2846 Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 997 and 998

[Docket Nos. FV97–997–1 IFR and FV97–

998–1 IFR]

Peanuts Marketed in the United States;

Relaxation of Handling Regulations

AGENCY: Agricultural Marketing Service

(AMS), USDA.

ACTION: Interim final rule with request

for comments.

SUMMARY: This rule relaxes, for 1997

and subsequent crop peanuts, several

provisions regulating the handling of

domestically produced peanuts

marketed in the United States. The

relaxation includes: Eliminating need

for approval of certain facilities;

allowing minimum grade requirements

for lots of splits to correspond with

grade standards; allowing certain lots to

be custom blanched; providing that

under the Agreement, all lots of edible

quality peanuts be eligible for

indemnification benefits; providing that

peanuts which have been certified as

meeting the minimum grade

requirements, but fail on aflatoxin, may

be roasted prior to being certified as

meeting the latter; and allowing rejected

peanuts to be placed in ‘‘suitable

containers’’, not just ‘‘bagged’’. This rule

will improve efficiency and reduce

program costs resulting in a similar

reduction in assessment rates charged

Agreement signer and non-signer

handlers.

DATES: Effective January 20, 1998;

comments received by March 17, 1998

will be considered prior to issuance of

a final rule.

ADDRESSES: Interested persons are

invited to submit written comments

concerning this rule. Comments must be

sent in triplicate to the Docket Clerk,

Fruit and Vegetable Programs, AMS,

USDA, room 2525–S, P.O. Box 96456,

Washington, DC 20090–6456; Fax: (202)

205–6632. All comments should

reference the docket numbers, the date

and page number of this issue of the

Federal Register and will be made

available for public inspection in the

Office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT:

George J. Kelhart or Jim Wendland,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525–S, Washington, DC 20090–6456;

telephone: (202) 720–2491, Fax: (202)

205–6632. Small businesses may request

information on compliance with this

regulation by contacting: Jay Guerber,

Marketing Order Administration

Branch, Fruit and Vegetable Programs,

AMS, USDA, P.O. Box 96456, room

2525-S, Washington, D.C., 20090–6456;

telephone: (202) 720–2491, Fax: (202)

205–6632.

SUPPLEMENTARY INFORMATION: This rule

is issued under Marketing Agreement

No. 146 (7 CFR Part 998) and the

Agricultural Marketing Agreement Act

of 1937, as amended (7 U.S.C. 601–674),

hereinafter referred to as the ‘‘Act.’’ The

marketing agreement and the

regulations issued thereunder (7 CFR

Part 998) and the non-signatory peanut

handler regulations (7 CFR Part 997)

regulate the quality of domestically

produced peanuts.

The Department of Agriculture

(Department) is issuing this rule in

conformance with Executive Order

12866.

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.

Following explanation of each change

to the Agreement’s regulation, the

corresponding change to the nonsignatory regulation is discussed.

Incoming Regulations

Farmers Stock Storage and Handling

Facilities: The Committee recommended

amending § 998.100 Incoming quality

regulation for 1995 and subsequent crop

peanuts by removing paragraph (g)

Farmers Stock Storage and Handling

Facilities which currently regulates the

condition of such facilities and

authorizes Committee inspection. The

Committee recommended the change to

save approximately $450,000, by

eliminating the positions of the seven

fieldmen whose specified duties

through last crop year included

spending an estimated 60–65 percent of

their time inspecting and approving

such facilities. The vote was 17 ‘‘For’’

and 1 ‘‘Against’’, with the dissenting

voter contending that the fieldmen were

providing valuable services and their

positions should not be eliminated and

that inspection and approval of such

facilities by the Committee staff was

important. Handlers contend they are

already paying their own employees to

do facilities inspections and the cost of

such duplication of effort needs to be

eliminated. Also, this cost-cutting will

not adversely affect quality since

peanuts must still meet the Outgoing

Quality Regulation.

Elimination of the regulatory

provision will allow the Committee to

reduce its non-headquarters staff from

seven to one compliance officer in each

of the three production areas and reduce

the current ‘‘fieldmen’’ staffing costs to

zero. The compliance officers will

conduct compliance audits of

Agreement signers similar to AMS

approved non-signer program

compliance plan procedures where

AMS Compliance Staff auditors check

non-signers’ records. A revised 1997–98

compliance plan from the Committee

includes this new procedure. AMS

believes this will continue to assure

compliance under the Agreement.

The non-signer regulation contains no

similar requirements for inspection and

approval of such facilities, so no change

is needed.

Outgoing Regulations

The Committee unanimously

recommended that § 998.200(a) be

amended to provide that minimum

grade requirements for lots of ‘‘splits’’

(the separated halves of peanut kernels)

be modified to correspond with ‘‘United

States Standards For Grades Of: (1)

Cleaned Virginia Type Peanuts In The

Shell; or (2) Shelled Runner Type

Peanuts; or (3) Shelled Spanish Type

Peanuts; or (4) Shelled Virginia Type

Peanuts’’ (7 CFR Part 51: Sections

51.1235–1242; 51.2710-2721; 51.2730–

2741; and 51.2750–2763, respectively.

This increase to 2.00 percent from the

current 1.50 percent for unshelled

peanuts and damaged kernels is needed

to provide consistency with the grade

standards. Under the current regulation,

a handler could have a lot of peanuts

which met U.S. Grade Standards for

U.S. Splits, but failed to meet

Agreement requirements for edible

quality. It was expected that this change

might reduce the number of lots which

will need to be remilled to meet

outgoing quality requirements.

Although this reduction was roughly

estimated at something less than 10

percent in an average year, this year’s

crop has been stressed by drought

conditions and virtually all peanut

producing States have expressed having

problems with quality. Thus, this

change could still result in significant

reductions in costs for handlers.

Another modification to § 998.200(a)

will remove Table 2.—INDEMNIFIABLE

GRADES. The Committee had originally

established this table in its regulations

to qualify higher grade peanut lots for

its indemnification program covered in

§ 998.300. However, coverage under this

provision has been greatly reduced by
Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations 2847

recent Committee action, to the point

that the table is no longer deemed

necessary. The Department agrees that

Table 2 is not needed and its removal

will simplify the Agreement regulations

and therefore it is hereby removed.

Similar changes are made to the

corresponding § 997.30(a) of the nonsigner regulation.

The Committee unanimously

recommended that § 998.200(h)(1) be

amended to allow lots of peanuts which

fail edible quality requirements, due to

excessive fall through, to be custom

blanched. However, such lots will have

to be certified as meeting minimum ‘‘fall

through’’ requirements after blanching.

The change eliminates the current

requirement that prior to movement of

such peanuts, handlers have to submit

a form to the Committee and receive

authorization for movement and

blanching of each such lot.

Section 997.40(d) of the non-signer

regulation currently does not require

such handlers to submit a request to the

Department and receive authorization

for movement and blanching of each

such lot. Therefore, no similar change to

that provision is needed. However, it is

being amended to add ‘‘fall through’’ to

the category of items allowed in the first

and third sentences.

The Committee also unanimously

recommended a further change to

paragraph (h), specifically that

subparagraphs (h)(1) and (h)(2) be

further amended to provide that reject

peanuts may be placed in suitable

containers acceptable to the Committee.

The current requirement specifies

‘‘bagged,’’ which refers to the older

standard-sized burlap bags. It does not

include the many newer and more

efficient containers which are easier to

handle such as tote bags, corrugated

containers (including those with

capacities of over a ton), Super Sacks,

and other various company containers

used by individual peanut product

manufacturers. The change will allow

handlers to use more efficient

containers or those desired by their

customers. For purposes of this

provision, most any container that

handlers use other than bulk loads—i.e.,

those in which peanuts are not in any

type of receptacle other than the vehicle

transporting them—will be considered

suitable.

Section 997.40(c) of the non-signer

regulation currently provides for ‘‘in

bulk or bags or other suitable

containers.’’ To make it consistent with

the Agreement’s amended regulation,

the words ‘‘in bulk or’’ are being

removed. Paragraphs (d) and (e) are also

being amended by removing the word

‘‘bagged’’ and replacing it with the

words ‘‘placed in suitable containers.’’

The Committee also unanimously

recommended that § 998.200 Outgoing

quality regulation and § 998.300 Terms

and conditions of indemnification . . .

be amended to make all lots of edible

quality peanuts indemnifiable, for

freight reimbursement, when rejected on

appeal after being certified ‘‘negative’’

as to aflatoxin. Under provisions

specified in § 998.300, product claim

lots of edible quality peanuts will now

also be indemnifiable. This involves lots

where a handler sustained a loss as a

result of a buyer withholding from

human consumption any or all of the

product made from a lot of peanuts

which had been determined to be

unwholesome due to aflatoxin after

such lot had originally been certified

‘‘negative’’ as to aflatoxin. This change

will provide consistency by treating all

edible quality peanuts equally, whether

appeal claims or product claims.

Although these changes should further

reduce costs and will promote

uniformity in the handling of

indemnification of all edible quality

peanuts, there is no way to accurately

quantify how much these reductions

would be, because the savings would be

different for each handler. However, the

total savings would be significantly less

than the projected approximately

$200,000 total 1996 crop

indemnification costs.

The non-signer enabling legislation

does not provide authority for

indemnification. Therefore, no similar

change is being made in the non-signer

regulation.

The Committee further unanimously

recommended that § 998.200(h)(3) be

amended to provide that peanuts which

have been certified as meeting

minimum grade requirements specified

in § 998.200(a)(1), but fail to meet

requirements for aflatoxin, may be

roasted while being blanched prior to

being certified as meeting the aflatoxin

requirements. After roasting, such

peanuts must be sampled and assayed

for aflatoxin content but do not have to

be re-sampled and analyzed for grade

again. This simplified process is

recommended by the Committee

because blanched peanuts, after

certification, often are placed back into

blancher for additional heating.

Removing the blanched peanuts short of

the complete roasting process for

sampling and aflatoxin analysis, and

then reinserting them back into the

blancher adds costs to the roasting

process and usually causes additional,

unintentional damage due to the extra

handling of the kernels. Also, the

roasting will enhance the blanching

efforts to eliminate aflatoxin, thus

improving the wholesomeness, quality

and value of such shelled peanuts. The

savings involved in blanching and

roasting in one step should far outweigh

the approximately $40 per hour costs of

having an inspector present during this

process to maintain needed positive lot

identification. Any residual peanuts,

excluding skins and hearts, resulting

from this roasting process, must be red

tagged and disposed of to non-edible

peanut outlets. A similar change is

being made to § 997.40(d) of the nonsigner regulation.

The unchanged portions of the

incoming and outgoing regulations

currently in effect for 1996 and

subsequent crop peanuts will remain in

effect for 1997 and subsequent crop

peanuts.

Pursuant to the requirements set forth

in the Regulatory Flexibility Act (RFA),

the Agricultural Marketing Service

(AMS) has considered the economic

impact of this action on small entities.

Accordingly, AMS has prepared this

initial regulatory flexibility analysis.

There are approximately 27 signatory

and 30 non-signatory peanut handlers

who are currently subject to regulations

under the Agreement and non-signer

program respectively and approximately

25,000 commercial peanut producers in

the 16-State production area. Small

agricultural service firms, which

include handlers, have been defined by

the Small Business Administration (13

CFR 121.601) as those having annual

receipts of less than $5,000,000, and

small agricultural producers are defined

as those having annual receipts of less

than $500,000. Approximately 25

percent of the signatory handlers,

virtually all of the non-signers, and most

of the producers may be classified as

small entities. This action will be

favorable to the industry by tending to

improve efficiency, reducing costs and

increasing returns.

The relaxations to handling

regulations specified in this rule will

simplify requirements and enable

handlers, both large and small, to cut

costs and more efficiently handle their

peanut supplies, without jeopardizing

safeguard requirements in the current

regulations.

The relaxations include: 1. The

elimination of the requirement for

inspection and approval of farmers

stock storage and handling facilities will

save approximately $450,000 by

eliminating the positions of the seven

fieldmen, who had performed this

activity through last crop year. Handlers

contend they already paid their own

employees to do this and the duplicate

cost should be eliminated;
2848 Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations

2. Relaxing the minimum grade

requirements for ‘‘splits’’ to correspond

with U.S. grade standards might reduce

the number of lots which need to be

remilled this year by 10 percent due to

stressed growing conditions in virtually

all areas. This should result in

significant reductions in costs for

handlers;

3. Another relaxation is to provide

that all lots of edible quality peanuts,

whether appeal claims or product

claims, will be eligible for handler

indemnification benefits. Thus,

handlers with product claim lots will

now also be eligible for reimbursement

of most transportation expenses on such

lots. Such additional reimbursement

was not publicly quantified by the

Committee, but would be less than the

projected approximately $200,000 total

1996 crop indemnification costs;

4. The revised provision to allow lots

which fail edible quality requirements,

due to excessive fall through, to be

custom blanched eliminates the current

requirement that handlers have to

submit a form to the Committee and

receive authorization for movement and

blanching of each such lot. This

relaxation will eliminate unnecessary

paperwork and save time for all affected

handlers;

5. Relaxing the requirement that

peanuts be ‘‘bagged’’ (i.e., placed only in

older standard-size burlap bags) by

allowing the use of suitable containers,

will permit use of the many newer and

more efficient containers or those

desired by handlers’ customers; and

6. Another relaxation will allow

peanuts which have been certified as

meeting the minimum grade

requirements, but fail to meet

requirements for aflatoxin, to be roasted

while being blanched prior to being

certified as meeting the latter

requirements. This simplified process

eliminates reinserting such peanuts

back into the blancher, which doubles

the processing costs and tends to lower

the peanuts’ quality and value by

causing additional damage to them.

Such savings should far outweigh the

approximately $40 per hour expense of

having an inspector present to maintain

needed positive lot identification.

The relaxed requirements will

significantly improve efficiency and

have enabled the Committee to cut in

half for the 1997–98 and subsequent

crops years its administrative costs and

assessment rate charged Agreement

signer and non-signer handlers to

finance their respective programs.

Further, the rate of assessment last

season was $0.70 per net ton of

assessable peanuts. The rate for the

1997–98 crop year has been reduced to

$0.35 per net ton by another rulemaking

action, as published in the September

17, 1997, issue of the Federal Register

(62 FR 48749). This will save regulated

domestic handlers approximately

$500,000 in administrative assessment

costs which should, to a great extent,

also correspond to the savings from this

relaxation action.

The specifics of each change and why

they will tend to increase returns to

handlers were covered in detail near the

beginning of this rule under the

discussion starting with ‘‘Incoming

regulations.’’. These changes will relax

requirements on regulated domestic

peanut handlers, improve their

efficiency and cut costs, to benefit the

peanut industry, manufacturers, and

consumers, while still assuring quality

of all peanuts in domestic human

consumption markets.

As with all Federal marketing

agreement and order programs, reports

and forms are periodically reviewed to

reduce information requirements and

duplication by industry and public

sectors. Consistent with the Paperwork

Reduction Act (44 U.S.C. Chapter 35),

the Committee unanimously

recommended greatly reducing

reporting and recordkeeping

requirements on both large and small

domestic peanut handlers regulated

under these two programs. It will

eliminate 20 of the 21 Committee forms

currently approved by OMB that might

accompany peanut shipments, to only

require use of the Form PAC–1. The

PAC–1 is mailed to handlers on a

monthly basis and is used to report

receipts and acquisitions of farmers

stock peanuts and to remit assessments.

It is estimated this will eliminate 95

percent (or about 2,291 hours and

assuming $10 per hour, would save

respondents nearly $23,000 in costs) of

the current estimated 2,417 hours of

total reporting burden on Agreement

signers, including small businesses, and

a proportional, smaller reduction in

non-signer reporting burden. A notice of

the proposed revision was published in

the July 31, 1997, issue of the Federal

Register (62 FR 41021). Sixty days were

allowed for comments. One comment

was received, from the American Peanut

Shellers Association, supporting the

reduced burdens. This information

collection package has been submitted

to the Office of Management and Budget

(OMB) for approval.

In addition, the Department has not

identified any Federal rules that

duplicate, overlap or conflict with this

rule.

Further, the Committee’s meeting was

widely publicized throughout the

peanut industry and all interested

persons were invited to attend the

meeting and participate in the

Committee’s deliberations. Like all

Committee meetings, the April 29–30,

1997, meeting was a public meeting and

all entities, both large and small, were

able to express their views on the issues.

The 18-member Committee is composed

of an equal number of peanut handlers

and producers, the majority of whom

are small entities.

Also, the Committee has a number of

appointed subcommittees to review

certain issues and make

recommendations to the Committee.

The Committee’s Regulations,

Indemnification and Quality

Subcommittee and ‘‘New Concept’’

Subcommittee met on January 28, 1997,

and discussed these issues in detail. On

March 25, 1997, the Committee held an

informational meeting to hear a

presentation by the National Peanut

Council’s Peanut Industry Revitalization

Project Steering Committee and discuss

those issues there and back with their

industry peers before voting on those

issues at the April Committee meeting.

The Committee’s Administrative Budget

Subcommittee also meet March 25,

1997, to discuss budget

recommendations. These meetings were

also public meetings and both large and

small entities were able to participate

and express their views. Finally,

interested persons are invited to submit

information on the regulatory and

informational impacts of this action on

small businesses.

An objective of the two domestic

programs is to ensure that only high

quality and wholesome peanuts enter

human consumption markets in the

United States. About 70 percent of

domestic handlers, handling

approximately 95 percent of the crop

volume, have signed the Agreement.

The remaining 30 percent are nonsignatory handlers handling the

remaining 5 percent of domestic

production.

Under these regulations, farmers stock

peanuts with visible Aspergillus flavus

mold (the principal source of aflatoxin)

are required to be diverted to inedible

uses. Each lot of milled peanuts must be

sampled and the samples chemically

analyzed for aflatoxin content. Costs to

administer the Agreement and to

reimburse the Department for oversight

of the non-signatory program are paid

by an assessment levied on handlers in

the respective programs.

The 18-member Committee, which is

composed of an equal number of peanut

producers and handlers, meets at least

annually to review the Agreement’s

rules and regulations, which are

effective on a continuous basis from one
Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations 2849

year to the next. Committee meetings

are open to the public, and interested

persons may express their views at these

meetings. The Department assesses

Committee recommendations, as well as

information from other sources, prior to

making any recommended changes to

the regulations under the Agreement.

Section 608b of the Act was amended

in 1989 to require that all peanuts

handled by persons who have not

entered into the Agreement (nonsigners) be subject to the same quality

and inspection requirements to the same

extent and manner as are required under

the Agreement. Section 608b was

further amended in 1993 to impose

similar requirements regarding

administrative assessments. The nonsignatory handler regulations have been

amended several times thereafter and

are published in 7 CFR part 997.

Thus, the Committee’s recommended

changes to the Agreement regulation, as

established in this rule, also are

established for the Agreement nonsigners. This interim final rule identifies

the corresponding change to the nonsigner regulation for each change to the

Agreement regulation.

According to the Committee, the

domestic peanut industry is undergoing

a period of great change. The Committee

bases its view, in part, on findings in a

recent study entitled ‘‘United States

Peanut Industry Revitalization Project’’

developed by the National Peanut

Council and the Department’s

Agricultural Research Service (May

1996).

According to the study, the U.S.

peanut industry has been in a period of

dramatic economic decline since 1991

because: (1) Per capita peanut

consumption has steadily declined a

total of 11 percent; (2) harvested acreage

has declined 25 percent; (3) production

has declined 30 percent and farm value

dropped 29 percent; and (4) imports of

peanuts and peanut products have

increased from insignificant quantities

to 48,736 raw farmer stock tons in 1995

and 55,536 in 1996.

The study points to recent increases

in the duty-free import quota for raw

peanuts due to the North American Free

Trade Agreement (NAFTA) and the

Uruguay Round Agreements under the

General Agreement on Tariffs and Trade

(GATT). Under Section 22 import quota

provisions, the volume of U.S. peanut

imports had been limited to about 2.3

million pounds, in-shell basis, annually.

Thus, imports have historically

represented about one-tenth of 1 percent

of U.S. food use of peanuts. Under

NAFTA, Mexico has been granted a

minimum access level for duty-free

entry of peanuts of about 10 million

pounds, in-shell basis. This level will

increase about 3 percent annually

through 2008, when quantitative limits

will cease. Mexico’s 1998 duty-free

quota will total 8.4 million pounds.

Under GATT, the 1995 quota was 74.5

million pounds. This year it is 86.8

million pounds, will increase to 96.7

million pounds (Argentina 81.2 and all

other 15.5) in 1998, and can grow to

about 155 million pounds (about 4

percent of U.S. disappearance) in 2000.

The study also projects that farm

production costs and revenue will be

equal by the year 2000, as will handler

costs and revenue, leaving no profit.

In addition, the modification of the

Federal farm peanut poundage quota

regulations implemented under the

Agricultural Market Transition Act of

1996 (1996 Act) has resulted in the

domestic industry undergoing

significant changes scheduled to

continue through the year 2002. The

peanut support price has been reduced

from $670 per ton in 1995 to $610 per

ton through 2002. The USDA’s Farm

Service Agency final rule implementing

the Act was published May 9, 1997 (62

FR 25433). That rule indicates that

economic impacts of the 1996 Act

include expected reductions in

domestic peanut producers’ revenue of

$1.25 billion from 1996 through 2002.

Quota lease holders could absorb a loss

of about $40 million annually because

of reduced leasing rates due to the lower

peanut price support. Also, capitalized

value of quotas could decline $200 to

$300 million, thus reducing land values

and the tax base of rural communities.

The Committee agrees that all of these

factors combined show that the

domestic peanut industry had been in

decline and that the outlook was not

expected to change without some

positive intervention by the industry.

World supply and demand are less

important for peanuts than most U.S.

farm commodities. Much of world

peanut production is for non-food uses,

although production for food use might

increase a little if there were no U.S.

import restrictions. Also, import quotas,

though increased recently, still are set at

relatively low levels.

Domestic peanut production in 1996

was approximately 3.66 billion pounds,

with a farm value of slightly under $1

billion. The Department’s November 1

forecast pegs the 1997 peanut crop

production at 3.5 billion pounds, down

approximately 4 percent from last year.

Harvested acreage for 1997 is forecast to

be 1.384 million acres, up 4,500 acres

from a year ago. The U.S. average yield

per acre for the 1997 crop is forecast at

2,528 pounds, down 11 pounds per acre

from the 1996 crop.

Production is expected to gradually

increase from 1996 to 2002 because

domestic food use is projected to rise

about 1.5 percent annually. Imports are

expected to remain at a relatively small

percentage of total U.S. peanut use.

Estimated exports of 750 million

pounds in Marketing Year (MY) 1997

are below the average for the prior 3

years, but are 11 percent more than a

year earlier. Peanut oil prices are

expected to average about 38 cents a

pound of oil in MY 1997, 6 percent

lower than MY 1996 as vegetable oil

supplies return to more normal levels.

Peanut meal prices for MY 1997 are

expected to decline to $175 a ton, down

25 percent from MY 1996 because of

larger soybean meal supplies.

The season average price of farmer

stock peanuts for MY 1997 may remain

unchanged from the 28.5 cents per

pound average for 1996. This was the

lowest price of the last two years and

reflects the adjustment to the reduced

quota support level and an unexpected

change in the proportions of quota and

additionals in 1997 production. Average

prices to growers are expected to

increase, but will remain below 1995

prices because of the lower quota price

support level. The value of farm

production is expected to gradually rise

and surpass that of 1995 by 2000/01.

The Committee recommended the

changes in this rulemaking to the

Agreement’s Incoming and Outgoing

regulations for 1997 and subsequent

crop peanuts at its April 30, 1997,

public meeting.

Alternative Actions Considered

Although the Committee could have

recommended no changes or less

changes to the current regulations, it

unanimously concluded that those were

not satisfactory solutions. It believes

that all possible simplification and costcutting should be done and that these

regulations should focus more on

outgoing quality and less on the shelling

and milling processes necessary to meet

the outgoing, human consumption

requirements. Newer, high technology

milling and blanching equipment enable

handlers to recondition failing peanut

lots that could not have been

economically reconditioned when the

regulations were first promulgated.

Therefore, it is no longer necessary to

impose restrictions that hinder the

efficiency of handling operations and

result in the loss of potentially good

quality peanuts. Thus, the Committee

believes these changes will tend to

improve the returns to growers and

handlers, while still maintaining

consumer safeguard provisions in the

current domestic regulations, because
2850 Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations

all peanuts intended for human

consumption must still be inspected

and certified acceptable for such use.

After review of the recommendations,

the Department concurs that the

recommended changes will tend to

improve returns to the industry and be

in the public interest. Expected benefits

of the changes were included in the

previous discussion of each individual

change.

In accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C.

Chapter 35) information collection

requirements that are contained in this

rule have been previously approved by

the Office of Management and Budget

(OMB) and have been assigned OMB

Nos. 0581–0067 (for Agreement signers)

and 0581–0163 (for non-signers).

After consideration of all relevant

material presented, including the

Committee’s recommendations, and

other information, it is found that this

interim final rule, as hereinafter set

forth, will tend to effectuate the

declared policy of the Act.

This rule invites comments on

changes to the quality regulations

currently prescribed under the

Agreement and the non-signers

program. All written comments timely

received will be considered prior to

finalization of this rule.

Pursuant to 5 U.S.C. 553, it is also

found and determined upon good cause

that it is 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

because: (1) This rule relaxes

requirements currently in effect; (2) the

1997 peanut crop year began July 1,

1997, and the changes should be

effective as soon as possible to allow the

industry to receive the benefits for as

much of the remainder of the crop year

as possible; (3) the Committee

unanimously recommended these

changes at a public meeting and all

entities, both large and small, were able

to express views on these issues; (4) this

rule provides a 60-day opportunity for

comment, and all written comments

timely received will be considered prior

to finalization of the rule.

List of Subjects

7 CFR Part 997

Food grades and standards, Peanuts,

Reporting and recordkeeping

requirements.

7 CFR Part 998

Marketing agreements, Peanuts,

Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 7 CFR parts 997 and 998 are

amended as follows:

PART 997—PROVISIONS

REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED

PEANUTS HANDLED BY PERSONS

NOT SUBJECT TO THE PEANUT

MARKETING AGREEMENT

1. The authority citation for 7 CFR

part 997 continues to read as follows:

Authority: 7 U.S.C. 601–674.

2. Section 997.30 is amended by

revising paragraph (a), to read as

follows:

Quality Regulations

§ 997.30 Outgoing Regulation.

(a) Shelled peanuts. (1) No handler

shall dispose of shelled peanuts for

human consumption unless such

peanuts are positive lot identified,

certified ‘‘negative’’ as to aflatoxin and

certified as meeting the following

requirements:

MAXIMUM LIMITATIONS

Type and grade

category

Unshelled

peanuts and

damaged kernels (percent)

Unshelled

peanuts, damaged kernels

and minor defects (percent)

Fall through

Foreign material (percent)Moisture (perSound split and cent)

broken kernels

Sound whole

kernels Total

Excluding lots of

‘‘splits’’

Runner ............... 1.50 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 16⁄64×3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00

Virginia (except

No. 2).

1.50 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 15⁄64×1

inch slot

screen.

4.00%; both

screens.

.20 9.00

Spanish and Valencia.1.50 2.50 3.00%; 16⁄64 inch

round screen.

3.00%; 15⁄64×3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00

No. 2 Virginia ..... 1.50 3.00 6.00%; 17⁄64 inch

round screen.

6.00%; 15⁄64×1

inch slot

screen.

6.00%; both

screens.

.20 9.00

Lots of ‘‘splits’’

Runner (not

more than 4%

sound whole

kernels).

2.00 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 14⁄64×3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00

Virginia (not less

than 90%

splits).

2.00 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 14⁄64×1

inch slot

screen.

4.00%; both

screens.

.20 9.00

Spanish and Valencia (not

more than 4%

sound whole

kernels).

2.00 2.50 3.00%; 16⁄64 inch

round screen.

3.00%; 13⁄64×3⁄4

inch slot

screen.

4.00% both

screens.

.20 9.00
Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations 2851

(2) The term fall through, as used in

this paragraph, shall mean sound split

and broken kernels and whole kernels

which pass through specified screens.

Prior to shipment, appropriate samples

for pretesting shall be drawn in

accordance with paragraph (c) of this

section from each lot of peanuts. For the

current crop year, ‘‘negative’’ aflatoxin

content means 15 parts per billion (ppb)

or less for peanuts which have been

certified as meeting edible quality grade

requirements.

* * * * *

3. In § 997.40, paragraph (c)

introductory text is amended by

removing the words ‘‘bulk or’’,

paragraph (e) is amended by removing

the word ‘‘bagged’’ and adding in its

place the words ‘‘placed in suitable

containers acceptable to AMS’’,

paragraph (d) is amended by removing

the word ‘‘bagged’’ and adding in its

place the words ‘‘placed in suitable

containers acceptable to AMS’’, and

adding after the last sentence, 5

additional sentences, to read as follows:

§ 997.40 Reconditioning and disposition of

peanuts failing quality requirements.

* * * * *

(d) * * * Handlers may contract with

Committee approved blanchers for

roasting positive lot identified shelled

peanuts, which originated from

Segregation 1 peanuts, that meet the

grade requirements of paragraph (a) of

this section but are positive as to

aflatoxin. Lots of peanuts moved under

these provisions must be accompanied

by a valid grade inspection certificate

and a valid aflatoxin certificate. To be

eligible for disposal into human

consumption outlets, such peanuts after

roasting, shall have had the positive lot

identity maintained and be

accompanied by a negative aflatoxin

certificate. The residual peanuts,

excluding skins and hearts, resulting

from roasting under these provisions,

shall be placed in suitable containers

acceptable to AMS and red tagged and

disposition shall be that such peanuts

are returned to the handler for further

disposition; or that in the alternative,

such residuals shall be positive lot

identified by a Federal or Federal-State

Inspection Service, and shall be

disposed of, by the blancher, to handlers

who are crushers, or to crushers who are

not handlers under the Agreement only

on the condition that they agree to

comply with the terms of paragraph (c)

of this section and all other applicable

requirements of this regulation. Roasting

under the provisions of this paragraph

shall be performed only by blanchers

who are approved by the Committee.

* * * * *

PART 998—MARKETING AGREEMENT

REGULATING THE QUALITY OF

DOMESTICALLY PRODUCED

PEANUTS

1. The authority citation for 7 CFR

part 998 continues to read as follows:

Authority: 7 U.S.C. 601–674.

§ 998.100 [Amended]

2. Section 998.100 is amended by

removing paragraph (g), redesignating

paragraphs (h) and (i) as paragraphs (g)

and (h), and removing the number

‘‘1996’’ in the section heading and

adding in its place the number ‘‘1997’’.

3. In § 998.200, the section heading

and paragraphs (a), (h)(1) and (h)(2) are

revised and a new paragraph (h)(3) is

added to read as follows:

§ 998.200 Outgoing quality regulation for

1997 and subsequent crop peanuts.

* * * * *

(a) Shelled peanuts. (1) No handler

shall dispose of shelled peanuts for

human consumption unless such

peanuts are positive lot identified,

certified ‘‘negative’’ as to aflatoxin, and

certified as meeting the following

requirements:

MAXIMUM LIMITATIONS

Type and grade

category

Unshelled

peanuts and

damaged kernels

(percent)

Unshelled

peanuts, damaged kernels

and minor defects (percent)

Fall through

Foreign materials (percent)Moisture

Sound split and (percent)

broker kernels

Sound whole

kernels Total

Excluding lots of

‘‘splits’’

Runner ............... 1.50 2.50 3.00%; 17⁄64 inch

round screen.

3.00% 16⁄64 × 3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00

Virginia (except

No. 2.

1.50 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 15⁄64 × 1

inch slot

screen.

4.00%; both

screens.

.20 9.00

Spanish and Valencia.1.50 2.50 3.00%; 16⁄64 inch

round screen.

3.00%; 15⁄64 × 3⁄4

inch slot

screen.

4.00% both

screens.

.20 9.00

No. 2 Virginia 1.50 3.00 6.00%; 17⁄64 inch

round screen.

6.00%; 15⁄64 × 1

inch slot

screen.

6.00%; both

screens.

.20 9.00

Lots of ‘‘splits’’

Runner (not

more than 4%

sound whole

kernels.

2.00 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 14⁄64 × 3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00

Virginia (not less

than 90% splits.

2.00 2.50 3.00%; 17⁄64 inch

round screen.

3.00%; 14⁄64 × 1

inch slot

screen.

4.00%; both

screens.

.20 9.00

Spanish and Valencia (not

more than 4%

sound whole

kernels).

2.00 2.50 3.00%; 16⁄64 inch

round screen.

3.00%; 13⁄64 × 3⁄4

inch slot

screen.

4.00%; both

screens.

.20 9.00
2852 Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 / Rules and Regulations

(2) The term fall through, as used in

this paragraph, shall mean sound split

and broken kernels and whole kernels

which pass through specified screens.

* * * * *

(h) * * * (1) Handlers may blanch or

cause to have blanched positive lot

identified shelled peanuts, which

originated from Segregation 1 peanuts,

that fail to meet the requirements of

paragraph (a) of this section. Lots of

peanuts which are moved under these

provisions must be accompanied by a

valid grade inspection certificate and

the title shall be retained by the handler

until the peanuts are blanched and

certified by an inspector of the Federal

or Federal-State Inspection Service as

meeting the requirements for disposal

into human consumption outlets. To be

eligible for disposal into human

consumption outlets, such peanuts after

blanching, must meet specifications as

listed in paragraph (a) of this section

and be accompanied by an aflatoxin

certificate determined to be negative by

the Committee. Lots of peanuts which

have been certified as meeting fall

through requirements as specified in

paragraph (a) of this section, prior to

blanching, shall be exempt from fall

through requirements after blanching.

The residual peanuts, excluding skins

and hearts, resulting from blanching

under these provisions, shall be placed

in suitable containers acceptable to the

Committee and red tagged and

disposition shall be that such peanuts

are returned to the handler for further

disposition; or, in the alternative, such

residuals shall be positive lot identified

by the Federal or Federal-State

Inspection Service, and shall be

disposed of, by the blancher, to handlers

who are crushers, or to crushers who are

not handlers under the Agreement only

on the condition that they agree to

comply with the terms of paragraph (g)

of this section and all other applicable

requirements of the Agreement.

Blanching under the provisions of this

paragraph shall be performed only by

those firms who agree to procedures

acceptable to the Committee and who

are approved by the Committee to do

such blanching.

(2) Handlers may contract with

Committee approved remillers for

remilling shelled peanuts, which

originated from Segregation 1 peanuts,

that fail to meet the requirements for

disposition to human consumption

outlets heretofore specified in paragraph

(a) of this section: Provided, That such

lots of peanuts contain not in excess of

10 percent fall through. Lots of peanuts

moved under these provisions must be

accompanied by a valid grade

inspection certificate and must be

positive lot identified and the title of

such peanuts shall be retained by the

handler until the peanuts have been

remilled and certified by the Federal or

Federal-State Inspection Service as

meeting the requirements for

disposition to human consumption

outlets specified in paragraph (a) of this

section, and be accompanied by an

aflatoxin certificate determined to be

negative by the Committee. Remilling

under these provisions may include

composite remilling of more than one

such lot of peanuts owned by the same

handler. However, such peanuts owned

by one handler shall be held and

remilled separate and apart from all

other peanuts. The residual peanuts

resulting from remilling under these

provisions, shall be placed in suitable

containers acceptable to the Committee

and red tagged and disposition shall be

that such peanuts are returned to the

handler for further disposition; or, in

the alternative, such residuals shall be

positive lot identified by the Federal or

Federal-State Inspection Service, and

shall be disposed of, by the remiller, to

handlers who are crushers, or to

crushers who are not handlers under the

Agreement only on the condition that

they agree to comply with the terms of

paragraph (g) of this section and all

other applicable requirements of the

Agreement. Remilling under the

provisions of this paragraph shall be

performed only by those firms who

agree to procedures acceptable to the

Committee and who are approved by the

Committee to do such remilling.

(3) Handlers may contract with

Committee approved blanchers for

roasting positive lot identified shelled

peanuts, which originated from

Segregation 1 peanuts, that meet the

grade requirements of paragraph (a) of

this section but are positive as to

aflatoxin. Lots of peanuts moved under

these provisions must be accompanied

by a valid grade inspection certificate

and a valid aflatoxin certificate. To be

eligible for disposal into human

consumption outlets, such peanuts after

roasting, shall have had the positive lot

identity maintained and be

accompanied by an aflatoxin certificate

determined to be negative by the

Committee. The residual peanuts,

excluding skins and hearts, resulting

from roasting under these provisions,

shall be placed in suitable containers

acceptable to the Committee and red

tagged and disposition shall be that

such peanuts are returned to the handler

for further disposition; or in the

alternative, such residuals shall be

positive lot identified by a Federal or

Federal-State Inspection Service, and

shall be disposed of, by the blancher, to

handlers who are crushers, or to

crushers who are not handlers under the

Agreement only on the condition that

they agree to comply with the terms of

paragraph (g) of this section and all

other applicable requirements of the

Agreement. Roasting under the

provisions of this paragraph shall be

performed only by blanchers who are

approved by the Committee.

* * * * *

Dated: January 9, 1998.

Sharon Bomer Lauritsen,

Acting Deputy Administrator, Fruit and

Vegetable Programs.

[FR Doc. 98–1052 Filed 1–15–98; 8:45 am]

BILLING CODE 3410–02–P