[Federal Register Volume 67, Number 174 (Monday, September 9, 2002)]
[Rules and Regulations]
[Pages 57129-57145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22700]



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  Federal Register / Vol. 67, No. 174 / Monday, September 9, 2002 / 
Rules and Regulations  

[[Page 57129]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 996, 997, 998, and 999

[Docket No. FV02-996-1 IFR]


Establishment of Minimum Quality and Handling Standards for 
Domestic and Imported Peanuts Marketed in the United States and 
Termination of the Peanut Marketing Agreement and Associated Rules and 
Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule establishes a new Part 996 requiring all domestic 
and imported peanuts marketed in the United States to be officially 
inspected. This action is mandated by the Farm Security and Rural 
Investment Act of 2002, enacted May 13, 2002. This rule establishes 
handling standards that handlers and importers must follow and edible 
quality standards that all such peanuts intended for edible use must 
meet prior to entering human consumption channels. Safeguards to 
protect against peanut quality concerns also are specified. This rule 
also terminates Peanut Marketing Agreement No. 146 (Agreement) and the 
rules and regulations issued under the Agreement. It also terminates 
the companion regulations that apply to imported peanuts and peanuts 
handled by persons not subject to the Agreement.

DATES: Effective September 10, 2002, except that, Part 998 is removed 
effective January 1, 2003; comments received by October 9, 2002, will 
be considered prior to issuance of a final rule. Indemnification 
payments for the 2001 crop peanuts will continue through December 31, 
2002.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938, or e-mail: [email protected]. 
All comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours, or can be viewed at: http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Jim Wendland or Kenneth G. Johnson, DC 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, 4700 River Road, suite 2A04, Unit 
155, Riverdale, Maryland 20737; telephone (301) 734-5243, Fax: (301) 
734-5275 or Ronald L. Cioffi, Marketing Order Administration Branch, 
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., 
Stop 0237, Washington, DC 20250-0237; telephone (202) 720-2491, Fax: 
(202) 720-8938; or e-mail: [email protected], 
[email protected] or [email protected].
    Small businesses may request information on complying with this 
rule by contacting Jay Guerber, at the same address as above, or e-
mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Section 1308 of 
the Farm Security and Rural Investment Act of 2002 (Public Law 107-
171), 7 U.S.C. 7958, hereinafter referred to as the ``Act.''
    This interim final rule has been determined to be non-significant 
for the purposes of Executive Order 12866 by the Office of Management 
and Budget (OMB) and therefore has not been reviewed by OMB.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    There are no administrative procedures, which must be exhausted 
prior to any judicial challenge to the provisions of this rule.

Termination of the Peanut Marketing Agreement and the Peanut Non-Signer 
and Import Regulations

    This rule terminates Peanut Marketing Agreement No. 146 (7 CFR 
998.1--998.61) and the rules and regulations (7 CFR 998.100--998.409) 
in effect under the Agreement on December 31, 2002, so that 
indemnification payments can be made on 2001 crop peanuts. This rule 
also terminates the companion regulations that apply to peanuts handled 
by persons not subject to the Agreement (7 CFR part 997) and to 
imported peanuts (7 CFR 999.600) effective September 10, 2002.
    The Peanut Marketing Agreement No. 146 (7 CFR part 998) has been in 
effect since 1965 under the authority of the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674) (AMAA). The 
Agreement was administered by the Peanut Administrative Committee 
(PAC), which was comprised of peanut handlers and producers appointed 
by USDA. Minimum quality regulations were applied to handlers who 
signed the Agreement. The Agreement covered peanuts produced in the 
three regional production areas in the United States. The Agreement 
also included authority for indemnification payments to signatory 
handlers on peanuts involved in product and appeals claims due to 
aflatoxin content. Reporting and recordkeeping requirements also were 
prescribed. Handlers paid assessments to the PAC to cover program 
administrative and indemnification costs.
    Consistent with the requirements of the AMAA, comparable quality 
requirements were in effect for peanuts handled by persons not 
signatory to the Agreement (``non-signers''). The non-signer program (7 
CFR part 997) was mandated in 1989 by Public Law 101-220, which amended 
the AMAA. The peanut import regulation has been authorized by section 
108B(f)(2) of the Agricultural Act of 1949 (7 U.S.C. 1445c3), as 
amended in 1990 and 1993.
    The non-signer regulations covered peanuts handled by persons not 
subject to the Agreement. The inspection and quality requirements were 
the same as those under the Agreement. Non-signer handlers had to pay 
the same administrative assessment rate as applied to signatory 
handlers under the Agreement.

[[Page 57130]]

    The peanut import regulation required imported peanuts to meet the 
same quality and handling requirements as required under the Agreement. 
Imported peanuts were maintained under lot identification procedures 
and kept separate and apart from domestic peanuts until certified for 
human consumption use.
    Under all three programs, failing peanuts could be reconditioned to 
meet edible requirements or disposed of in non-edible outlets. 
Safeguard provisions were included in the three programs to ensure that 
the Federal or Federal State Inspection Service (Inspection Service) 
sampled, inspected, and certified the quality of all peanut lots 
intended for edible consumption, and that chemical analyses were 
performed by USDA laboratories or laboratories approved by USDA.
    The Act terminated the PAC effective July 1, 2002. This, in turn, 
requires terminating the Agreement and its implementing regulations. 
The companion regulations covering peanuts handled by persons not 
signatory to the Agreement and imported peanuts also are terminated. 
Assessments collected by the PAC under the Agreement and by USDA under 
the non-signer regulations ceased with 2001 crop peanuts.

New Peanut Program Authority

    Section 1308 of the Act requires that USDA take several actions 
with regard to peanuts marketed in the United States, effective with 
2002 crop peanuts.
    Mandatory Inspection: Paragraph (a) requires that all peanuts 
marketed in the United States (including imported peanuts) be 
officially inspected and graded by Federal or Federal-State inspectors.
    Termination of the Peanut Administrative Committee: Paragraph (b) 
terminated the PAC effective July 1, 2002. As noted above, because the 
PAC was charged with daily oversight of the Agreement's regulatory 
program, termination of the PAC necessitates termination of the 
Agreement and its implementing regulations. The companion non-signer 
and peanut import regulations were based on regulations under the 
Agreement. Those regulations also are terminated.
    Establishment of a Peanut Standards Board: Paragraph (c) provides 
for the establishment of a Peanut Standards Board (Board), and requires 
USDA to consult with the Board prior to establishing or changing 
quality and handling standards for domestically produced and imported 
peanuts. The Board is not subject to the Federal Advisory Committee 
Act. A transition period is designated to allow time for USDA to 
implement nomination procedures and select a Board, as prescribed under 
the Act.
    USDA received nominations and applications from interested persons 
to serve on the Board. A Notice was published in the Federal Register 
on August 2, 2002 (67 FR 50409) and an application form was posted on 
the AMS Web site at: http://www.ams.usda.gov/fv/peanut-farmbill.htlm. 
Written nominations were received through September 3, 2002.
    The Act also provides, in paragraph (g)(1) of section 1308, that 
during the transition period from the Agreement to the new program, 
USDA may designate persons serving as members of the PAC to serve as 
members of the Board, on an interim basis, for the purpose of carrying 
out the duties of the Board. USDA has established the interim Board and 
has consulted with the Board and Board officers on three occasions to 
establish the quality and handling standards specified in this program.
    Maintaining wholesome quality peanuts: Paragraph (d) directs USDA 
to make identifying and combating the presence of all quality concerns 
related to peanuts a priority in the development of quality and 
handling standards for peanuts and in the inspection of domestically 
produced and imported peanuts. The Act directs USDA to consult with 
appropriate Federal and State agencies to provide adequate safeguards 
against all quality concerns related to peanuts. USDA notified State 
government Inspection Service supervisors of the proposed text on the 
internet and met with supervisors on July 29 and August 15, 2002. USDA 
also has contacted officials in the United States Customs Service 
(Customs Service) and the Food and Drug Administration (FDA) with 
regard to this new program.
    Imported peanuts: Paragraph (e) provides that imported peanuts 
shall be subject to the same quality and handling standards as apply to 
domestically produced peanuts.

Program Continuity

    To maintain program continuity until the new peanut program could 
take effect, USDA continued the implementing regulations of the 
Agreement, and the non-signer and import regulations from July 1, 2002, 
until the effective date of this action. This action terminates the 
Agreement and the rules and regulations in effect under the Agreement 
on December 31, 2002, to allow payment of indemnification claims on 
2001 crop peanuts. The peanut non-signer and import regulations are 
terminated on the effective date of this action. Assessments will not 
be collected and indemnification will not be paid on 2002 crop peanuts.
    The provisions of this new program will apply to 2002 and 
subsequent crop year peanuts, to 2001 crop year peanuts not yet 
inspected, and to 2001 crop year failing peanuts that have not met 
disposition standards, and will continue in force and effect until 
modified, suspended, or terminated.
    Pursuant to the Act, USDA has consulted with interim Board members 
in the development of the quality and handling standards established in 
this rulemaking. USDA coordinated a conference call with interim Board 
members on July 2, 2002. An initial draft text with reduced USDA 
oversight was prepared by USDA and distributed to the interim Board 
members prior to the conference call. The draft was reviewed and 
initial changes and comments were proposed. At the interim Board's 
direction, four interim Board officers met with USDA on July 17, 2002. 
Three of the four officers proposed several additional changes. A 
second draft text was prepared reflecting those proposed changes. That 
draft was again distributed to interim Board members and State 
supervisors of the Inspection Service and was discussed at a meeting in 
Atlanta, Georgia, on July 30, 2002. In addition to the 18-member 
interim Board, approximately 50 industry members and Inspection Service 
State supervisors attended the meeting. The revised draft text was 
thoroughly reviewed and several modifications were recommended. Quality 
standards which would allow purchase of Segregation 2 and 3 quality 
peanuts for processing for human consumption use and a change minimum 
kernel size were discussed by the interim Board. An implementation 
schedule also was discussed.
    In addition to those meetings, USDA revised the draft text after 
the Atlanta meeting and posted it on the AMS website. Written comments 
were received from interim Board members after the meeting and a few 
comments were received in response to the posting of the draft 
standards text on the internet. Comments were accepted through August 
12, 2002.

New Peanut Quality and Handling Standards

    This rulemaking action establishes, under Part 996, peanut quality 
and handling standards similar to the quality and handling requirements 
that were in effect under USDA's three previous peanut programs, with 
certain

[[Page 57131]]

changes. The changes, described in the following discussion, are based 
on interim Board and industry suggestions.
    No restrictions on use of farmers stock peanuts: Previously, only 
farmers stock peanuts determined to be Segregation 1 quality peanuts 
could be acquired by handlers for preparation and disposition to human 
consumption outlets. Segregation 2 and 3 farmers stock peanuts were 
restricted to non-human consumption use such as seed, oilstock, animal 
feed, and birdseed.
    This rule differs from the previous peanut programs in that 
handlers may purchase any segregation quality peanuts for shelling and 
eventual disposition to human consumption outlets, provided that such 
peanuts, after handling, meet the outgoing standards of this program. 
This change was recommended by several of the large peanut handling 
operations.
    Some handlers on the interim Board stated that the prohibition on 
Segregation 2 and 3 peanuts for edible use is more than 35 years old 
and that modern technologies enable handlers to shell and mill failing 
quality peanuts of any segregation category. They stated that this will 
increase use of domestic peanut production for edible consumption 
without a loss in edible peanut quality. They also stated that raw, 
farmers stock peanuts produced in other countries are not subject to 
incoming quality requirements or restricted as to segregation levels in 
those countries. Thus, they believe, this change in the peanut program 
would place domestic handlers on an even playing field with shellers in 
other countries who might export to the United States peanuts shelled 
and handled from any quality raw peanuts.
    At least one grower spoke in favor of removal of the restriction on 
use of Segregation 2 and 3 farmers stock only in non-edible outlets. 
Many growers have long contended that a single moldy peanut in a 
wagonload of farmers stock greatly reduces the value of the entire 
wagon and, thus, significantly reduces the grower's income. These 
growers see this as unfair and believe that they should be able to 
market their peanuts without a restriction on segregation use.
    Under the new program, Segregation 3 peanuts with visible aflatoxin 
mold may now be purchased by handlers and imported by importers. 
Safeguard procedures remain in place to assure peanut quality and 
wholesomeness. The requirement that any farmers stock peanuts shelled 
and milled for human consumption use must be inspected and certified as 
meeting outgoing quality standards for grade and aflatoxin content 
prior to disposition for human consumption use is retained in this 
rule.
    Storage of Segregation 2 and 3 farmers stock peanuts purchased by 
the handler is at the handler's discretion. Separate storage and 
shelling of Segregation 2 and 3 peanuts under the handler's ownership 
are no longer necessary because any peanuts intended for human 
consumption use must meet outgoing quality requirements before such 
use. Shelling of a handler's farmers stock peanuts and use of the 
handler's shelled peanuts also are at the handler's discretion, 
provided that any shelled peanuts which the handler disposes for human 
consumption use are inspected and certified for outgoing grade quality, 
as indicated in the table in Sec.  996.31(a), and certified as negative 
to aflatoxin pursuant to a chemical analysis carried out by a USDA or 
USDA-approved laboratory. Positive lot identification (PLI) practices 
covered under Sec.  996.40(a) must also be followed.
    A handler may dispose of the handler's non-edible quality peanuts 
(sheller oilstock residuals) to such non-edible peanut uses as crushing 
into oil, or animal feed, or seed, pursuant to Sec.  996.50. 
Disposition is at the handler's discretion provided that non-edible 
peanuts are moved under positive lot identification procedures and 
records documenting all such dispositions are maintained by the handler 
pursuant to Sec.  996.71(b).
    To the extent that farmers stock peanuts are imported, the importer 
has the same discretionary control over the storage, handling, and 
disposition of such peanuts.
    Any storage or subsequent inspection that a handler may carry out 
for farmers stock peanuts held under USDA's Farm Service Agency's (FSA) 
loan program are subject to the provisions of the loan program.
    Likewise, a handler may receive or acquire farmers stock peanuts or 
shelled peanuts from another handler and proceed to mill and prepare 
those peanuts for edible or non-edible use. Any contractual 
arrangements covering storage, shelling, milling, or disposition of 
such peanut lots are up to the two handlers. However, any peanuts 
intended for human consumption must be certified for such use pursuant 
to Sec.  996.31(a).
    This rule establishes the same outgoing quality standards for 
damage, defects, foreign material and moisture, and maximum allowable 
aflatoxin content as required under the previous peanut programs. The 
15 parts-per-billion (ppb) maximum aflatoxin content is specified in 
the definition of the term ``negative aflatoxin content'' in Sec.  
996.11.
    Direct blanching without prior inspection: Under the previous 
programs, all peanuts were required to be sampled and inspected for 
grade quality and aflatoxin content as the peanuts completed the 
shelling operation. The peanuts were also positive lot identified at 
that time and kept separate and apart from other milled lots. After the 
peanuts were moved to a blanching operation and blanched, a second 
sampling and grade inspection was conducted.
    Under this program, handlers intending to blanch peanuts pursuant 
to a buyer's demand, may move peanuts from the handler's shelling 
facility to the handler's dedicated blanching facility without 
obtaining outgoing inspection and PLI prior to movement. Under this 
provision, the handler's blanching operation may not blanch peanuts 
belonging to other handlers. Movement of such peanuts under these 
conditions may be without grade inspection and PLI.
    This change was recommended by interim Board handler members who 
have their own blanching facilities as a method of reducing handling 
and inspection costs and improving the efficiency of handling 
operations for peanuts that the handler intends to blanch. This change 
does not apply to peanuts sent to a custom blancher for blanching 
because those peanuts may be commingled with peanuts from another 
handler. To help safeguard against inadvertent commingling with another 
handler's peanuts, peanut lots sent to a custom blancher must be 
maintained under positive lot identity and be accompanied by a valid 
grade inspection certificate.
    Because the peanuts are sampled and inspected for grade and 
aflatoxin content after completion of the blanching operation, and PLI 
is applied at that time, the outgoing quality and identity of the 
peanuts is not jeopardized.
    Reporting farmers stock acquisitions: Because handlers and 
importers may now shell and mill Segregation 2 and 3 peanuts into 
edible quality peanuts, it is necessary that USDA account for all 
farmers stock peanuts acquired by handlers and importers. Reporting of 
farmers stock acquisitions is changed in this rule to require that all 
farmers stock acquisitions, regardless of segregation category, must be 
reported by the handler and importer to USDA. The Monthly Report of 
Acquisitions form is similar to the form previously used under the non-
signer peanut program

[[Page 57132]]

and to the PAC-1 filed by signatory handlers under the Agreement.
    Reporting failing lots: Under the previous programs, non-signer 
handlers and importers were required to file with USDA copies of the 
outgoing grade and aflatoxin certificates on every peanut lot failing 
quality or aflatoxin standards. USDA used these certificates to monitor 
reconditioning and proper disposition of the failing lots. Under the 
Agreement, the Inspection Service and the aflatoxin laboratories filed 
with PAC, all grade and aflatoxin certificates on behalf of the 
signatory handlers.
    Reporting procedures similar to those used under the Agreement are 
used for all handlers and importers in this new program. Thus, handlers 
and importers will not be required to file failing grade quality and 
aflatoxin certificates with USDA. These certificates will be filed by 
the Inspection Service and USDA and USDA-approved aflatoxin 
laboratories.

Comments From Interim Board Members and Others

    As previously discussed, USDA conducted a telephone conference call 
with interim Board members on July 2, 2002, and met with interim Board 
officers on July 17, 2002, and the full interim Board on July 30, 2002. 
Written comments from interim Board members and a few handlers not 
members of the interim Board were received throughout this period. 
Unless otherwise indicated, the comments addressed below were provided 
during the July 30 interim Board meeting.
    Most interim Board members indicated that they did not seek radical 
or wholesale changes to the Agreement's regulations. This was apparent 
from the comments offered during the initial telephone conference call 
and at the July 30 interim Board meeting.
    Some grower member representatives raised three general objections 
to establishment of new standards for the 2002 peanut crop. They 
believed that the new program should not be implemented if the 2002 
crop harvest had begun. Because of geographical location, peanuts in 
south Texas and north Florida, representing a small portion of the 
total crop, were harvested before USDA could complete this rulemaking 
process. Because the new quality standards offer potential benefits to 
growers and handlers, some grower members believe that implementation 
after the 2002 crop harvest has begun is unfair to producers and 
handlers in those early-harvest areas.
    Some interim Board members suggested that the greatest benefit to 
the program--purchase of Segregation 2 and 3 peanuts for possible 
edible use--would affect only a very small percentage of the early 
harvest peanuts, and that it may be possible to warehouse some of those 
farmers stock peanuts until the new standards become effective. Other 
interim Board members did not contest this assessment.
    Section 1308 of the Act provides that its provisions take effect 
with the 2002 peanut crop. An alternative could be to continue the more 
restrictive 2001 regulations for the entire 2002 crop. However, USDA 
believes that implementation of the program as soon as possible after 
harvest begins is better than that alternative. The benefits of the new 
program to the entire industry are compelling. Most interim Board 
members believe that there should not be further delay in implementing 
this action. Only a small number of early harvest producers should be 
affected by the implementation date of this action. Further, storage 
accommodations can help alleviate any timing concerns.
    The same interim Board members concerned about producer fairness 
also cautioned about making significant changes to incoming quality 
provisions without knowledge of changes being considered to the 
Marketing Assistance Program by USDA's Farm Service Agency. Pursuant to 
the Act, the FSA loan program also is being restructured, and the 
extent and nature of the loan provisions will not be known until after 
the quality and handling standards in this program become effective.
    These members stated that the provision to allow purchase of 
Segregation 2 and 3 quality peanuts for edible consumption could affect 
the FSA loan program. They questioned details relating to the loan 
payments, inspection costs and storage of farmers stock peanuts placed 
under FSA's loan program. These questions are applicable to growers and 
will be addressed by FSA in that program. This action concerns the 
outgoing quality standards and handling procedures applicable to peanut 
handlers.
    None of the definitions and other provisions addressed in this rule 
will be applicable to other peanut programs operated by USDA such as 
the loan and direct payment, counter-cyclical payments, and quota 
buyout payment programs provided for in the 2002 Act. Thus, for 
example, the definitions of ``handle'' and ``handler'' set out in this 
rule will have no application to those other programs, and will not 
govern eligibility for payments, or the kinds of payments that can be 
made, under those other programs. Rather, the definitions and other 
provisions implemented here were strictly developed for the limited 
purposes reflected in the rule and no other. The policy choices and any 
statutory interpretations involved reflect that limited purpose. FSA 
was consulted in that respect and assured that the understanding and 
intent was clearly that these rules would not in any way restrict 
policy determination made with respect to other programs. Rules for 
other peanut programs will be issued in due course. Further, references 
in this preamble to previous peanut programs is meant to refer to those 
peanut operations which were under the control of the Agricultural 
Marketing Service (AMS) and not those under the control of FSA or FSA's 
predecessor agency.
    Written comments were received from a few independent handlers 
stating that not all handlers are able to remove all defective kernels, 
particularly in lots with concealed freeze damage or kernels with 
yellow pitting. Also, some operations do not have the latest 
technologies or their own dedicated blanching facilities to remove all 
kernels which contain aflatoxin.
    Handlers will have to make decisions regarding the reconditioning 
of each failing lot. Those decisions are made on a lot-by-lot basis, 
based upon the grade factors identified in the lot's latest grade 
inspection or aflatoxin certificate. Handlers with the latest milling 
technologies or their own blanching operations may be better able to 
recondition failing lots than handlers without such equipment. Handlers 
are not prevented from remilling lots more than one time to remove 
defective or contaminated kernels. Custom blanching operations with 
current technologies are available to all handlers. If reconditioning 
operations are not successful, other handlers with such equipment could 
acquire the failing lots or recondition them on a contract basis. 
Because handlers are not prevented from reconditioning other handlers' 
failing lots, high quality standards can be established and maintained.
    In the 1980's, Agreement regulations prohibited small kernels from 
use in edible consumption lots because research showed a higher 
incidence of aflatoxin in small peanuts. Research conducted at that 
time indicated that aflatoxin occurs more frequently in peanuts which 
are under stress during the growing season and that many peanut kernels 
are small because the plants were under such stress.
    Some large handlers now contend that modern sorting technologies 
are able to remove the smaller, contaminated kernels and that end-
product manufacturers now have markets for smaller whole kernels in 
snack foods

[[Page 57133]]

and other edible products. The handlers recommend that the change would 
allow more domestically produced peanuts to be used in human 
consumption outlets and, thus, result in a more efficient use of total 
domestic peanut production. They also claim that foreign manufacturers 
of peanut products, such as peanut paste and peanut butter, are not 
under such minimum size restrictions for the manufactured product they 
export to the United States. They contend that relaxation in the size 
and shape of the holes in the screens used to sort out small kernels 
will allow domestic handlers and manufacturers to better compete with 
foreign product.
    However, interim Board members representing regional grower 
associations oppose smaller kernel sizes for food quality and 
wholesomeness reasons. They believe that the risk of increased 
aflatoxin contamination in the smaller kernels outweighs the benefit of 
any incremental increase in the use of small peanut kernels, or cost 
savings accrued. Those opposed to use of small kernels contend that, in 
addition to having a higher incidence of aflatoxin, smaller kernels 
also may have a bitter taste. At the interim Board meeting, a 
representative from a peanut manufacturers' association said that 
manufacturers would oppose use of smaller size kernels.
    The draft text which USDA posted on the Internet included the table 
displaying the amended screen sizes that would allow smaller kernels in 
edible lots. Written comments were received, most from interim Board 
members, opposing use of round hole screens and the smaller kernel 
size. Those comments cited concerns for wholesomeness and a loss of 
quality if smaller kernels were allowed in edible lots. Some suggested 
that the screen sizes should not be changed without further research on 
the increased risk of aflatoxin in small peanut kernels.
    After review of the positions presented at the meeting and the 
written comments received, USDA believes that the kernel sizes 
specified under the previous peanut programs should continue in effect 
for the 2002 crop year. Therefore, the recommendation to change the 
minimum size standard is not accepted for 2002 crop peanuts.
    An oilmill operator (crusher) filed a written comment that the 
mission of the new standards should be to ensure food safety and not to 
establish restrictions that increase costs and hinder trade between 
willing sellers and buyers. The oilmill operator suggested that: (1) 
Incoming inspection should not be required for farmer stock peanuts 
that the producer and handler/crusher know will be sent immediately to 
crushing; (2) shelled peanuts intended for non-edible use do not need 
to be positive lot identified; and (3) peanuts imported as non-edible 
specifically for crushing also should not have to be inspected before 
such disposition.
    Incoming inspection is necessary to determine the value of any 
farmers stock peanuts. It is not likely that a producer will sell 
peanuts at low, oilstock prices without first obtaining inspection to 
ascertain whether the peanuts could be higher than oilstock quality. In 
addition, production data collected at incoming inspection continues to 
be used for loan data purposes and to develop daily crop reports which 
are helpful to peanut growers, handlers and manufacturers. This data 
would not be as helpful to all segments of the industry if it covered 
only high quality peanuts.
    With regard to the commenter's second point, sheller oilstock 
residuals are positive lot identified with red tags to help prevent 
commingling in handling or storage and to assure buyers that certified 
edible lots are not mixed with lesser quality peanuts prior to 
shipment. Also, most crushing operations require certification of 
foreign material and moisture on milled peanuts.
    With regard to the commenter's third point, to date, no peanuts 
have been imported specifically for crushing. Crushing is the least 
economical use of peanuts. It is not likely that importers would pay 
the international shipping costs and use limited duty-free import quota 
on peanuts suitable only for crushing.
    This action removes a long standing Agreement provision (Sec.  
998.200(c)(3)) which automatically imposed a small aflatoxin sampling 
and testing charge on buyers. The charge had been carried for several 
years under the Agreement and was supported by handler members on the 
interim Board. However, such service charges are matters that should be 
negotiated between sellers and buyers and, therefore, are not 
appropriate in these regulations.
    Several additional changes have been made to the draft text posted 
on the Internet. These changes are based on further USDA review of the 
draft text and discussions with Inspection Service supervisors. These 
changes include re-instituting Agreement requirements that help USDA 
monitor disposition of sheller oilstock residuals, the movement of 
failing lots through the reconditioning processes, adjustments to 
positive lot identification procedures, and compliance oversight. A 
more thorough recordkeeping paragraph also was added to reflect current 
industry practice and the requirements of this program.
    The outgoing quality and handling standards established under this 
rule are the same as, or similar to, the requirements under the 
previous peanut programs and are intended to maintain the peanut 
industry's high standards for peanut quality and wholesomeness.

Quality Standards

    The following categories of peanuts are subject to inspection 
requirements and quality and handling standards established under new 
Part 996.
    Incoming quality--farmers stock peanuts: Under this program, all 
farmers stock peanuts received by handlers or importers must be sampled 
and inspected by Federal or Federal-State Inspection Service 
(Inspection Service) inspectors to determine the moisture content of 
the peanuts, the amount of foreign material in the peanuts, and the 
amount of damage and concealed damage in the peanuts. Moisture and 
foreign material content not exceeding 10.49 percent meet incoming 
quality standards--the same as under the previous peanut programs. The 
peanuts also are inspected for visible Aspergillis flavus mold.
    Domestically produced farmers stock peanuts are required to undergo 
incoming inspection at a buying point prior to shelling or storage. 
Incoming quality standards are found in paragraph (a) of Sec.  966.30. 
Incoming inspection is conducted by the Inspection Service to determine 
the general grade level of raw, farmers stock peanuts presented by the 
producer at buying points in the various domestic production areas. 
Peanuts are graded for foreign material, loose-shelled kernels, and 
moisture content. Segregation 1 farmers stock peanuts may contain 2 
percent or less damaged kernels and 1 percent or less concealed damage 
caused by rancidity, mold, or decay. Segregation 2 peanuts are lesser 
quality peanuts containing more than 2 percent damaged kernels, or more 
than 1 percent concealed damage. Segregation 3 peanuts are those which 
contain visible Aspergillus flavus. Segregation 2 and 3 peanuts may be 
shelled and entered into human consumption outlets provided the peanuts 
meet outgoing quality and wholesomeness requirements. Imported farmers 
stock peanuts must be transported directly to a buying point and 
subjected to incoming inspection to determine Segregation quality.
    It is the handler's option to keep farmers stock peanuts segregated 
by category or to commingle Segregation 1,

[[Page 57134]]

2 and 3 peanuts in the handler's warehouse. Domestically produced and 
imported farmers stock peanuts, however, must be kept separate and 
apart because imported peanuts are subject to Customs Service 
redelivery demands until the imported peanuts are certified as meeting 
outgoing quality requirements specified in Sec.  996.31.
    Incoming inspection determines the quality of the farmers stock 
peanuts based on moisture content, foreign material, damage, loose-
shelled kernels, and visible Aspergillus flavus mold. Handlers and 
importers must report to USDA acquisitions of all Segregation 1, 2, and 
3 farmers stock peanuts. The Inspection Service issues USDA Form FV-95, 
``Federal-State Inspection Service Notesheet'' designating the lot as 
either Segregation 1, 2, or 3 quality. Reporting requirements are 
discussed in more detail below.
    Because USDA cannot determine whether peanuts produced and milled 
in a foreign country originated from Segregation 1 quality peanuts, 
importers do not have to provide evidence of Segregation 1 quality for 
foreign peanuts imported in shelled or cleaned-inshell condition.
    Outgoing quality--shelled peanuts: Both domestic and imported 
shelled peanuts must be sampled, inspected, and certified as meeting 
the outgoing grade standards specified in the table in Sec.  996.31(a) 
entitled ``Minimum Quality Standards B Peanuts for Human Consumption.'' 
The table lists, for different peanut varieties, maximum percentage 
tolerances for damaged kernels; unshelled kernels and kernels with 
minor defects; split and broken kernels and sound whole kernels (size 
factors); foreign material, and moisture content. All categories and 
tolerances in the table are the same as those in effect under the 
Agreement at the time the PAC was terminated.
    Each shelled peanut lot also must undergo chemical testing by a 
USDA laboratory or a private laboratory approved by USDA. AMS' Science 
and Technology Programs assures that all of the laboratories conducting 
chemical analyses follow the same testing procedures. The maximum 
allowable presence of aflatoxin is 15 parts per billion (ppb)--the same 
standard as required under the three previous peanut programs. This 
tolerance has been in effect for more than 15 years and was in effect 
at the time the PAC was terminated.
    Once certified as meeting outgoing quality standards under Sec.  
996.31(a) for shelled peanuts, a lot may not be commingled with any lot 
that has failed outgoing quality standards or any residual peanuts from 
reconditioning operations.
    Outgoing quality--Cleaned-inshell peanuts: Based on the changes in 
the edible use of Segregation 2 and 3 peanuts, cleaned-inshell peanuts 
are no longer restricted to Segregation 1 peanuts. Cleaned-inshell 
peanuts are farmers stock peanuts that are cleaned, sorted, and 
prepared for human consumption markets in the U.S. and must be 
inspected against minimum quality standards not exceeding 2 percent 
damage, 10 percent moisture, and 0.5 percent foreign material. Cleaned-
inshell peanuts also may not exceed more than 1 percent mold unless the 
lot is also chemically tested and found ``negative'' as to aflatoxin. 
These standards are found in paragraph (b) of Sec.  996.31.

Handling Standards

    Positive lot identification procedures are established under Sec.  
966.40. These are necessary to maintain identification of peanut lots 
and ensure that lots certified for edible consumption are not 
commingled with peanuts of lower quality. This section also establishes 
consistent procedures for collecting samples from peanut lots that are 
being inspected. Lot identification and sampling procedures must be 
applied consistently on all peanut lots undergoing inspection to ensure 
that all peanut lots are handled uniformly and lots once certified as 
meeting outgoing standards are maintained and shipped without loss of 
quality. PLI standards under this rule are the same as the positive lot 
identification requirements used by the Inspection Service in under the 
agreement, non-signer, and import peanut programs.
    The Inspection Service works with domestic peanut handlers, 
importers, and storage warehouses to determine the most appropriate PLI 
or lot identity method to be used on individual peanut lots. Several 
factors dictate which PLI method should be used: (1) Size of the lot; 
(2) storage space on the dock or in the warehouse; (3) whether any 
further movement of the lot is required prior to certification; and (4) 
other needs of the handler, importer, dock or warehouse operators, or 
the Customs Service.
    For domestic lots and repackaged import lots, PLI includes PLI 
stickers, tags or seals applied to each individual package or container 
in such a manner that is acceptable to the Inspection Service and 
maintains the identity of the lot. For imported lots, PLI tape may be 
used to wrap bags or boxes on pallets, PLI stickers may be used to 
cover the shrink-wrap overlap, doors may be sealed to isolate the lot, 
bags or boxes may be stenciled with a lot number, or any other means 
that is acceptable to the Inspection Service. The crop year or quota 
year shown on the positive lot identification tags shall be the year in 
which the peanuts in the lot were produced domestically or imported 
into the U.S., as appropriate.
    PLI practices for both domestic and imported peanuts also include 
affixing a PLI seal to the door of a shipping container so that it 
cannot be opened without breaking the seal, and affixing a red tag on 
sewn bags of failing quality peanuts. Other methods acceptable to the 
Inspection Service that clearly identify the lot and prevent peanuts 
from being removed or added to the lot may be used. Any peanuts moved 
in bulk or bulk bins shall have their lot identity maintained by 
sealing the conveyance and, if in other containers, by other means 
acceptable to the Inspection Service. All lots of shelled or cleaned-
inshell peanuts shall be handled, stored, and shipped under positive 
lot identification procedures.
    The standard peanut lot size is 40,000 pounds, but may vary at the 
handler or buyer's preference. Lot size is limited to 200,000 pounds, 
which is the largest amount of peanuts that can be adequately sampled 
by the Inspection Service. The limitation was used under the agreement, 
non-signer, and import peanut programs.
    Sampling procedures: This rule also establishes uniform sampling 
procedures and sample sizes that the Inspection Service follows when 
conducting grade inspections, and in collecting peanuts for chemical 
analysis. The portion of the peanuts collected for chemical analysis 
are sent to a USDA or USDA-approved laboratory. A portion of the 
peanuts sampled are held by the Inspection Service as check samples if 
the lot is determined to fail either grade or aflatoxin analysis. These 
procedures and sample sizes are the same as those used under the 
agreement, non-signer, and import peanut programs.
    All required sampling and positive lot identification procedures 
are performed by inspectors of the Federal or Federal-State Inspection 
Service. Imported peanuts are subject to Customs Service redelivery 
demands if determined in violation of these quality or handling 
standards or Customs Service entry requirements referenced below. 
Handlers and importers must reimburse the Inspection Service and 
chemical laboratories for sampling and grade inspection and chemical 
analyses for aflatoxin. Incoming inspections range from $4.00 to $6.25 
per ton of farmers stock peanuts. Sampling and outgoing grade 
inspections vary with each

[[Page 57135]]

Federal-State Inspection Service and range from $1.50 to $3.00 a ton. 
Chemical analysis for aflatoxin averages $40.00 per analysis. The fee 
schedule for USDA laboratories appear at 7 CFR 91.37.

Import Entry Procedures

    This program establishes procedures for importing peanuts into the 
United States that are similar to the procedures applied under the 
previous peanut import program (7 CFR 999.600).
    U.S. Customs Service requirements: Importers of foreign produced 
peanuts must follow established Customs Service entry procedures and 
AMS stamp-and-fax notification and inspection procedures specified 
below. Customs Service importation procedures and requirements are set 
out in title 19 of the Code of Federal Regulations. The Customs Service 
regulations applicable to peanut handling and processing include, but 
are not be limited to: bond requirements (19 CFR part 113); transfer 
from port of entry to another Customs Service office location (19 CFR 
part 112); entry of merchandise for consumption (19 CFR part 141); 
warehouse entry, and withdrawal from warehouse for consumption (19 CFR 
part 144); establishment of bonded warehouses (19 CFR 19.13 and 19.2); 
manipulation in bonded warehouses (19 CFR 19.11); transfer of ownership 
(19 CFR 141.113 and 141.20); failure to recondition (19 CFR 113.62(e); 
and redelivery of merchandise (19 CFR 113.62(d)). For Customs Service 
purposes, the term ``consumption'' means ``use in the United States.'' 
Customs Service entry procedures are not superseded by the import 
procedures in this program.
    It is the importer's responsibility to file import entry 
documentation and notify the Inspection Service with documentation 
sufficient to insure inspection of all imported peanut lots. It also is 
the importer's responsibility to account for disposition of all failing 
quality peanut lots imported by the importer. A bond secured by surety 
or U.S. Treasury obligations must be posted by the importer with the 
Customs Service to guarantee the importer's performance. For more 
information on these procedures importers should contact their importer 
broker, the Customs Service office at the port where peanuts are 
expected to be entered, or http://www.ustreas.gov/education/duties/bureaus/uscustoms.html.
    Safeguard procedures: The safeguard procedures in this part are 
similar to those in the current import regulation and provide for 
monitoring of imported peanut lots from entry into the U.S. to final 
disposition. The safeguard procedures are similar to safeguard 
procedures already in place for peanuts and other imported fresh 
agricultural commodities and are consistent with the inspection, 
identification, and certification requirements applied to domestically 
produced peanuts.
    To obtain information on importing peanuts or making arrangements 
for necessary inspection and certification, importers may contact the 
Fresh Products Branch headquarters office in Washington, DC, which will 
direct them to the closest regional inspection office. The telephone 
number of headquarters office is (202) 720-5870, and the fax number is 
(202) 720-0393.
    Stamp-and-fax procedure: Under USDA safeguard procedures 
established in this program, the importer must provide advanced notice 
of inspection needs to the Inspection Service office that will collect 
samples of the peanuts for inspection. The importer must file completed 
entry documentation (Customs Service Form 3461 or other equivalent 
form) with the Inspection Service office by mail or facsimile 
transmission. To expedite entry procedures, the filing should occur 
prior to, or upon, arrival of the shipment at the port of entry. The 
Inspection Service office will stamp, sign, and date the entry document 
and return it to the importer or import broker by fax or mail. The 
importer/broker then submits the stamped copy to the Customs Service. 
This ``stamp-and-fax'' procedure is the same as the procedure currently 
in place under the import regulation and similar to procedures in place 
for other imported agricultural commodities under USDA jurisdiction. 
Failure to file with the Customs Service a copy of the entry 
documentation stamped by the Inspection Service may result in a delay 
or denial of entry by the Customs Service.
    The importer must file a copy of each stamp-and-fax entry document 
with USDA and forward a copy, with any conditionally released lot, to 
the inland destination where the lot is to be inspected or warehoused. 
The importer must provide sufficient information to identify the peanut 
lot being entered and to ensure that arrangements are made for sampling 
and inspection. This information must include the Customs Service entry 
number, container identification, weight of the peanut lot, the city, 
street address, and building number (if known) receiving the peanut 
lot, the requested date and time of inspection, and a contact name and 
telephone number at the destination. If the destination is changed from 
that listed on the stamp-and-fax document, the importer must 
immediately advise Inspection Service offices at both the original 
destination and the new destination of such change. Shipments that are 
not made available pursuant to entry documentation, or are not properly 
displayed for sampling purposes, will be reported to the Customs 
Service as failing to follow required entry procedures.
    Boatload shipments exceeding 200,000 pounds must be entered under 
two or more Customs Service entry documents. Lot size and 
identification arrangements must be made cooperatively between the 
importer, Inspection Service, and the Customs Service office at the 
port-of-entry. This facilitates subsequent lot identification, 
inspection, and reporting of large imported shipments.
    Release for importation: Depending on condition (shelled or 
inshell) and containerization, foreign-produced peanuts may be either: 
(1) Held at the port-of-entry until certified by the Inspection Service 
as meeting the edible quality requirements of this rule; or, (2) 
conditionally released under Customs Service entry procedures and 
transported inland for inspection and certification.
    Under option (1), foreign-produced shelled or cleaned-inshell 
peanuts which are held at the port-of-entry must be presented in 
containers or bags that allow appropriate sampling of the lot pursuant 
to Inspection Service requirements. After sampling, such lots are held 
at the port-of-entry under Customs Service custody, under positive lot 
identification requirements of the Inspection Service, pending results 
of the inspection and chemical analysis. If determined to meet the 
applicable edible quality requirements of this Part, the shelled or 
cleaned-inshell peanuts may be entered for consumption without further 
inspection. Reports of such entries do not have to be filed with USDA.
    If a lot is held at the port of entry under Customs Service custody 
and subsequently determined to fail edible quality standards, the lot, 
at the importer's discretion, may be: exported; entered for 
reconditioning and if satisfactorily remilled or blanched, used for 
edible consumption; or entered for non-edible consumption. Such failing 
peanuts that are remain under Customs Service custody until exported do 
not have to be reported to USDA because the peanuts were not officially 
entered into the U.S. Failing lots that are conditionally released for 
reconditioning at a remilling or blanching facility inland must be

[[Page 57136]]

reported to USDA. The importer is responsible for ensuring that such 
lots remain under PLI until reconditioned and determined to meet edible 
quality requirements. Disposition of residual peanuts to non-edible 
outlets also must be reported to USDA. Such reports must be submitted 
within the time frames discussed under Reporting and Recordkeeping 
Requirements, below.
    Under option (2), foreign produced peanuts are conditionally 
released at the port of entry and transported inland for sampling, 
inspection, and certification. All imported farmers stock peanuts must 
be shipped inland for sampling and inspection because specialized 
sampling facilities at buying points are not available at ports of 
entry. All conditionally released lots must be maintained under PLI. 
Shelled and cleaned-inshell lots which are subsequently sampled and 
determined to meet both grade and aflatoxin quality standards may be 
entered directly into human consumption channels of commerce and not 
reported to USDA. Conditionally-released peanut lots failing to meet 
outgoing quality standards and their eventual disposition as edible or 
non-edible peanuts also are reported to USDA by the Inspection Service 
and/or the aflatoxin laboratory.
    Peanuts transported from one port-of-entry to another port-of-entry 
must be transported by a carrier designated by the Customs Service 
under 19 U.S.C. 1551. Peanuts entered for warehousing must be stored in 
a Customs Service bonded warehouse. Such peanuts must remain in Customs 
Service custody until they are withdrawn from warehouse, entered for 
consumption, or released from Customs Service custody.
    Peanuts entered for consumption, and peanuts withdrawn from 
warehouse for consumption, are released from Customs Service custody 
for edible or non-edible use. Release of peanuts, in both cases, is a 
conditional release, pending final certification that the peanuts 
conform to Customs Service entry requirements and meet the handling and 
quality standards of this program.
    Peanut samples may be taken at the port-of-entry and shipped to an 
Inspection Service office with equipment and personnel qualified to a 
perform grade inspection. Imported shipments of farmers stock peanuts 
must be transported inland to a buying point where sampling equipment 
is available to conduct the sampling operation. In addition to grading 
the shelled peanuts against quality standards, the inspection office 
also sends samples from each lot to a USDA or USDA-approved laboratory 
for aflatoxin analysis. The laboratories must send copies of aflatoxin 
certificates to the USDA. Importers are required to maintain all 
records showing compliance with these standards and all Customs Service 
requirements.
    Importers must not release failing lots for edible consumption 
until reconditioned and certified as meeting the standards of this 
program.

Reporting and Recordkeeping

    This rule establishes reporting and recordkeeping standards under 
Sec.  996.71 that are necessary for USDA to monitor compliance with 
program quality and handling standards.
    Farmers stock acquisitions: Handlers and importers are required to 
report to USDA the volume of Segregation 1, 2, and 3 farmers stock 
peanuts acquired from growers or others, or imported. Under the 
previous programs, the information was used, in part, to determine the 
assessment owed by signatory handlers to the PAC and non-signatory 
handlers to USDA.
    Because all farmers stock peanuts can now be shelled for human 
consumption use, this rule establishes that all three categories of 
farmers stock must be reported. This information is used for compliance 
purposes and in the compilation of reports by USDA. The monthly report 
must include the volume, by variety, of Segregation 1, 2, and 3 farmers 
stock peanuts acquired in the preceding month. The storage location of 
the peanuts also must be reported. A form similar to USDA's FV-117 and 
the PAC-1 will be used by handlers and importers to report their 
monthly farmers stock acquisitions.
    To collect farmers stock information, the interim Board recommended 
that USDA use the form submitted by handlers to the National Peanut 
Board, under the Peanut Promotion Research and Information Order (7 CFR 
part 1216), to determine handler assessments under the national Peanut 
Promotion and Research Program. However, the form previously used by 
the Board has been discontinued and the new ``First Handler's Report'' 
does not require disclosure of volume handled, peanut variety, or 
Segregation of the peanuts acquired. The form cannot be used for the 
purposes needed in this rulemaking.
    The new form must be sent to USDA. Facsimile or express mail 
deliveries may be used to ensure timely receipt of certificates and 
other required documentation. Mail deliveries must be addressed to the 
DC Marketing Field Office, MOAB, FVP, AMS, USDA, 4700 River Road, Unit 
155, Riverdale, MD 20737, Attn: Report of Peanuts. The Fax number is 
(301) 734-5275.
    Falsification of any report submitted to USDA is a violation of 
Federal law and is punishable by fine or imprisonment, or both.
    Documentation of edible and non-edible peanuts: This program 
continues the procedures used under the Agreement to monitor 
disposition of edible and failing quality peanuts. The Inspection 
Service sends copies of all grade inspections and the chemical 
laboratories send copies of all aflatoxin assays to USDA. USDA uses 
this information to monitor proper disposition of all lots failing 
either grade or aflatoxin certification.
    This represents a relaxation of reporting requirements for 
importers. Under the previous peanut import program, non-signatory 
handlers and importers were required to file copies of all failing 
grade and aflatoxin certificates with AMS. They are no longer required 
to do so, unless specifically requested by USDA or unless the Customs 
Service demands such documentation of importers. These certificates 
will be provided by the Inspection Service, USDA laboratories, or 
certified USDA laboratories, as the case may be.
    Recordkeeping: Handlers and importers are required to maintain all 
relevant documentation on the disposition of inedible peanuts. If 
remilled, blanched, or roasted, the handler or importer must maintain 
grade certificate(s) and/or aflatoxin certificate(s) showing that the 
lot has been reconditioned and subsequently meets outgoing, edible 
quality standards. Grade and aflatoxin inspections conducted on 
reconditioned lots reference the peanuts lot number and previous grade 
and aflatoxin certificate numbers so that a record of the lot's 
reconditioning is maintained. Documents showing the disposition of non-
edible residuals (pick-outs etc.) must be maintained by each handler 
and importer. For example, if the lot is crushed for oil the oil mill's 
report of crushing must be maintained. That crushing report must tie 
the crushed residual peanuts to their original failing lots. If the 
failing lot is sold for seed or for animal feed, the sales receipt of 
the transaction must tie the purchased lot to the failing lot through 
the inspection certificate number. If the failing lot is exported, an 
export certificate must be filed showing the inspection certificate 
number of the failing peanut lot. Failing peanut lots sent to a 
landfill or buried also must be reported with proof of such disposition 
through the inspection certificate number.
    In total, the documentation maintained and distributed to USDA

[[Page 57137]]

must be sufficient to document and substantiate the proper disposition 
of all peanut lots failing grade or aflatoxin quality standards, as 
well as the residuals resulting from those failing lots.
    Documentation on lot dispositions must be maintained for at least 
two years after the crop year of applicability.

Confidentiality

    This rule includes a confidentiality provision in Sec.  996.72 to 
protect handler and importer reports and records required to be 
submitted to USDA under this action. Confidential information includes 
data or information constituting a trade secret or disclosing a trade 
position, financial condition, or business operations of handlers or 
their customers. Confidentiality provisions do not extend to disclosure 
of peanuts lots determined to be within the provisions in Sec.  
996.74(b).

Verification of Reports

    Provisions are included in Sec.  996.73 of this Part that allows 
USDA access to any premises where peanuts may be held or processed, and 
access to any business files containing information regarding the 
handling, importing, and disposition of peanuts. USDA, at any time 
during regular business hours, is permitted to inspect any peanuts held 
and any and all records with respect to the acquisition, holding, or 
disposition of any peanuts which may be held or which may have been 
disposed of by that handler or importer.

Compliance Oversight

    USDA will take action against any handler or importer in violation 
of the Act or this Part. Such action includes instances when a handler 
or importer: (1) Acquires farmers stock peanuts without official 
incoming inspection; (2) fails to obtain outgoing inspection on shelled 
or cleaned-inshell peanuts and ships such peanuts for human consumption 
use; (3) ships failing quality peanuts for human consumption use; (4) 
commingles failing quality peanuts with certified edible quality 
peanuts and ships the commingled lot for human consumption use; (5) 
fails to maintain PLI on peanut lots certified for human consumption 
use; (6) fails to maintain and provide access to records on the 
reconditioning or disposition of failing quality peanuts; or (7) 
otherwise violates any provisions of the Act or this program.
    USDA will use injunctions to restrain violations and withdraw 
inspection services from alleged violators.
    AMS will notify the FDA of the names of any handlers or importers 
known to have shipped un-inspected peanuts into human consumption 
channels and the lot numbers of such peanuts. AMS also will publish on 
the AMS Web site the names of any handler and importer and the failing 
lots not reported as reconditioned or disposed to non-edible outlets.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Analysis Act (RFA) the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities. 
Accordingly, AMS had prepared this initial regulatory flexibility 
analysis.
    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.
    There were approximately 45 peanut handlers and 38 importers that 
were subject to regulation under the Agreement and non-signer program, 
and the peanut import regulation. An estimated two-thirds of the 
handlers and nearly all of the importers may be classified as small 
entities, based on the documents and reports received by USDA. Small 
agricultural service firms, which include handlers and importers, are 
defined by the Small Business Administration (13 CFR 121.201), as those 
having annual receipts of less than $5,000,000.
    An approximation of the number of peanut farms that could be 
considered small agricultural businesses under the SBA definition (less 
than $750,000 in annual receipts from agricultural sales) can be 
obtained from the 1997 Agricultural Census, which is the most recent 
information on the number of farms categorized by size. There were 
10,505 peanut farms with sales valued at less than $500,000 in 1997, 
representing 86 percent of the total number of peanut farms in the U.S. 
(12,221). Since the Agricultural Census does not use $750,000 in sales 
as a category, $500,000 in sales is the closest approximation. Assuming 
that most of the sales from those farms are attributable to peanuts, 
the percentage of small peanut farms in 1997 (less than $750,000 in 
sales) was likely a few percentage points higher than 86 percent, and 
may have shifted a few percentage points since then. Thus, the 
proportion of small peanut farms is likely to be between 80 and 90 
percent.
    Two-year average peanut production for the 2000 and 2001 crop years 
was 3.711 billion pounds, harvested from 1.363 million acres, yielding 
2,723 pounds per acre. The average value of production for the two-year 
period was $948.777 million, as reported on the National Agricultural 
Statistics Service (NASS) Web site as of August 2002 (http://www.nass.usda.gov:81/idepd/report.htm). Average grower price over the 
two-year period was $0.26 per pound, and the average value per 
harvested acre was $707. Dividing the two-year average value of 
production ($948.177 million) by the estimated 12,221 farms yields an 
estimated revenue per farm of approximately $77,600.
    The Agricultural Census presents farm sizes in ranges of acres, and 
median farm size in 1997 was between 50 and 99 acres. The median is the 
midpoint from the ranging from the largest to the smallest. Median farm 
size in terms of annual sales revenue was between $100,000 and 
$250,000.
    Several producers may own a single farm jointly, or, conversely, a 
producer may own several farms. In the peanut industry, there is, on 
average, more than one producer per farm. Dividing the two-year average 
value of production of $948.777 million by an estimated 23,000 
commercial producers (2002 Agricultural Statistics, USDA, Table 11-10) 
results in an estimate of average revenue per producer of approximately 
$41,251.
    Oilmill operators, blanchers, and private chemical laboratories are 
subject to this rule to the extent that they must comply with 
reconditioning provisions under Sec.  996.50 and reporting and 
recordkeeping requirements under Sec.  996.71. There are several such 
entities in the peanut industry and these requirements are applied 
uniformly to these entities, whether large or small. In addition, there 
are currently 10 State inspection programs (FSIS) that will perform 
inspection under this new program.
    Importers of peanuts cover a broad range of business entities, 
including fresh and processed food handlers and commodity brokers who 
buy agricultural products on behalf of others. Under the 2001 import 
quota, approximately 38 business entities imported approximately 126 
million pounds of low duty peanuts (sometimes called ``duty free'' 
quota peanuts). The import quota period began January 2, 2001, for 
Mexico, and April 2, 2001, for Argentina, Israel, and other countries. 
Some large, corporate handlers are also importers of peanuts. AMS is 
not aware of any peanut producers who imported peanuts during any of 
the recent quota years. The majority of peanut importers have annual 
receipts under $5,000,000. Customs Service brokers provide import 
services to importers and are regulated

[[Page 57138]]

under this rule to the extent that they must comply with entry 
requirements under Sec.  996.60 and reporting and recordkeeping 
requirements under Sec.  996.71. These requirements are not applied 
disproportionately to small customs service brokers.
    In view of the foregoing, it can be concluded that the majority of 
peanut producers, handlers, and importers may be classified as small 
entities. In addition, it may be assumed that many oilmill operators 
and blanchers also are small entities.
    The quality and handling requirements of the prior peanut quality 
programs have been in effect for more than 36 years and for imported 
peanuts for more than six years. Handlers and importers have been the 
segment of the industry directly regulated under the three peanut 
programs, and they are in general agreement that the industry has 
changed greatly since the establishment of the Agreement in 1965.
    With only a few exceptions, the quality and handling standards in 
this peanut program are the same as, or similar to, the requirements 
previously in effect for domestically produced and imported peanuts. 
The few exceptions are relaxations in requirements that will benefit 
handlers and importers. These requirements were subject to regulatory 
flexibility analysis and were found to not disproportionately affect 
small entities.
    The Act requires that all peanuts marketed in the United States be 
officially inspected and graded by Federal or Federal-State inspectors. 
The Act further requires that USDA make identifying and combating the 
presence of all quality concerns a priority in the development of 
quality and handling standards and in the inspection of all peanuts in 
the domestic market. Finally, USDA is to ``* * * provide adequate 
safeguards against all quality concerns related to peanuts.'' A new 
peanut program is to be established in consultation with the Peanut 
Standards Board. Currently, members of the PAC are acting in an interim 
capacity for the Board.
    This program establishes under new Part 996 the minimum quality and 
handling standards that were in effect on May 13, 2002, the date the 
Act became effective, with a few relaxations recommended by interim 
Board members and a few peanut growers and handlers. Peanuts may not be 
entered into human consumption channels unless the peanuts are 
inspected and meet minimum quality standards for size, damage, defects, 
foreign material and moisture, and not exceed maximum aflatoxin content 
specified in this rule. Handling standards include the same positive 
lot identification, sampling and inspection procedures, and 
prohibitions on commingling certified and non-edible peanuts as were in 
effect under the three previous programs. Peanuts failing to meet the 
quality standards of this Part, or which are not handled consistent 
with the handling standards of this Part, may not be used for human 
consumption in the United States.
    All USDA required sampling, quality certification, and lot 
identification is conducted by the Inspection Service. Chemical 
analysis is conducted by USDA or USDA-approved laboratories. Private 
laboratories must, among other things, agree to send copies of all 
aflatoxin analyses conducted by the laboratory to USDA. Foreign 
produced peanuts stored in bonded warehouses are subject to Customs 
Service audits. Handlers and importers must reimburse the Inspection 
Service and USDA laboratories and approved private laboratories, for 
services provided and costs incurred in the sampling, grade inspection 
and chemical analysis of peanuts. Incoming inspections range from $4.00 
to $6.25 per ton of farmers stock peanuts. Sampling and outgoing grade 
inspections vary with the Federal and each Federal-State Inspection 
Service and range from $1.50 to $3.00 a ton. Chemical analysis for 
aflatoxin averages $40.00 per analysis. These costs to handlers and 
importers also were incurred under the previous three programs. Thus, 
there is no net increase in financial burden attributable to these 
aspects of the new program.
    This action will impose on handlers and importers a minor reporting 
requirement in addition to that imposed under the previous peanut 
programs (reporting acquisitions of Segregation 2 and 3 farmers stock 
peanuts). However, importers and non-signatory handlers under the 
previous programs have a minor decrease in reporting requirements, 
because they are no longer required to submit evidence of disposition 
of failing lots. That task is completed by the USDA. Recordkeeping 
requirements remain the same as required under the three previous 
peanut programs. The information collection burden under the previous 
programs totaled 411 reporting hours and 269 recordkeeping hours. These 
were approved under OMB Nos. 0581-0067 (Agreement), 0581-0163 (non-
signers), and 0581-0176 (imports).
    Changes affecting regulated entities: Under this program, handlers 
are no longer subject to payment of assessments based on the volume of 
farmers stock peanuts acquired. Under the Agreement and non-signer 
program, handlers were assessed $.33 per net farmers stock ton of 
peanuts acquired. This totaled over $515,000 for the 2000 crop. 
Assessments collected from signatory handlers provided for the 
administration of the PAC. Assessments collected from non-signatory 
handlers helped reimburse USDA for administration of the non-signer 
program. There are no such assessments under the new peanut program.
    The previous peanut programs prohibited the use of Segregation 2 
and 3 farmers stock peanuts in human consumption channels, but this 
rule removes that prohibition. This will allow such peanuts to be 
handled and marketed in higher return outlets. Handlers sought this 
change. As noted above, handlers believe that modern milling 
technologies enable handlers to remove poor quality and contaminated 
peanut kernels in the shelling and milling operation. This change from 
the previous programs' requirements will enable more peanuts to be 
marketed at higher market values for human consumption. Segregation 2 
and 3 peanuts, in a normal crop year, average around 1 percent of total 
production. Thus, for the 2000 and 2001 crop years, this would have 
allowed an additional 37 million pounds of farmers stock peanuts to be 
available for human consumption channels.
    Handlers stated that peanuts used in the manufacturing of imported 
peanut butter and peanut paste are not restricted to Segregation 1 
quality peanuts in those exporting countries. They contend that use of 
Segregation 2 and 3 quality peanuts for human consumption, after 
careful and efficient sorting and milling processes, levels the playing 
field for the U.S. peanut industry. Outgoing inspection will ensure 
that poor quality peanuts do not enter domestic edible consumption 
market channels.
    Grower and handler revenues are likely to increase slightly due to 
the ability to sell Segregation 2 and 3 quality peanuts for human 
consumption use. This change is not expected to affect small and large 
entities differently.
    If Segregation 2 and 3 peanuts are handled for human consumption, 
it is reasonable to assume that fewer poor quality peanuts will be 
available for crushing into oil and other non-edible use such as animal 
feed. It can be expected that the price of oilstock quality peanuts 
will rise slightly. A higher percentage of sheller oilstock residuals 
are likely to be sorted out of Segregation 2 and 3 peanuts during the 
initial shelling process. Therefore, not all of the peanuts in 
Segregation 2 and

[[Page 57139]]

3 lots will be edible, and the supply of oilstock peanuts will not be 
cut off completely. The market value of peanuts used for crushing into 
oil and added to animal feed could increase.
    Further, blanching operations could realize an increase in business 
because blanching, as a last resort in reconditioning a failing lot, 
will likely be used in the final preparation of shelled peanuts 
originating from Segregation 2 and 3 peanuts for human consumption.
    Finally, handlers with blanching facilities dedicated exclusively 
to the handler's own peanuts may move a lot of shelled peanuts directly 
from the shelling operation to their dedicated blanching operations 
without first obtaining grade inspection and PLI on the lot. Handlers 
recommended removing the required inspection and PLI prior to blanching 
at their own, dedicated facilities because the nature of the peanuts 
change in the blanching process and the peanuts must be inspected 
immediately after blanching, rendering the first inspection redundant. 
This would apply only to lots blanched in the handler's own blanching 
facility that does not blanch peanuts belonging to others, thus 
eliminating the need to establish PLI prior to blanching. This 
streamlined handling process will increase efficiency of the handling 
of peanuts that the handler intends to blanch. Handler costs for such 
lots are reduced by inspecting the lot once, rather than twice. While 
this change may tend to be most beneficial to those handlers who are 
mostly larger operations with their own, dedicated, blanching 
facilities, it should not have an adverse impact on small handlers.
    Reporting and recordkeeping requirements under the new peanut 
program are not expected to adversely impact small businesses, and 
there is no indication that large and small businesses would be 
impacted differently. Under this program, handlers and importers must 
report monthly acquisitions of Segregation 2 and 3 peanuts--a minor 
increase from the previous programs when only Segregation 1 peanuts 
were reported. However, the benefits of being able to handle those 
peanuts for possible edible consumption outweigh the increased 
reporting requirement. Further, this minor increase in reporting is 
offset by a decrease in reporting disposition of failing peanut lots 
for non-signatory handlers and importers. In the case of imports, few, 
if any, peanuts are imported in farmers stock form because of the extra 
weight and bulk of the peanut shell. Thus, importers will likely not be 
filing a monthly report of acquisitions.
    The other provisions in this peanut program are the same as, or 
similar to, the requirements in effect for domestically produced and 
imported peanuts for the last several years. Those requirements were 
subject to prior regulatory flexibility analysis.
    USDA has considered alternatives to this program. The Act provides 
that a new program be established for the 2002 peanut crop. An 
alternative would be to continue the 2001 regulations for the entire 
2002 crop. However, based on industry comment, implementation of a new 
program as soon as possible after harvest begins is preferable to 
continuing the previous programs. USDA has met with the interim Board 
which is representative of the industry and has included nearly all of 
its recommendations in this rule. The initial draft prepared by USDA 
proposed a streamlined program with less USDA oversight of handling 
standards. However, the interim Board suggested that oversight 
provisions in the previous programs be included in this program to 
assure the continued high quality and wholesomeness of peanuts entered 
into human consumption channels in the U.S. Draft provisions were 
posted on the USDA Web site and comments were received. Most comments 
confirmed the Board's consensus that significant changes in the 
previous programs were not desired. For instance, one proposal included 
changing screen sizes to allow smaller kernels to be included in lots 
intended for human consumption use. Comments advised against this 
relaxation and it is not included in this rule. Thus, this program is 
substantially the same as USDA's three previous peanut programs.
    Except as previously discussed, USDA has not identified any 
relevant Federal rules that duplicate, overlap, or conflict with this 
rule. A small business guide on complying with AMS' fresh fruit, 
vegetable, and specialty crop programs similar to this peanut program 
may be viewed at the following Web site: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide or compliance with 
this program should be sent to Jay Guerber at the previously mentioned 
address in the FOR FURTHER INFORMATION CONTACT section.

Information Collection

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection requirements under the 
Agreement, non-signers and import programs were approved by the Office 
of Management and Budget (OMB) and assigned OMB Nos. 0581-0067, 0581-
0163 and 0581-0176, respectively. However, with the termination of 
those peanut programs, reporting and recordkeeping burdens on peanut 
handlers and importers were terminated. The burden under the three 
previous programs was 680 hours. The burden under the new program is 
estimated to be 463 hours. An estimated 367 hours (nearly 80 percent) 
of the new program burden is for recordkeeping, which handlers and 
importers would normally do under good business practice.
    The Act specifies in Sec.  1604(c)(2)(A) that any new quality and 
handling standards, established pursuant to the Act, may be implemented 
without regard to the Paperwork Reduction Act. Nonetheless, USDA has 
considered the reporting and recordkeeping burden on handlers and 
importers under the new program.
    Handlers and importers are required to complete and file only one 
form--a monthly acquisition of farmers stock peanuts. Acquisitions of 
Segregation 2 and 3 peanuts must now be reported because those peanuts 
can be prepared for edible markets. Because Segregation 2 and 3 peanuts 
normally account for around 1 percent of each peanut crop, this change 
is expected to represent only a minor increase in the reporting burden 
under the new program. Non-signatory handlers and importers are no 
longer required to submit evidence of disposition of failing lots, 
which reduces their reporting burden. Recordkeeping requirements remain 
the same as required under the three previous peanut programs.
    AMS invites comments on this interim final rule. Any comments 
received by October 9, 2002, will be considered prior to finalization. 
A 30-day comment period is deemed appropriate because Sec.  1308 of the 
Act provides that the Act's requirements take effect with the 2002 crop 
of peanuts.
    USDA has held several meetings with the interim Board, Inspection 
Service supervisors, posted a draft rule on the internet for comments, 
and considered all comments. The program is substantially the same as 
the three previous peanut programs. USDA also has reviewed this rule 
with FSA and provided drafts to the Customs Service and FDA. The 2002 
crop harvest has already begun. Section 1601 also specifies that 
promulgation of the standards and administration of the new peanut 
quality program shall be made without regard to: (A) The Paperwork 
Reduction Act; (B) the Statement of

[[Page 57140]]

Policy of the Secretary of Agriculture effective July 24, 1971 (36 FR 
13804), relating to notices of proposed rulemaking and public 
participation in rulemaking; and (C) the notice and comment provisions 
of section 553 of title 5, United States Code.
    Nonetheless, based upon the above, USDA may find, upon good cause, 
that it would be impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register. 
Further, with regard to the termination and removal of Parts 997, 998, 
and section 999.600, it is found that those programs no longer tend to 
effectuate the declared policy of the Agricultural Marketing Agreement 
Act of 1937, or the purposes of that Act.

List of Subjects

7 CFR Part 996

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

7 CFR Part 997

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

7 CFR Part 998

    Marketing agreements, Peanuts, Reporting and recordkeeping 
requirements.

7 CFR Part 999

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


    For the reasons set forth in the preamble, and under authority of 7 
U.S.C. 601-674 and Public Law 107-171, 7 CFR Chapter IX is amended as 
set forth below:
    1. A new Part 996 is added to read as follows:

PART 996--MINIMUM QUALITY AND HANDLING STANDARDS FOR DOMESTIC AND 
IMPORTED PEANUTS MARKETED IN THE UNITED STATES

Definitions

Sec.
996.1 Act and scope.
996.2 Conditionally released.
996.3 Crop year.
996.4 Handle.
996.5 Handler.
996.6 Importation.
996.7 Importer.
996.8 Incoming inspection.
996.9 Inshell peanuts.
996.10 Inspection Service.
996.11 Negative aflatoxin content.
996.12 Outgoing inspection.
996.13 Peanuts.
996.14 Person.
996.15 Positive lot identification.
996.16 Producer.
996.17 Quota year.
996.18 Secretary.
996.19 Shelled peanuts.
996.20 USDA.
996.21 USDA laboratory.
996.22 USDA-approved laboratory.

Quality and Handling Standards

996.30 Incoming quality standards.
996.31 Outgoing quality standards.
996.40 Handling standards.
996.50 Reconditioning failing quality peanuts.
996.60 Safeguard procedures for imported peanuts.

Reports and Records

996.71 Reports and recordkeeping.
996.72 Confidential information.
996.73 Verification of reports.
996.74 Compliance.
996.75 Effective time.

    Authority: Sec. 1308, Pub.L. 107-171, 116 Stat. 178 (7 U.S.C. 
7958).

Definitions


Sec.  996.1  Act and scope.

    Act means Public Law 107-171, or the Farm Security and Rural 
Investment Act of 2002, enacted May 13, 2002. None of the definitions 
or provisions of this part shall apply to any other part or program 
(including, but not limited to, any program providing for payments or 
loans to peanut producers or other persons interested in peanuts or 
peanut quotas) unless explicitly adopted in such other part or program.


Sec.  996.2  Conditionally released.

    Conditionally released means released from U.S. Customs Service 
custody for further handling, sampling, inspection, chemical analysis, 
and storage.


Sec.  996.3  Crop year.

    Crop year means the 12-month period beginning with July 1 of any 
year and ending with June 30 of the following year, or other period 
established by USDA.


Sec.  996.4  Handle.

    Handle means to engage in the receiving or acquiring, cleaning and 
shelling, cleaning inshell, or crushing of domestic or imported peanuts 
and in the shipment (except as a common or contract carrier of peanuts 
owned by another) or sale of cleaned-inshell or shelled peanuts or 
other activity causing peanuts to enter into human consumption channels 
of commerce: Provided, That this term does not include sales or 
deliveries of peanuts by a producer to a handler or to an intermediary 
person engaged in delivering peanuts to handler(s): And provided 
further, That this term does not include sales or deliveries of peanuts 
by such intermediary person(s) to a handler.


Sec.  996.5  Handler.

    Handler means any person who handles peanuts, in a capacity other 
than that of a custom cleaner or dryer, an assembler, a warehouseman or 
other intermediary between the producer and the person handling 
peanuts.


Sec.  996.6  Importation.

    Importation means the arrival of foreign produced peanuts at a 
port-of-entry with the intent to enter the peanuts into channels of 
commerce of the United States.


Sec.  996.7  Importer.

    Importer means a person who engages in the importation of foreign 
produced peanuts into the United States for the purposes of entering 
such peanuts into human consumption channels.


Sec.  996.8  Incoming inspection.

    Incoming inspection means the sampling, inspection, and 
certification of farmers stock peanuts to determine segregation and 
grade quality.


Sec.  996.9  Inshell peanuts.

    Inshell peanuts means peanuts, the kernels or edible portions of 
which are contained in the shell.


Sec.  996.10  Inspection Service.

    Inspection Service means the Federal Inspection Service, Fruit and 
Vegetable Programs, Agricultural Marketing Service, USDA or the 
Federal-State Inspection Service.


Sec.  996.11  Negative aflatoxin content.

    Negative aflatoxin content means 15 parts per billion (ppb) or less 
for peanuts that have been certified as meeting edible quality grade 
standards.


Sec.  996.12  Outgoing inspection.

    Outgoing inspection means the sampling, inspection, and 
certification of either: shelled peanuts which have been cleaned, 
sorted, sized and otherwise prepared for human consumption markets; or 
inshell peanuts which have been cleaned, sorted, and otherwise prepared 
for inshell human consumption markets.


Sec.  996.13  Peanuts.

    Peanuts means the seeds of the legume Arachis hypogaea and includes 
both inshell and shelled peanuts produced in the United States or 
imported from foreign countries, other

[[Page 57141]]

than those in green form for consumption as boiled peanuts.
    (a) Farmers Stock. ``Farmers stock peanuts'' means picked and 
threshed 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.
    (b) Segregation 1. ``Segregation l peanuts'' means farmers stock 
peanuts with not more than 2.49 percent damaged kernels nor more than 
l.00 percent concealed damage caused by rancidity, mold, or decay and 
which are free from visible Aspergillus flavus.
    (c) Segregation 2. ``Segregation 2 peanuts'' means farmers stock 
peanuts with more than 2.49 percent damaged kernels or more than l.00 
percent concealed damage caused by rancidity, mold, or decay and which 
are free from visible Aspergillus flavus.
    (d) Segregation 3. ``Segregation 3 peanuts'' means farmers stock 
peanuts with visible Aspergillus flavus.


Sec.  996.14  Person.

    Person means an individual, partnership, corporation, association, 
any other business unit or legal entity.


Sec.  996.15  Positive lot identification.

    Positive lot identification is a means, approved by the Inspection 
Service, of relating the inspection certificate to the lot covered so 
that there is no doubt that the peanuts in the lot are the same peanuts 
described on the inspection certificate.


Sec.  996.16  Producer.

    Producer means any person in the United States engaged in a 
proprietary capacity in the production of peanuts for market.


Sec.  996.17  Quota year.

    Quota year means the 12-month period beginning January 1 and ending 
December 31 of the same year for peanuts produced in Mexico and the 12-
month period beginning April 1 and ending March 31 of the following 
year for Argentina and other countries, or other such periods as may be 
prescribed by the U.S. Customs Service.


Sec.  996.18  Secretary.

    Secretary means the Secretary of Agriculture of the United States 
or any officer, employee, or agent of the United States Department of 
Agriculture who is, or who may hereafter be authorized to act in the 
Secretary's stead.


Sec.  996.19  Shelled peanuts.

    Shelled peanuts means the kernels or portions of kernels of peanuts 
after the shells are removed.


Sec.  996.20  USDA.

    USDA means the United States Department of Agriculture, including 
any officer, employee, service, program, or branch of the Department of 
Agriculture, or any other person acting as the Secretary's agent or 
representative in connection with any provisions of this part.


Sec.  996.21  USDA laboratory.

    USDA laboratory means laboratories of the Science and Technology 
Programs, Agricultural Marketing Service, USDA, which chemically 
analyze peanuts for aflatoxin content.


Sec.  996.22  USDA-approved laboratory.

    USDA-approved laboratory means laboratories approved by the Science 
and Technology Programs, Agricultural Marketing Service, USDA, that 
chemically analyze peanuts for aflatoxin content.

Quality and Handling Standards


Sec.  996.30  Incoming quality standards.

    (a) All farmers stock peanuts received or acquired by a handler 
shall be officially inspected by the Inspection Service, and certified 
as to segregation, moisture content, and foreign material.
    (b) Moisture. No handler or importer shall receive or acquire 
farmers stock peanuts for subsequent disposition to human consumption 
outlets containing more than 10.49 percent moisture: Provided, That 
peanuts of a higher moisture content may be received and dried to not 
more than 10.49 percent moisture prior to storing or milling.
    (c) Foreign material. No handler or importer shall receive or 
acquire farmers stock peanuts for subsequent disposition to human 
consumption outlets containing more than 10.49 percent foreign 
material, except that peanuts having a higher foreign material content 
may be received or acquired if they are held separately until milled, 
or moved over a sand-screen before storage, or shipped directly to a 
plant for prompt shelling. The term sand-screen means any type of 
farmers stock cleaner which removes sand and dirt.
    (d) A handler may receive or acquire any peanuts from other persons 
for edible and non-edible use: Provided, That such peanuts intended for 
human consumption are inspected and certified pursuant to Sec.  996.31 
prior to such disposition. Non-edible uses may include, but are not 
limited to, seed, oilstock, animal feed, bird seed, or for export.


Sec.  996.31  Outgoing quality standards.

    (a) Shelled peanuts: No handler or importer shall ship or otherwise 
dispose of shelled peanuts for human consumption unless such peanuts 
are positive lot identified, chemically analyzed by a USDA laboratory 
or USDA-approved laboratory and certified ``negative'' as to aflatoxin, 
and certified by the Inspection Service as meeting the following 
quality standards:

                         Minimum Quality Standards: Peanuts for Human Consumption--Whole Kernels and Splits: Maximum Limitations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Unshelled                             Fall through
                                     Unshelled     peanuts,  ------------------------------------------------------------------
                                    peanuts and    damaged                                                                        Foreign
      Type and grade category         damaged    kernels and                                                                     materials     Moisture
                                      kernels       minor        Sound split and    Sound whole  kernels          Total          (percent)    (percent)
                                     (percent)     defects       broken kernels
                                                  (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Excluding lots of ``splits''
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner............................         1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00% Both screen...          .20         9.00
                                                               round screens.        4\ inch slot screen.
Virginia (except No. 2)...........         1.50         2.50  3.00%; \17/64\ inch   3.00%; \15/64\ x 1    4.00% Both screens..          .20         9.00
                                                               round screen.         inch slot screen.
Spanish and Valencia..............         1.50         2.50  3.00%; \16/64,\ inch  3.00%; \15/64\ x \3/  4.00% Both screens..          .20         9.00
                                                               round screen.         4\ inch slot screen.

[[Page 57142]]

 
No. 2 Virginia....................         1.50         3.00  6.00%; \17/64\ inch   6.00%; \15/64\ x 1    6.00% Both screens..          .20         9.00
                                                               round screen.         inch slot screen.
Runner with splits (not more than          1.50         2.50  3.00%; \17/64\ inch   3.00%; \16/64\ x \3/  4.00% Both screens..          .20         9.00
 15% sound splits).                                            roundscreen.          4\ inch slot screen.
Virginia with splits (not more             2.50         1.50  3.00%; \17/64\ inch   3.00%; \15/64\ x 1    4.00% Both screens..          .20         9.00
 than 15% sound splits).                                       round screen.         inch slot screen.
Spanish and Valencia with splits           1.50         2.50  3.00%; \16/64\ inch   2.00%; \15/64\ x \3/  4.00% Both screens..          .20         9.00
 (not more than 15% sound splits).                             round screen.         4\ inch slot screen.
-----------------------------------
                                                                   Lots of ``splits''
--------------------------------------------------------------------------------------------------------------------------------------------------------
Runner (not more than 4% sound             2.00         2.50  3.00%; \17/64\ inch   3.00%; \14/64\ x \3/  4.00% Both screens..          .20         9.00
 whole kernels).                                               round screen.         4\ slot screen.
Virginia (not less than 90%                2.00         2.50  3.00%; \17/64\ inch   3.00%; \14/64\ x 1    4.00% Both screens..          .20         9.00
 splits).                                                      round screen.         inch slot screen.
Spanish and Valencia (not more             2.00         2.50  3.00%; \16/64\ inch   3.00%; \13/64\ x \3/  4.00% Both Screens..          .20         9.00
 than 4% sound whole kernels).                                 round screen.         4\ inch slot screen.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (b) Cleaned-inshell peanuts: No handler or importer shall ship or 
otherwise dispose of cleaned-inshell peanuts for human consumption 
unless such peanuts are Positive lot identified and are determined by 
the Inspection Service to contain:
    (1) Not more than l.00 percent kernels with mold unless a sample of 
such peanuts, drawn by an inspector of the Inspection Service, is 
analyzed chemically by a USDA laboratory or a USDA-approved laboratory 
and certified ``negative'' as to aflatoxin;
    (2) Not more than 2.00 percent peanuts with damaged kernels;
    (3) Not more than 10.00 percent moisture; or
    (4) Not more than 0.50 percent foreign material.


Sec.  996.40  Handling standards.

    (a) Identification: Each lot of shelled or cleaned inshell peanuts 
intended for human consumption shall be identified by positive lot 
identification prior to being shipped or otherwise disposed of. 
Positive lot identification (PLI) methods are tailored to the size and 
containerization of the lot, by warehouse storage or space 
requirements, or, by necessary further movement of the lot prior to 
certification. Positive lot identification is established by the 
Inspection Service and includes the following methods of 
identification. For domestic lots and repackaged import lots, PLI 
includes PLI stickers, tags or seals applied to each individual package 
or container in such a manner that is acceptable to the Inspection 
Service and maintains the identity of the lot. For imported lots, PLI 
tape may be used to wrap bags or boxes on pallets, PLI stickers may be 
used to cover the shrink-wrap overlap, doors may be sealed to isolate 
the lot, bags or boxes may be stenciled with a lot number, or any other 
means that is acceptable to the Inspection Service. The crop year or 
quota year shown on the positive lot identification tags shall be the 
year in which the peanuts in the lot were produced domestically or 
imported into the U.S., as appropriate. All lots of shelled and 
cleaned-inshell peanuts shall be handled, stored, and shipped under 
positive lot identification procedures, except those lots which are 
reconstituted and/or commingled at the request of the buyer: Provided, 
That the reconstituted or commingled lots were previously positive lot 
identified and certified as meeting the outgoing standards of Sec.  
996.31.
    (b) Sampling and testing shelled peanuts for outgoing Inspection: 
Prior to shipment, the following sampling and inspection procedures 
shall be conducted on each lot of shelled peanuts intended for human 
consumption. The lot size of shelled or cleaned-inshell peanuts 
presented for outgoing inspection in bags or bulk shall not exceed 
200,000 pounds.
    (1) Each handler or importer shall cause appropriate samples, based 
on a sampling plan approved by the Inspection Service, of each lot of 
shelled peanuts intended for human consumption to be drawn by the 
Inspection Service. The gross amount of peanuts drawn shall be large 
enough to provide for a grade analysis, for a grading check-sample, and 
for three 48-pound samples for aflatoxin chemical analysis. The three 
48-pound samples shall be designated by the Inspection Service as 
``Sample 1,'' ``Sample 2,'' and ``Sample 3'' and each sample shall be 
placed in a suitable container and positive lot identified by means 
acceptable to the Inspection Service. Sample 1 may be prepared for 
immediate testing or Sample 1, Sample 2, and Sample 3 may be returned 
to the handler or importer for testing at a later date. Imported 
peanuts shall be labeled ``Sample 1IMP,'' ``Sample 2IMP,'' and ``Sample 
3IMP'' and handled accordingly.
    (2) Before shipment of a lot of shelled peanuts to a buyer, the 
handler or importer shall cause Sample 1 to be ground by the Inspection 
Service, a

[[Page 57143]]

USDA laboratory or a USDA-approved laboratory, in a ``subsampling 
mill.'' The resultant ground subsample from Sample 1 shall be of a size 
specified by the Inspection Service and shall be designated as 
``Subsample 1-AB'' and at the handler's, importer's or buyer's option, 
a second subsample may also be extracted from Sample 1. It shall be 
designated as ``Subsample 1-CD.'' Subsample 1-CD may be sent as 
requested by the handler or buyer, for aflatoxin assay, to a USDA 
laboratory or USDA-approved laboratory that can provide analyses 
results on such samples in 36 hours. The cost of sampling and testing 
Subsample 1-CD shall be for the account of the applicant. Subsample 1-
AB shall be analyzed only in a USDA laboratory or USDA-approved 
laboratory. Both Subsamples 1-AB and 1-CD shall be accompanied by a 
notice of sampling or grade certificate, signed by the inspector, 
containing, at least, identifying information as to the handler or 
importer, the buyer, if known, and the positive lot identification of 
the shelled peanuts.
    (3) The samples designated as Sample 2 and Sample 3 shall be held 
as aflatoxin check-samples by the Inspection Service or the handler or 
importer and shall not be included in the shipment to the buyer until 
the analyses results from Sample 1 are known.
    (4) Upon call from the laboratory, the handler or importer shall 
cause Sample 2 to be ground by the Inspection Service, USDA or USDA-
approved laboratory in a ``subsampling mill.'' The resultant ground 
subsample from Sample 2 shall be of a size specified by the Inspection 
Service and it shall be designated as ``Subsample 2-AB.'' Upon call 
from the laboratory, the handler shall cause Sample 3 to be ground by 
the Inspection Service in a ``subsampling mill.'' The resultant ground 
subsample from Sample 3 shall be of a size specified by Inspection 
Service and shall be designated as ``Subsample 3-AB.'' ``Subsamples 2-
AB and 3-AB'' shall be analyzed only in a USDA laboratory or a USDA-
approved laboratory and each shall be accompanied by a notice of 
sampling. The results of each assay shall be reported by the laboratory 
to the handler and to USDA.
    (5) Handlers and importers may make arrangements for required 
inspection and certification by contacting the Inspection Service 
office closest to where the peanuts will be made available for 
sampling. For questions regarding inspection services, a list of 
Federal or Federal-State Inspection Service offices, or for further 
assistance, handlers and importers may contact: Fresh Products Branch, 
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., 
Room 2049-S, (STOP 0240), Washington, DC, 20250-0240; Telephone: (202) 
720-5870; Fax: (202) 720-0393.
    (6) Handlers and importers may make arrangements for required 
chemical analysis for aflatoxin content at the nearest USDA or USDA-
approved laboratory. For further information concerning chemical 
analysis and a list of laboratories authorized to conduct such analysis 
contact: Dr. Robert Epstein, Deputy Administrator, Science and 
Technology Programs, AMS, USDA, 1400 Independence Avenue, SW STOP 0270, 
Washington, DC 20250-0270; Telephone (202) 720-5231; Fax (202) 720-
6496.


Sec.  996.50  Reconditioning failing quality peanuts.

    (a) Lots of peanuts which have not been certified as meeting the 
requirements for disposition to human consumption outlets may be 
disposed for non-human consumption uses: Provided, That each such lots 
are positive lot identified using red tags, or other methods acceptable 
to the Inspection Service, and certified as to aflatoxin content 
(actual numerical count). However, on the shipping papers covering the 
disposition of each such lot, the handler or importer shall cause the 
following statement to be shown: ``The peanuts covered by this bill of 
lading (or invoice, etc.) are not to be used for human consumption.''
    (b) Sheller oil stock residuals shall be positive lot identified 
using red tags, or other methods acceptable to the Inspection Service, 
and may be disposed of domestically or to the export market in bulk or 
bags or other suitable containers. Disposition to crushing may be to 
approved crushers.
    (1) If such peanuts are not tested and certified as to aflatoxin 
content, pursuant to paragraph (a) of this section, the handler or 
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.''
    (2) If the peanuts are certified as 301 ppb or more aflatoxin 
content, disposition shall be limited to crushing or export.
    (c) Remilling. Handlers and importers may remill, or cause to have 
remilled, lots of shelled or cleaned-inshell peanuts failing to meet 
the applicable outgoing quality standards in the table in Sec.  
996.31(a). If, after remilling, such peanut lot meets the applicable 
quality standards in Sec.  996.31, the lot may be moved for human 
consumption under positive lot identification procedures and 
accompanied by applicable grade and aflatoxin certificates.
    (d) Blanching. Handlers and importers may blanch, or cause to have 
blanched, shelled peanuts failing to meet the outgoing quality 
standards specified in the table in Sec.  996.31(a). If, after 
blanching, such peanut lot meets the quality standards in Sec.  
996.31(a), except fall through standards as specified below, the lot 
may be moved for human consumption under positive lot identification 
procedures and accompanied by applicable grade and aflatoxin 
certificates. Peanut lots certified as meeting fall through standards 
as specified in Sec.  996.31(a) prior to blanching shall be exempt from 
fall through standards after blanching.
    (e) Roasting. Handlers or importers may roast or cause to be 
roasted shelled peanuts which meet the grade standards the table in 
Sec.  996.31(a) but are positive to aflatoxin. Lots of peanuts moved 
under this provision must be accompanied by a valid grade certificate 
showing that the lot met grade requirements of Sec.  996.31(a) prior to 
roasting and a valid aflatoxin certificate. If, after roasting, such 
peanut lot is certified negative as to aflatoxin and the positive lot 
identity has been maintained during the roasting process, the lot may 
be moved for human consumption.
    (f) Lots of shelled peanuts moved for remilling, blanching or 
roasting shall be positive lot identified and accompanied by valid 
grade inspection certificate, Except That, a handler's shelled peanuts 
may be moved without PLI and grade inspection to the handler's 
blanching facility that blanches only the handler's peanuts. The title 
of such peanuts shall be retained by the handler or importer until the 
peanuts have been certified by the Inspection Service as meeting the 
outgoing quality standards specified in the table in Sec.  996.31(a). 
Remilling, blanching, and roasting under the provisions of this 
paragraph shall be performed only by those remillers and blanchers 
approved by USDA. Such approved entities must agree to comply with the 
handling standards in this part and to report dispositions of all 
failing peanuts and residual peanuts to USDA.
    (g) Residual peanuts resulting from remilling, blanching, or 
roasting of peanuts shall be red tagged, or identified by other means 
acceptable to the Inspection Service, and returned directly to the 
handler for further disposition or, in the alternative, such residual 
peanuts shall be positive lot

[[Page 57144]]

identified by the Inspection Service and shall be disposed of to 
handlers who are crushers, or to approved crushers. Handlers who are 
crushers and crushers approved by USDA must agree to comply with the 
terms and conditions of this part.
    (h) Re-inspection. Whenever USDA has reason to believe that 
domestic or imported peanuts may have been damaged or deteriorated 
while in storage, USDA may reject the then effective inspection 
certificate and may require the owner of the peanuts to have a re-
inspection to establish whether or not such peanuts may be disposed of 
for human consumption.
    (i) The cost of transportation, sampling, inspection, 
certification, chemical analysis, and identification, as well as 
remilling and blanching, and further inspection of remilled and 
blanched lots, and disposition of failing peanuts, shall be borne by 
the applicant. Whenever peanuts are presented for inspection, the 
handler or importer shall furnish any labor and pay any costs incurred 
in moving, opening containers, and shipping samples as may be necessary 
for proper sampling and inspection. The Inspection Service shall bill 
the applicant or other responsible entity separately for applicable 
fees covering sampling and inspection, delivering aflatoxin samples to 
laboratories, positive lot identification measures, and other 
certifications as may be necessary to certify edible quality or non-
edible disposition. The USDA and USDA-approved laboratories shall bill 
the applicant or other responsible entity separately for applicable 
fees for aflatoxin assays.


Sec.  996.60  Safeguard procedures for imported peanuts.

    (a) 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 the peanuts in each lot being entered, the inland 
shipment destination where the lot will be made available for 
inspection; and a contact name or telephone number at the destination. 
The inspection office shall sign, stamp, and return the entry document 
to the importer. The importer shall cause a copy of the relevant entry 
documentation to accompany each peanut lot and be presented to the 
Inspection Service at the time of inspection.
    (b) Importers shall report to AMS the entry number, container 
number, and inspection certificate of those peanuts which are sampled 
and inspected but which are subsequently exported as excess of the 
peanut import quota. Peanuts for which an import application is filed 
with the Customs Service, and which are not sampled and inspected, but 
which are subsequently exported as excess of quota, shall not be 
reported to USDA.
    (c) 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 USDA at the time of inspection. 
The importer shall file copies of the Customs Service documentation 
showing the volume of peanuts placed in storage and 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. The Inspection Service may require 
re-inspection of the lot at the time the lot is declared for entry with 
the Customs Service.
    (d) Additional standards. (1) Nothing contained in this section 
shall preclude any importer from milling or reconditioning, prior to 
importation, any shipment of peanuts for the purpose of making such lot 
eligible for importation into the United States. However, all peanuts 
entered for human consumption use must be certified as meeting the 
quality standards specified in Sec.  996.31(a) prior to such 
disposition. Failure to fully comply with quality and handling 
standards as required under this section, will result enforcement 
action by USDA.
    (2) Imported peanut lots sampled and inspected at the port-of-
entry, or at other locations, shall meet the quality standards of this 
part in effect on the date of inspection.
    (3) A foreign-produced peanut lot entered for consumption or for 
warehouse may be transferred or sold to another person: Provided, That 
the original importer shall be the importer of record unless the new 
owner applies for bond and files Customs Service documents pursuant to 
19 CFR 141.113 and 141.20: And provided further, That such peanuts must 
be certified and reported to USDA pursuant to Sec.  996.71 of this 
part.
    (4) 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.

Reports and Records


Sec.  996.71  Reports and recordkeeping.

    (a) Each handler and importer shall report acquisitions of all 
farmers stock peanuts, by Segregation, on a form ``Monthly Report of 
Acquisitions'' and such other reports or information as may be 
necessary to enable USDA to carry out the provisions of this part.
    (b) Each handler and importer shall maintain records of all 
receipts and acquisitions of farmers stock peanuts, and all grade and 
aflatoxin certificates showing the results of milling, remilling, 
blanching and roasting of peanuts for human consumption and the records 
of the disposition of peanuts not certified as meeting Outgoing quality 
standards, specified in Sec.  996.31(a) of this part. Such records 
shall be maintained for at least 2 years after the crop year of their 
applicability. Such recordkeeping shall be sufficient to document and 
substantiate the handler or importer's compliance with this part.
    (c) USDA shall maintain copies of grade and aflatoxin certificates 
on all peanut lots inspected and chemically tested. USDA and USDA-
approved laboratories shall file copies of all aflatoxin certificates 
completed by such laboratories with the DC Marketing Field Office, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 4700 River Road, Suite 2A04, Unit 155, Riverdale, Maryland 
20737; Telephone (301) 734-5243, Fax: (301) 734-5275, or other address 
as determined by USDA.


Sec.  996.72  Confidential information.

    All reports and records furnished or submitted by handlers and 
importers to USDA which include data or information constituting a 
trade secret or disclosing a trade position, financial condition, or 
business operations of the particular handlers or their customers shall 
be received by, and at all times kept in the custody and control of one 
or more employees of USDA, and, except as provided in Sec.  996.74 or 
otherwise provided by law, such information shall not be disclosed to 
any person outside USDA.

[[Page 57145]]

Sec.  996.73  Verification of reports.

    For the purpose of checking and verifying reports filed by handlers 
and importers and the operation of handlers and importers under the 
provisions of this Part, the officers, employees or duly authorized 
agents of USDA shall have access to any premises where peanuts may be 
held and at any time during reasonable business hours and shall be 
permitted to inspect any peanuts so held by such handler or importer 
and any and all records of such handler with respect to the 
acquisition, holding, or disposition of all peanuts which may be held 
or which may have been disposed by the handler.


Sec.  996.74  Compliance.

    (a) A handler or importer shall be subject to withdrawal of 
inspection services, for a period of time to be determined by USDA, if 
the handler or importer:
    (1) Acquires farmers stock peanuts without official incoming 
inspection, pursuant to Sec.  996.30;
    (2) Fails to obtain outgoing inspection on shelled or cleaned-
inshell peanuts, pursuant to Sec.  996.31, and ships such peanuts for 
human consumption use;
    (3) Ships failing quality peanuts, pursuant to Sec.  996.31, for 
human consumption use;
    (4) Commingles failing quality peanuts with certified edible 
quality peanuts and ships the commingled lot for human consumption use;
    (5) Fails to maintain positive lot identification, pursuant to 
Sec.  996.40(a), on peanut lots certified for human consumption use;
    (6) Fails to maintain and provide access to records, pursuant to 
Sec.  996.71, on the reconditioning or disposition of peanuts acquired 
by such handler or importer; or
    (7) Otherwise violates any provision of section 1308 of the Act or 
any provision of this part.
    (b) Any peanut lot which fails to meet the Outgoing quality 
standards specified in Sec.  996.31, and is not reconditioned to meet 
such standards, or is not disposed to non-human consumption outlets as 
specified in Sec.  996.50, shall be reported by USDA to the Food and 
Drug Administration and listed on an Agricultural Marketing Service Web 
site.


Sec.  996.75  Effective time.

    The provisions of this part, as well as any amendments, shall apply 
to the remainder of the 2002 crop year peanuts and subsequent crop year 
peanuts, to 2001 crop year peanuts not yet inspected, and to 2001 crop 
year failing peanuts that have not met disposition standards, and shall 
continue in force and effect until modified, suspended, or terminated. 
Indemnification payments for the 2001 crop peanuts will continue 
through December 31, 2002, under the terms and conditions of 7 CFR part 
998.

PART 997--[REMOVED]

    2. Part 997 is removed.

PART 998--[REMOVED]

    3. Part 998 is removed, effective January 1, 2003.

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

    4. The authority citation for 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.


Sec. 999.600  [Removed]

    5. Section 999.600 is removed.

    Dated: September 3, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-22700 Filed 9-6-02; 8:45 am]
BILLING CODE 3410-02-P