay and which are free from visible Aspergillus flavus mold.
    (7) Segregation 3 peanuts, unless otherwise specified, means 
farmers stock peanuts with visible Aspergillus flavus mold.
    (8) Shelled peanuts means the kernels of peanuts after the shells 
are removed.
    (9) Outgoing inspection means the sampling and inspection of 
either: Shelled peanuts which have been cleaned, sorted, sized, or 
otherwise

[[Page 71362]]

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

BILLING CODE 3410-02-P

[[Page 71363]]

[GRAPHIC] [TIFF OMITTED] TR24DE98.000



BILLING CODE 3410-02-C

[[Page 71364]]

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

Dothan, AL, tel: (334) 792-5185,
Graceville, FL, tel: (904) 263-3204,
Winter Haven, FL, tel: (941) 291-5820, ext 260,
Albany, GA, tel: (912) 432-7505,
Williamston, NC, tel: (252) 792-1672,
Columbia, SC, tel: (803) 253-4597,
Suffolk, VA, tel: (757) 925-2286,
Portales, NM, tel: (505) 356-8393,
Oklahoma City, OK, tel: (405) 521-3864,
Gorman, TX, tel: (817) 734-3006.

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

Eastern U.S.
    Mobile, AL, tel: (334) 415-2531,
    Jacksonville, FL, tel: (904) 359-6430,
    Miami, FL, tel: (305) 870-9542,
    Tampa, FL, tel: (813) 272-2470,
    Presque Isle, ME, tel: (207) 764-2100,
    Baltimore/Washington, tel: (301) 317-4387,
    Boston, MA, tel: (617) 389-2480,
    Newark, NJ, tel: (201) 645-2636,
    New York, NY, tel: (718) 991-7665,
    Buffalo, NY, tel: (800) 262-4810,
    Philadelphia, PA, tel: (215) 336-0845.
Central U.S.
    New Orleans, LA, tel: (504) 589-6741,
    Detroit, MI, tel: (313) 226-6059,
    St. Paul, MN, tel: (612) 296-8557,
    Las Cruces, NM, tel: (505) 646-4929,
    Alamo TX tel: (956) 787-4091.
    El Paso, TX, tel: (915) 540-7723,
    Houston, TX, tel: (713) 923-2557.
Western U.S.
    Nogales, AZ, tel: (520) 281-4719,
    Los Angeles, CA, tel: (213) 894-2489,
    San Francisco, CA, tel: (415) 876-9313,
    Honolulu, HI, tel: (808) 973-9566,
    Salem, OR, tel: (503) 986-4620,
    Seattle, WA, tel: (206) 859-9801.

    (C) Questions regarding inspection services or requests for further 
assistance may be obtained from: Fresh Products Branch, PO Box 96456, 
room 2049-S, Fruit and Vegetable Programs, AMS, USDA, Washington, DC, 
20090-6456, telephone (202) 690-0604, fax (202) 720-0393.
    (ii) Sampling. Sampling of bulk farmers stock lots shall be 
performed at a facility that utilizes a pneumatic sampler or approved 
automatic sampling device. The maximum lot size of farmers stock 
peanuts shall be one conveyance, or two or more conveyances not 
exceeding a combined weight of 50,000 pounds (22,680 kilograms). 
Shelled peanut lots and cleaned-inshell lots, in bulk or bags, shall 
not exceed 200,000 pounds. For farmers stock, shelled and cleaned-
inshell lots not completely accessible for sampling, the applicant 
shall be required to have lots made accessible for sampling pursuant to 
inspection service requirements. The importer shall cause appropriate 
samples of each lot of edible quality shelled peanuts to be drawn by 
the inspection service. The amount of such peanuts drawn shall be large 
enough to provide for a grade and size analysis, for a grading check-
sample, and for three 48-pound samples for aflatoxin assay. Because 
there is no acceptable method of drawing official samples from bulk 
conveyances of shelled peanuts, the importer shall arrange to have bulk 
conveyances of shelled peanuts sampled during the unloading process. A 
bulk lot sampled in this manner must be Positive Lot Identified by the 
inspection service and held in a sealed bin until the associated 
inspection and aflatoxin test results have been reported.
    (4) Positive Lot Identification (PLI) shall be applied to all 
shelled and cleaned-inshell peanut lots during or immediately after 
first inspection by the inspection service or under the

[[Page 71365]]

guidance of the inspection service. Positive Lot Identification of a 
lot may be accomplished by: Wrapping PLI tape around bags or boxes on 
pallets; shrink wrapping pallets or multiple bags and applying a PLI 
sticker; stenciling and numbering of individual bags or boxes; affixing 
PLI seals on shipping container doors; or by other methods acceptable 
to the inspection service that clearly identifies the lot, is securely 
affixed to the lot, and prevents peanuts from being removed or added to 
the lot. Such positive lot identification methods may be dictated by 
the size and containerization of the lot, by warehouse storage or space 
requirements, or, by necessary further movement of the lot prior to 
receipt of certification. All lots forwarded to a reconditioning 
facility must be accompanied by valid PLI certification. Failing lots 
that are reconditioned shall be positive lot identified by sewing tags 
on bags or affixing a seal and taping bulk bin containers after such 
reconditioning or by other means acceptable to the inspection service 
that clearly identifies the peanuts in the lot, is securely affixed to 
the lot, and which prevents peanuts from being removed or added to the 
lot.
    (5) Aflatoxin assay. (i) The importer shall cause appropriate 
samples of each lot of shelled peanuts intended for edible consumption 
to be drawn by the inspection service. The three 48-pound samples shall 
be designated by the inspection service as ``Sample 1IMP,'' ``Sample 
2IMP,'' and ``Sample 3IMP'' and each sample shall be placed in a 
suitable container and lot identified by the inspection service. Sample 
1IMP may be prepared for immediate testing or Samples 1IMP, 2IMP and 
3IMP may be returned to the importer for testing at a later date, under 
Positive Lot Identification procedures.
    (ii) The importer shall cause Sample 1IMP to be ground by the 
inspection service or a USDA or PAC-approved laboratory in a 
subsampling mill. The resultant ground subsample shall be of a size 
specified by the inspection service and shall be designated as 
``Subsample 1-ABIMP.'' At the importer's option, a second subsample may 
also be extracted from Sample 1IMP and designated ``Subsample 1-CDIMP'' 
which may be sent for aflatoxin assay to a USDA or PAC-approved 
laboratory. Both subsamples shall be accompanied by a Milled Peanut 
Inspection Certificate or Notice of Sampling signed by the inspector 
containing identifying information as to the importer, the lot 
identification of the shelled peanut lot, and other information deemed 
necessary by the inspection service. Subsamples 1-ABIMP and 1-CDIMP 
shall be analyzed only in a USDA or PAC-approved laboratory. The 
methods prescribed by the Instruction Manual for Aflatoxin Testing, SD 
Instruction-1, August 1994, shall be used to assay the aflatoxin level. 
The cost of testing and notification of Subsamples 1-ABIMP and 1-CDIMP 
shall be borne by the importer.
    (iii) The samples designated as Sample 2IMP and Sample 3IMP shall 
be held as aflatoxin check-samples by the inspection service or the 
importer until the analyses results from Sample 1IMP are known. Upon 
call from the USDA or PAC-approved laboratory, the importer shall cause 
Sample 2IMP to be ground by the inspection service in a subsampling 
mill. The resultant ground subsample from Sample 2IMP shall be 
designated as ``Subsample 2-ABIMP.'' Upon further call from the 
laboratory, the importer shall cause Sample 3IMP to be ground by the 
inspection service in a subsampling mill. The resultant ground 
subsample shall be designated as ``Subsample 3-ABIMP.'' The importer 
shall cause Subsamples 2-ABIMP and 3-ABIMP to be sent to and analyzed 
only in a USDA or PAC-approved laboratory. Each subsample shall be 
accompanied by a Milled Peanut Inspection Certificate or a Notice of 
Sampling. All costs involved in the sampling, shipment and assay 
analysis of subsamples required by this section shall be borne by the 
importer.
    (iv)(A) To arrange for chemical analysis, importers shall contact 
one of the following USDA or PAC-approved laboratories:

Science and Technology Programs, AMS, 301 West Pearl St., Aulander, 
NC 27805, (P.O. Box 279), Tel: (919) 345-1661 Ext. 156, Fax: (919) 
345-1991
Science and Technology Programs, AMS, 1211 Schley Ave., Albany, GA 
31707, Tel: (912) 430-8490/8491, Fax: (912) 430-8534
Science and Technology Programs, AMS, 610 North Main St., Blakely, 
GA 31723, Tel: (912) 723-4570, Fax: (912) 723-3294
Science and Technology Programs, AMS, 107 South Fourth St., Madill, 
OK 73446, Tel: (405) 795-5615, Fax: (405) 795-3645
Science and Technology Programs, AMS, 715 North Main St., Dawson, GA 
31742, (PO Box 272), Tel: (912) 995-7257, Fax: (912) 995-3268
Science and Technology Programs, AMS, 308 Culloden St., Suffolk, VA 
23434,(P.O. Box 1130), Tel: (757) 925-2286, Fax: (757) 925-2285
Federal-State Inspection Service Laboratory, 1557 Reeves St., 
Dothan, AL 36303, (PO Box 1368, zip 36302)), Tel: (334) 792-5185, 
Fax: (334) 671-7984
Federal-State Inspection Service Laboratory, 201 Broad St., 
Headland, AL 36345, (PO Box 447, zip 36345-0447), Tel: (334) 693-
2729, Fax: (334) 693-2183
Federal-State Inspection Service Laboratory, 103 Greenville Ave., 
Goshen, AL 36035, (PO Box 204), Tel: (334) 484-3340, Fax: (334) 484-
3340
Federal-State Inspection Service Laboratory, 805 North Main St., 
Enterprise, AL 36330, (PO Box 310926), Tel: (334) 347-6525
ABC Research, 3437 SW 24th Ave., Gainesville, FL 32607, Tel: (904) 
372-0436, Fax: (904) 378-6483
J. Leek Associates, Inc., 1200 Wyandotte, Albany, GA 31705, (PO Box 
50395, zip 31703), Tel: (912) 889-8293, Fax: (912) 888-1166
J. Leek Associates, Inc., 139 South Lee St., Ashburn, GA 31714, Tel: 
(912) 567-3703, Fax: (912) 567-8055
J. Leek Associates, Inc., 402 SE 3rd Street, Anadarko, OK 73005, 
Tel: (405) 247-3266, Fax: (405) 247-3270
J. Leek Associates, Inc., PO Box 475, Blakely, GA 31723, Tel: (912) 
723-9155, Fax: (912) 723-2980
J. Leek Associates, Inc., 502 West Navarro St., DeLeon, TX 76444, 
(PO Box 6), Tel: (817) 893-3653, Fax: (817) 893-3640
J. Leek Associates, Inc., PO Box 333, Headland, AL 36345, Tel: (334) 
693-9320, Fax: (334) 693-0491
Pert Laboratory South, 721 East Pine Street, Colquitt, GA 31737, (PO 
Box 396), Tel: (912) 758-9293, Fax: (912) 758-8286
Pert Laboratories, 145 Peanut Drive, Edenton, NC 27932, (PO Box 
267), Tel: (252) 482-4456, Fax: (252) 482-5370
Southern Cotton Oil Company, 600 E. Nelson Street, Quanah, TX 79252, 
(PO Box 180), Tel: (940) 663-5323, Fax: (940) 663-5091
Quanta Lab, 9330 Corporate Drive, Suite 703, Selma, TX 78154-1257, 
Tel: (210) 651-5799, Fax: (210) 651-9271

    (B) Further information concerning the chemical analyses required 
pursuant to this section may be obtained from: Science and Technology 
Programs, AMS, USDA, PO Box 96456, room 3507-S, Washington, DC 20090-
6456, Tel (202) 720-5231, or Fax (202) 720-6496.
    (v) Reporting aflatoxin assays. A separate aflatoxin assay 
certificate, Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' or equivalent PAC-approved laboratory form, shall be issued 
by the laboratory performing the analysis for each lot. The assay 
certificate shall identify the importer, the volume of the peanut lot 
assayed, date of the assay, and numerical test result of the assay. The 
importer shall file, or cause to be filed, with the Secretary, all USDA 
Form CSSD-3, or equivalent chemical assay forms issued on failing 
peanuts. The importer shall cause the results of all chemical assays 
issued by PAC-approved laboratories to be filed with the Secretary. The 
results of the assay shall be reported as follows.
    (A) For the current peanut quota year, ``negative'' aflatoxin 
content means 15 parts per billion (ppb) or less aflatoxin content for 
peanuts which have been

[[Page 71366]]

certified as meeting edible quality grade requirements. Such lots shall 
be certified as ``Meets U.S. import requirements for edible peanuts 
under Sec. 999.600 with regard to aflatoxin.''
    (B) Lots containing more than 15 ppb aflatoxin content shall be 
certified as ``Fails to meet U.S. import requirements for edible 
peanuts under Section Sec. 999.600 with regard to aflatoxin.'' The 
certificate of any non-edible peanut lot also shall specify the 
aflatoxin count in ppb.
    (6) Appeal inspection. In the event an importer questions the 
results of a quality and size inspection, an appeal inspection may be 
requested by the importer and performed by the inspection service. A 
second sample will be drawn from each container and shall be double the 
size of the original sample. The results of the appeal sample shall be 
final and the fee for sampling, grading and aflatoxin analysis shall be 
charged to the importer. Lots that show evidence of PLI violation or 
tampering, as determined by the inspection service, are not eligible 
for appeal inspection.
    (e) Disposition of peanuts failing edible quality requirements. 
Peanuts shelled, sized, and sorted in another country prior to arrival 
in the U.S. and shelled peanuts which originated from imported 
Segregation 1 peanuts that fail minimum grade requirements specified in 
the table in paragraph (c)(1)(i) of this section (excessive damage, 
minor defects, moisture, or foreign material) or are positive to 
aflatoxin may be reconditioned by remilling and/or blanching. Peanuts 
that fail minimum grade requirements because of excessive ``fall 
through'' may be blanched. After such reconditioning, peanuts meeting 
the minimum grade requirements in the table, including minimum ``fall 
through'' requirements, and which are negative to aflatoxin (15 ppb or 
less), may be disposed for edible use. Residual peanuts resulting from 
milling or reconditioning of such lots shall be disposed of as 
prescribed as follows:
    (1) Failing peanut lots may be disposed for non-human consumption 
uses (such as livestock feed, wild animal feed, rodent bait, seed, 
etc.) which are not otherwise regulated by this section; Provided, That 
each such lot is Positive Lot Identified and certified as to aflatoxin 
content (actual numerical count). On the shipping papers covering the 
disposition of each such lot, the importer shall cause the following 
statement to be shown: ``The peanuts covered by this bill of lading (or 
invoice) are not to be used for human consumption.''
    (2) Peanuts, and portions of peanuts which are separated from 
edible quality peanuts by screening or sorting or other means during 
the milling process (``sheller oilstock residuals''), may be sent to 
non-edible peanut markets pursuant to paragraph (e)(1) of this section, 
crushed or exported. Such peanuts may be commingled with other milled 
residuals. Such peanuts shall be positive lot identified, red tagged in 
bulk or bags or other suitable containers.
    (i) If such peanuts have not been certified as to aflatoxin 
content, as prescribed in paragraph (d) of this section, disposition is 
limited to crushing and the importer shall cause the following 
statement to be shown on the shipping papers: ``The peanuts covered by 
this bill of lading (or invoice, etc.) are limited to crushing only and 
may contain aflatoxin.''
    (ii) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (3) Shelled peanuts which originated from Segregation 1 peanuts 
that fail minimum grade requirements specified in the table in 
paragraph (c)(1)(i) of this section, peanuts derived from the milling 
for seed of Segregation 2 and 3 farmers stock peanuts, and peanuts 
which are positive to aflatoxin, may be remilled or blanched. Residuals 
of remilled and/or blanched peanuts which continue to fail minimum 
grade requirements in the table shall be disposed pursuant to 
paragraphs (e)(1) or (2) of this section.
    (4) Shelled peanuts that are certified as meeting minimum grade 
requirements specified in the table in paragraph (c)(1)(i) of this 
section and which are positive to aflatoxin may be roasted during 
blanching. After roasting, such peanuts certified as meeting aflatoxin 
requirements (15 ppb or less), and which are positive lot identified, 
may be disposed to human consumption outlets without further grade 
analysis. The residual peanuts, excluding skins and hearts, resulting 
from roasting process, shall be red tagged and disposed of to non-
edible outlets pursuant to paragraphs (e)(1) or (2) of this section.
    (5) All certifications, lot identifications, and movement to non-
edible dispositions, sufficient to account for all peanuts in each 
consumption entry, shall be reported to the Secretary by the importer 
pursuant to paragraphs (f)(2) and (f)(3) of this section.
    (f) Safeguard procedures. (l) Prior to, or upon, arrival of a 
foreign-produced peanut lot at a port-of-entry, the importer, or 
customs broker acting on behalf of the importer, shall mail or send by 
facsimile transmission (fax) a copy of the Customs Service entry 
documentation for the peanut lot or lots to the inspection service 
office that will perform sampling of the peanut shipment. More than one 
lot may be entered on one entry document. The documentation shall 
include: The Customs Service entry number; the container number(s) or 
other identification of the lot(s); the volume of peanuts in each lot 
being entered; the inland shipment destination where the lot will be in 
storage or made available for inspection; and a contact name or 
telephone number at that destination. The inspection office shall sign, 
stamp, and return the entry document to the importer. The importer 
shall cause a copy of the relevant entry documentation to accompany 
each peanut lot and be presented to the inspection service at the time 
of sampling.
    (2) The importer shall file, of cause to have filed, with the 
Secretary, copies of failing grade and aflatoxin certificates and non-
edible disposition documents which identify the importer and the 
disposition outlet for failing quality peanuts. Such reports shall be 
sufficient to account for all peanuts failing quality requirements of 
this section: Provided, That: importers shall cause all certificates of 
peanuts meeting aflatoxin requirements issued by PAC-approved 
laboratories to be filed with the Secretary. Proof of non-edible 
disposition may include bills-of-lading, transfer certificates, and 
other documentation showing shipment from the importer, blancher, 
remiller, warehouse, or other entity, to crushing, feed or seed use, 
burying, or other non-edible disposition. Such documentation must 
include the weight of peanuts being disposed and the name and telephone 
number of the disposing entity. Proof of re-export must include U.S. 
Customs Service documentation showing exportation from the United 
States. These documents must be sent to the Marketing Order 
Administration Branch, Attn: Report of Imported Peanuts. Facsimile 
transmissions and overnight mail may be used to ensure timely receipt 
of inspection certificates and other documentation. Fax reports should 
be sent to (202) 205-6623. Overnight and express mail deliveries should 
be addressed to USDA, AMS, FV, Marketing Order Administration Branch, 
1400 Independence Avenue, SW, Room: 2525-S, Washington, DC, 20250, 
Attn: Report of Imported Peanuts. Regular mail should be sent to FV, 
AMS, USDA, PO Box 96456, Room

[[Page 71367]]

2525-S, Washington, DC 20090-6456, Attn: Report of Imported Peanuts.
    (3) All peanuts imported into the United States subject to this 
part shall be conditionally released by the U.S. Customs Service for a 
period of 180 days following the date of Customs Service release, for 
the purpose of determining whether such peanuts meet the quality 
requirements for human consumption or non-edible disposition and 
reporting such certification or non-edible disposition to the 
Secretary.
    (4) If the Secretary finds during, or upon termination, of the 
conditional release period that a lot of peanuts is not entitled to 
admission into the commerce of the United States, the Secretary shall 
request the Customs Service, within 30 days after close of the 
conditional release period, to demand return of said lot of peanuts to 
Customs Service custody. Failure to comply with a redelivery demand 
within 30 days of the date of the redelivery demand, may result in the 
assessment against the importer of record and surety, jointly and 
severally of liquidated damages equal to the value of the peanuts 
involved. Failure to fully comply with quality and handling 
requirements or failure to notify the Secretary of disposition of all 
foreign-produced peanuts, as required under this section, may result in 
a compliance investigation by the Secretary. Falsification of reports 
submitted to the Secretary is a violation of Federal law punishable by 
fine or imprisonment, or both.
    (5) An extension of the 180-day conditional release period may be 
granted by the Secretary upon request of the importer. Extension shall 
not exceed an additional 60 calendar days. Requests for extension shall 
be specific to each peanut lot and shall include the lot's Customs 
Service entry number, the positive lot identification, weight or 
volume, and current storage location. Requests for extension of the 
conditional release period shall be made in writing pursuant to 
paragraph (f)(2) of this section.
    (6) Peanuts for which an import application is filed with the 
Customs Service but which are subsequently exported without sampling or 
inspection by the inspection service, need not be reported to the 
Secretary.
    (7) Reinspection. Whenever the Secretary has reason to believe that 
peanuts may have been damaged or deteriorated while in storage, the 
Secretary may reject the then effective inspection and aflatoxin 
certificates and require the importer to have the peanuts reinspected 
to establish whether or not such peanuts may be disposed of for human 
consumption.
    (8) Early arrival and storage. Peanut lots sampled and inspected 
upon arrival in the United States, but placed in storage for more than 
one month prior to beginning of the quota year for which the peanuts 
will be entered, must be reported to AMS at the time of inspection. The 
importer shall file copies of the Customs Service documentation showing 
the volume of peanuts placed in storage and the storage location, 
including any identifying number of the storage warehouse. Such peanuts 
should be stored in clean, dry warehouses and under cold storage 
conditions consistent with industry standards. Pursuant to paragraph 
(f)(7) of this section, the Secretary may require reinspection of the 
lot at the time the lot is declared for entry with the Customs Service.
    (g) Additional requirements. (1) Nothing contained in this section 
shall preclude any importer from milling or reconditioning, prior to 
importation, any shipment of peanuts for the purpose of making such 
peanuts eligible for importation into the United States. However, all 
peanuts intended for human consumption use must be certified as meeting 
the quality requirements specified in paragraph (c) of this section, 
prior to such disposition.
    (2) Conditionally released peanut lots of like quality and 
belonging to the same importer may be commingled. Defects in an 
inspected lot may not be blended out by commingling with other lots of 
higher quality. Commingling also must be consistent with applicable 
Customs Service regulations. Commingled lots must be reported and 
disposed of pursuant to paragraphs (f)(2) and (f)(3) of this section.
    (3) Inspection by the Federal or Federal-State Inspection Service 
shall be available and performed in accordance with the rules and 
regulations governing certification of fresh fruits, vegetables and 
other products (7 CFR part 51). The importer shall make each 
conditionally released lot available and accessible for inspection as 
provided in this section. Because inspectors may not be stationed in 
the immediate vicinity of some ports-of-entry, importers must make 
arrangements for sampling, inspection, and certification through one of 
the offices and laboratories listed in paragraphs (d)(3) and (d)(5) of 
this section, respectively.
    (4) Imported peanut lots sampled and inspected at the port-of-
entry, or at other locations, shall meet the quality requirements of 
this section in effect on the date of inspection.
    (5) A foreign-produced peanut lot entered for consumption or for 
warehouse may be transferred or sold to another person: Provided, That 
the original importer shall be the importer of record unless the new 
owner applies for bond and files Customs Service documents pursuant to 
19 CFR 141.20 and 141.113: Provided further, That such peanuts must be 
certified and reported to the Secretary pursuant to paragraphs (f)(2) 
and (f)(3) of this section.
    (6) Payment of the cost of transportation, sampling, inspection, 
certification, chemical analysis, and Positive Lot Identification, as 
well as remilling and blanching, and further inspection of remilled and 
blanched lots, and disposition of failing peanuts, shall be the 
responsibility of the importer. Whenever an applicant presents peanuts 
for inspection, the applicant shall furnish any labor and pay any costs 
incurred in moving, opening containers for sampling, and the shipment 
of samples as may be necessary for proper sampling and inspection. The 
inspection service shall bill the applicant for fees covering quality 
inspections and other certifications as may be necessary to certify 
edible quality or non-edible disposition. USDA and PAC-approved 
laboratories shall bill the applicant separately for aflatoxin assay 
fees. The importer also shall pay Customs Service costs as required by 
that agency.
    (7) Each person subject to this section shall maintain true and 
complete records of activities and transactions specified in this 
section. Such records and documentation accumulated during entry shall 
be retained for not less than two years after the calendar year of 
acquisition, except that Customs Service documents shall be retained as 
required by that agency. The Secretary, through duly authorized 
representatives, shall have access to any such person's premises during 
regular business hours and shall be permitted, at any such time, to 
inspect such records and any peanuts held by such person.
    (8) The provisions of this section do not supersede any 
restrictions or prohibitions on peanuts under the Federal Plant 
Quarantine Act of 1912, the Federal Food, Drug and Cosmetic Act, any 
other applicable laws, or regulations of other Federal agencies, 
including import regulations and procedures of the Customs Service.

    Dated: December 16, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-33933 Filed 12-23-98; 8:45 am]
BILLING CODE 3410-02-P