[Federal Register Volume 61, Number 119 (Wednesday, June 19, 1996)]
[Rules and Regulations]
[Pages 31306-31322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15361]




[[Page 31305]]


_______________________________________________________________________

Part III





Department of Agriculture





_______________________________________________________________________



Agricultural Marketing Service



_______________________________________________________________________



7 CFR Part 999



Specialty Crops; Import Regulations; Peanut Import Regulations; Final 
Rule

Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / 
Rules and Regulations

[[Page 31306]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 999

[Docket No. FV94-999-2FR]


Specialty Crops; Import Regulations; Peanut Import Regulations

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule establishes minimum quality, identification, 
certification and safeguard requirements for imported farmers stock, 
shelled, and cleaned-inshell peanuts. This rule is issued under section 
108B(f)(2) of the Agricultural Act of 1949, as amended. The provisions 
of paragraph (f)(2) require all peanuts in the domestic market to fully 
comply with all quality standards under Peanut Marketing Agreement No. 
146 (Agreement). Therefore, this rule establishes the same quality 
requirements and handling procedures for imported peanuts as those 
which are in effect for domestically produced peanuts. This final rule 
addresses comments to the proposed rule submitted by members of the 
industry and other interested persons. This action will benefit peanut 
handlers, importers and consumers by helping to ensure that all peanuts 
in the marketplace comply with the same quality standards.

EFFECTIVE DATE: July 19, 1996.

FOR FURTHER INFORMATION CONTACT: Tom Tichenor or Rick Lower, Marketing 
Specialists, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2523-S, Washington, DC 20090-
6456; tel: (202) 720-6862 or (202) 720-2020 respectively; fax (202) 
720-5698.

SUPPLEMENTARY INFORMATION: This final rule is issued under paragraph 
(f)(2) of section 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c-
3), as amended November 28, 1990; Pub. Law 101-624, hereinafter 
referred to as the Act. Paragraph (f)(2) of section 108B of the Act 
provides that the Secretary of Agriculture (Secretary) shall require 
that all peanuts in the domestic market fully comply with all quality 
standards under Marketing Agreement No. 146 (7 CFR part 998), issued 
pursuant to the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674).
    This rule adds ``Sec. 999.600 governing the importation of 
peanuts'' under 7 CFR part 999--Specialty Crops; Import Regulations. 
Section 999.600 establishes minimum quality, identification, 
certification and safeguard requirements for foreign produced farmers 
stock, shelled and cleaned-inshell peanuts presented for importation 
into the United States. The quality requirements are the same as those 
specified in Sec. 998.100 Incoming quality regulation and Sec. 998.200 
Outgoing quality regulation established pursuant to the Agreement. 
Whenever the regulations specified in the Agreement are changed, the 
regulations in Sec. 999.600 will be changed accordingly. Safeguard 
procedures enable the Department to monitor and assure importers' 
compliance with the requirements of this regulation.
    The intent of paragraph (f)(2) of section 108B of the Act is to 
ensure that all peanuts in the domestic marketplace comply with the 
same quality standards.
    The U.S. Department of Agriculture (Department or USDA) is issuing 
this rule in accordance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform, and is not intended to have retroactive effect. This 
rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule. There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of this rule.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule on small entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Small agricultural 
service firms, which include importers, have been defined by the Small 
Business Administration (13 CFR 121.601) as those whose annual receipts 
are less than $5 million. This import regulation is based on 
regulations established under the Agreement which regulates the quality 
of domestically produced peanuts.
    Experience shows that peanut importers affected by this regulation 
are comprised primarily of signatories to the Agreement and import 
brokers. The majority of signatories to the Agreement cannot be 
classified as small entities. Import brokers may contract with peanut 
handlers who have the equipment and storage facilities needed to carry 
out necessary shelling and reconditioning of imported peanuts. While 
the Department is aware of at least seven importers who imported 
peanuts into the United States (most of whom are small entities), it is 
unable to accurately estimate the number or size of importers who may 
choose to import peanuts in the future. The Department estimates that 
there are as many as 50 domestic peanut handlers with storage and 
milling facilities that can be used to prepare peanuts for human 
consumption markets.
    The quality and handling requirements of this import regulation 
apply uniformly to all importers, whether small or large. The peanut 
import quota, while limited, is available to all importers, regardless 
of size or business orientation. There are no known additional costs 
incurred by small importers that are not incurred by large importers.
    No significant alternatives which could accomplish the objectives 
of this action were identified.
    Importers must incur the costs of inspection and aflatoxin 
analysis. However, these costs are proportional to the volume of 
peanuts imported and the size of each inspected and tested lot. Such 
costs are applied to all importers regardless of size and also are 
consistent with such costs incurred by handlers of domestically 
produced peanuts. Additional costs are incurred if an imported lot must 
be reconditioned to meet quality requirements of the import rule. 
Losses may occur if an imported failing lot cannot be reconditioned and 
must be disposed to a non-edible peanut outlet, destroyed or re-
exported. However, such costs are relative to the quality of each 
imported peanut lot, and importers may reduce the likelihood of 
incurring reconditioning costs or other losses due to poor quality 
peanuts, by importing only high quality peanuts. In this regard, the 
business risks for peanut importers are no different than those for 
handlers of domestically produced peanuts. Further, it is common 
industry practice that buyers (manufacturers) of peanuts require, or 
make purchase contingent upon, passing grade and aflatoxin certificates 
of each peanut lot purchased. Thus, the costs of inspection and 
maintenance of lot identification are a part of normal business 
practices for this industry.
    While the level of benefits of this action are difficult to 
quantify, the stabilizing effects of shipping only high quality and 
wholesome peanuts to human consumption outlets impact both small and 
large importers positively by helping them maintain and expand markets. 
The Department is not aware of any Federal rules which duplicate, 
overlap, or conflict with this final rule. Finally, this action is 
required by statute.

[[Page 31307]]

    Based on available information, the AMS has determined that this 
rule would not have a significant impact on a substantial number of 
small entities.
    In the past, the importation of peanuts has been limited to 1.71 
million pounds annually. However, the Schedule of the United States 
annexed to the North American Free Trade Agreement (NAFTA), implemented 
on January 1, 1994, provided duty free entry for up to approximately 
7.43 million pounds of qualifying peanuts from Mexico. For 1996, the 
duty-free access for Mexican peanuts increased to approximately 7.88 
million pounds. In calendar year 2008, access for Mexican peanuts will 
be unlimited. In addition, the United States Schedule to the Uruguay 
Round Agreements negotiated under the General Agreement on Tariffs and 
Trade (GATT) relaxes the peanut import quota to 74.5 million pounds in 
1995, with additional annual increases of approximately 10 million 
pounds to reach a ceiling of 125 million pounds by the year 2000 for 
all imported peanuts.
    Various qualities of peanuts are entered into the United States 
from countries such as Argentina, Mexico, Nicaragua, India, and the 
People's Republic of China. Foreign produced peanuts are produced under 
varying weather conditions and using different cultural practices.
    Consistent with the Agreement's regulatory provisions, each lot of 
peanuts entered into the U.S. would be required to be officially 
sampled and graded by the Federal or Federal-State Inspection Service 
(inspection service). Incoming inspection for farmers stock peanuts and 
outgoing inspection for edible quality shelled peanuts and cleaned-
inshell peanuts will be required for imported peanuts. A list of 
inspection service offices is provided in paragraph (d)(2)(i) of this 
regulation.
    Some peanuts contain defects or other damage which cause them to be 
of low quality or have poor taste which could affect the demand for 
peanuts. Producers, handlers and manufacturers in the domestic peanut 
industry believe that even an isolated quality problem could adversely 
affect consumer confidence, which would be detrimental to the domestic 
peanut industry.
    The Agreement imposes quality standards for domestically produced 
inshell and shelled peanuts. Peanut lots are graded based on the 
percentage of unshelled peanuts, percentage of kernels with damage and 
minor defects, percentage of loose shelled kernels, percentage of 
foreign material, and percentage of moisture content. In addition, an 
integral part of these quality standards is the extent of the presence 
of Aspergillus flavus mold (the principal cause of aflatoxin, which is 
a carcinogen). This mold is more likely to be found on damaged or 
defective kernels than on sound, whole, good quality kernels. A 
chemical analysis for aflatoxin is required on shelled peanut lots not 
meeting superior quality requirements. Shelled lots that exceed certain 
superior quality requirements need not be analyzed prior to shipment 
for human consumption.
    The proposed rule was issued January 23, 1996, and published in the 
Federal Register February 1, 1996. A 30-day comment period was provided 
and 16 comments were received. Comments were received from a United 
States Congressman, as well as persons representing the agricultural 
office of a South American embassy, the Peanut Administrative Committee 
(PAC), the American Farm Bureau Federation, the Southwestern Peanut 
Growers' Association, the Peanut Growers Cooperative Marketing 
Association in the Virginia-Carolina area, the American Peanut Shellers 
Association, and the American Peanut Product Manufacturers, Inc. 
Comments were also received from a peanut product manufacturer, three 
peanut brokers, one peanut handler/importer, and a company making 
chemical analysis testing kits. Most all commenters agree that imported 
peanuts should meet domestic requirements for human consumption. 
However, they also were critical of various provisions in the proposed 
rule.
    Three commenters stated that the regulation should establish 
requirements for aflatoxin testing of peanut butter and peanut paste 
imported from Canada and Mexico. However, Peanut Marketing Agreement 
No. 146, the authorizing statute, and the quality regulations under the 
Agreement are only applicable to peanuts and not peanut products. The 
Food and Drug Administration (FDA) is responsible for certifying the 
aflatoxin level of imported peanut butter and peanut products.
    Four commenters recommended that the rule should establish country-
of-origin requirements on imported peanuts to guard against peanuts 
produced in one country and transhipped through another country before 
importation into the U.S. However, the purpose of this rule is to 
establish quality requirements for all imported peanuts, and 
establishment of country-of-origin requirements is not necessary. The 
United States Customs Service (Customs Service) monitors country-of-
origin on imported peanuts for tariff purposes. In addition, the grade 
and aflatoxin certificates will identify the country-of-origin as the 
shipping country unless another producing country is identified on 
Customs Service documentation.
    Five commenters were of the opinion that the regulation is contrary 
to the spirit of GATT and NAFTA, which is to promote free and fair 
trade. However, both GATT and NAFTA recognize the rights of signatories 
to protect themselves from inferior quality imports by allowing the 
receiving country to apply to imports the same standards mandated for 
its domestically produced, agricultural products. The Department 
believes that this rule meets such ``national treatment'' requirements 
in that it provides the same grade and handling requirements applied to 
peanuts domestically produced throughout the United States.
    One commenter indicated that European countries are implementing a 
program using the quality test results conducted by suppliers in 
origin-producing countries. The commenter questioned why the Department 
does not honor origin-testing programs in other countries while United 
States peanut suppliers are aggressively supporting origin-testing of 
peanuts they ship to Europe. The commenter recommended that imported 
peanuts be origin-tested by recognized independent laboratories 
overseas. The commenter suggested that a laboratory owned and operated 
by a PAC-approved laboratory in the United States be authorized to 
perform the grade and aflatoxin inspections in Argentina. The lab is 
currently certifying peanut shipments to the United States and Europe, 
and those shipments have met minimum aflatoxin requirements over the 
past year.
    The Agreement's requirements, as reflected in these import 
regulations, are supported by an integrated quality assurance system 
that includes statistically based sampling, positive lot 
identification, and laboratory oversight. Because it would be 
difficult, at this time, to ascertain that imported peanuts meet the 
same quality requirements as domestic peanuts without the application 
of that inspection system, these regulations do not provide for country 
of origin inspection and testing.
    A number of commenters complained about the increased burden on 
importers, and four commenters contended that the regulation is more 
burdensome on importers than the domestic regulation is on handlers 
under the Agreement. Individually or jointly, they commented that the 
proposed regulations would increase importers' burdens by: placing time 
constraints on certification or non-edible disposition of each imported 
lot;

[[Page 31308]]

requiring bonded storage which may be scarce or not available; adding 
costs for demurrage, sampling, and inspection of imported lots; and 
adding layers of bureaucracy and regulations. They commented that any 
peanut lots requiring more than simple aflatoxin testing could not be 
shelled, sorted, sized, remilled, and reported in 23 days.
    As stated in the proposed rule, the purpose of these regulations is 
to ensure that all peanuts (including imported peanuts) marketed in the 
United States comply with quality standards of the Agreement. Quality 
standards cannot be guaranteed without handling requirements that 
prohibit the commingling of certain peanut lots and ensure lot 
identification of imported shipments. Further, in order to ensure 
compliance with non-edible disposition requirements, it is necessary to 
require that imported peanut lots failing edible quality be certified 
as handled and disposed of to appropriate non-edible peanut uses.
    In this rule, the Department attempted to establish the least 
burdensome and least costly procedures which would assure that imported 
peanuts meet the required quality standards. Grade and disposition 
requirements are the same as those provided under the Agreement. Lot 
identification and storage requirements are similar to those of the 
Agreement, but vary slightly because of Customs Service requirements 
and because shipments have to be monitored from the place and time of 
conditional release rather than from a buying point or shelling 
facility.
    The initial 30 day reporting period is a Customs Service 
requirement that cannot be changed by a USDA regulation. It is applied 
by Customs Service to imported merchandise that must meet product 
requirements in effect in the United States. Also, as stated in the 
proposed rule, the Department needs to establish a shorter reporting 
period because a Customs Service port-of-entry office issuing the entry 
documentation needs up to 7 days to issue a redelivery demand notice. 
Therefore, the Department established a reporting period of 23 days 
from the date of entry by the Customs Service.
    The intent of a Customs Service redelivery notice is not 
necessarily to require immediate return of the shipment to the port-of-
entry. Rather, the redelivery notice serves as a notice to the importer 
that the lot must be either: (1) Brought into compliance with program 
requirements within the number of days specified on the redelivery 
notice, or (2) returned to the port-of-entry. During the redelivery 
period, the importer may recondition a failing lot in order to bring 
the lot into compliance with regulatory requirements. This option was 
not clearly stated in the proposed rule.
    The Department has been informed that it may establish a redelivery 
period which is longer than the 30 days specified in the proposal. 
Therefore, to enable importers more opportunity to meet the 
requirements of this regulation, the Department is extending the 
redelivery demand period from 30 days to 60 days. Customs Form 4647 
(``Notice to Mark and/or Notice to Redeliver'') is issued by the 
Customs Service at the request of AMS. A 60 day redelivery period 
should be entered by the Customs Service under item 15 on the form. 
Thus, an importer has as long as 90 days to move an imported peanut lot 
through the peanut handling process. By the end of the redelivery 
period, the importer must submit certifications to AMS that the lot 
either: (1) Meets requirements for human consumption; (2) is disposed 
to one or more non-edible peanut outlets; (3) is destroyed under 
supervision of the inspection service and Customs Service; or (4) is 
exported out of the U.S. Alternatively, the importer must redeliver the 
peanuts to the port-of-entry pursuant to the redelivery notice.
    An exception to this rule may be applied to cleaned-inshell peanuts 
that are conditionally released for movement to an inland facility for 
outgoing inspection. As stated in the proposed rule, such cleaned-
inshell peanut lots must proceed directly to the outgoing inspection 
and may not undergo any cleaning, drying or sorting prior to outgoing 
inspection. During outgoing inspection, if AMS determines that the 
peanut lot sampled and graded is a farmers stock lot which has been 
mislabeled or misrepresented as cleaned in-shell peanuts, the lot is 
considered as ungraded farmers stock peanuts and must be sent to 
incoming inspection or redelivered to the port-of-entry. Such lots, if 
determined to be Segregation 1 quality at incoming inspection, can then 
be cleaned, dried, sorted and otherwise prepared for outgoing 
inspection as cleaned-inshell peanuts.
    The importer must notify both the Customs Service and the AMS that 
an outstanding lot has been certified as meeting disposition 
requirements of these regulations, destroyed or exported. Failure to 
meet these requirements or redeliver the peanut lot can result in 
liquidated damages up to three times the value of the product.
    The Department also wishes to reiterate that the above import 
procedure is not the only procedure available to importers. Importers 
can avoid the 23-day reporting requirement by holding shelled and 
cleaned-inshell shipments under Customs Service custody until the 
peanuts are sampled, tested and certified as meeting requirements for 
human consumption. This should be possible with containerization of the 
shipment that allows for sampling by the inspection service and storage 
while under Customs Service custody.
    The Customs Service requires (19 CFR part 141.5) that lots so held 
must be entered within 5 working days after arrival at the port. Thus, 
it is important that the peanut shipment be sampled and the samples 
sent for outgoing quality inspection and chemical analysis as soon as 
possible after unloading. Using overnight mail services and fax 
transmissions, the importer should be able to obtain grade and 
aflatoxin content certificates within 2 or 3 days. If certified as 
meeting import requirements for human consumption, such peanuts do not 
have to be reported to the Department and are not subject to further 
handling requirements of this regulation. As stated in the proposed 
regulations, shipments moved inland under Customs Service custody and 
held in bonded warehouses are not considered as entered by the Customs 
Service. Thus, the time under Customs Service custody will not be 
counted against the 23-day reporting period.
    One commenter questioned how the time frames relate to the stamp-
and-fax procedure and receipt of aflatoxin analyses. For all imported 
shipments, it is incumbent on the importer to plan ahead by contacting 
the inspection service offices where sampling and grading will take 
place and the aflatoxin lab where the analysis will be conducted. The 
stamp and fax procedure should take place before arrival of the 
shipment. As noted above, the 23-day reporting period begins when the 
shipment is released from Customs Service custody, whether at the port-
of-entry or inland after movement and storage under Customs Service 
custody. Samples can be taken, inspections performed, and results 
reported back to the importer within 2 or 3 days. Extra demurrage 
charges at a port-of-entry would be less likely if the importer or 
customs broker makes proper preparations prior to the arrival of a 
shipment.
    The Customs Service suggested that two definitions in paragraph (a) 
be changed to be consistent with terminology used by Customs. The 
Department has revised definitions for ``importation'' and 
``conditionally released'' and has made conforming

[[Page 31309]]

changes throughout this final rule to be consistent with the new 
definitions. In the proposed rule, the term ``importation'' was defined 
to mean release from custody of the Customs Service. That definition 
referred to peanuts after arrival and release by the Customs Service 
for inland movement. To make the term consistent with Customs Service 
operations, and for the purposes of this peanut import regulation, the 
term ``importation'' means the arrival of a peanut shipment at a port-
of-entry with the intent to enter the peanuts into channels of commerce 
of the United States.
    ``Conditionally released'' was defined in the proposed rule to mean 
peanuts released under bond for consumption or withdrawal from 
warehouse for consumption. This definition did not describe the reason 
for release. For the purposes of this import regulation, ``conditional 
release'' means released from Customs Service custody for further 
handling (sampling, inspection, chemical analysis, or storage) before 
liquidation (final release after computation of applicable duties) by 
the Customs Service of the imported peanut lot.
    After receiving information from a Customs Service port-of-entry 
officer, the Department has made an additional relaxation that could 
reduce the filing burden on importers. The proposed rule stated that 
one Customs Service entry document must be filed for each peanut lot 
entered. However, one entry document may encompass several lots. Each 
lot must be separately identified on the entry document to allow for 
appropriate monitoring and clearance. For example, a shipment of 
500,000 pounds of shelled peanuts in 10 containers can be entered on 
one entry document as 10 lots of one container per lot; 5 lots of two 
containers per lot; 3 lots of 200,000 and 200,000 and 100,000 pounds 
per lot, or other variations. Subdivision of a large shipment is a 
decision for the importer, working cooperatively with the Customs 
Service and the inspection service at the port-of- entry. Paragraph (g) 
has been changed accordingly.
    Two commenters pointed out that the proposed rule did not provide 
for changes in lot weight, especially after remilling or cleaning of a 
failing lot. The Department acknowledges potential difficulty in 
accounting for the total weight of a very large lot which may be 
shelled and reconditioned several times. However, the Department 
believes that the accepted percentage for the weight of shells in the 
shelling process plus the combined weight of resultant sublots and 
residuals should account for the total weight of the original lot. The 
Customs Service and the inspection service both recognized that inshell 
peanuts are 65 percent kernel weight and 35 percent shell weight. 
Further, the lot identification procedures of the inspection service 
identify the weight of the certified lot. Thus, when an importer 
reports disposition of a lot that has been reconditioned, the report 
must include inspection and lot identification certificates on all 
sublots--both edible and non-edible residuals--resulting from remilling 
or blanching.
    One commenter offered three recommendations that the Department has 
included in this final rule. The commenter correctly stated that, under 
the Agreement, in addition to shelling, failing cleaned-inshell lots 
may be remilled by running the inshell peanuts through inshell milling 
two or more times to remove moldy, damaged, moisture laden peanuts, and 
foreign material that prompted the failing certification. However, as 
noted above regarding reconditioning of cleaned-inshell peanuts, 
reconditioning may not be conducted if the inspection service 
determines that the failing peanuts are farmers stock peanuts and not 
cleaned-inshell peanuts. Such lots are considered to be mislabeled and, 
therefore, subject to redelivery without reconditioning.
    The commenter also pointed out that destroying failing peanuts by 
burying must be carried out under the supervision of the inspection 
service. Finally, he pointed out that under the Agreement, Segregation 
2 and 3 farmers stock peanuts which are shelled before exportation, 
must first also be fragmented. This requirement is a safeguard against 
such peanuts being diverted to human consumption outlets. Therefore 
these changes have been made in the final rule.
    A commenter pointed out two places in the preamble of the proposed 
rule where positive lot identification provisions could be inserted to 
ensure positive lot identification of failing peanut lots. The 
commenter also suggested that a definition for positive lot 
identification be added to the final rule. While the Department agrees 
with the need to ensure lot identification on all imported lots, it 
also understands the great burden that 'positive' lot identification 
could place on importers--particularly for large shiploads of peanuts. 
Positive lot identification involves an inspection service seal or tag 
that clearly identifies the peanuts covered by the seal or tag--which 
is affixed in such a way that the peanut container cannot be tampered 
with without destroying the seal or tag. Because of the size of some 
imported shipments (up to 200,000 pounds), or because of the multiple 
containers or bags used for such lots, it would be impractical to 
require that a seal be placed or tag be sewed onto every container or 
bag of such large shipments at the port-of-entry. For this reason, a 
definition of positive lot identification was not included in the 
proposed rule. This does not mean, however, that lot identity is not as 
important under the import regulation as it is under the Agreement. 
Each imported lot must be lot identified in such a way as to clearly 
distinguish the peanuts in the lot, but not necessarily require tags on 
individual bags or plastic wrap around an entire lot. Arrangements for 
lot identification should be made with the inspection service and 
Customs Service officers at the port-of-entry. Such arrangements can be 
tailored for the particular circumstances of each imported lot. Lot 
identification requirements of this rule should provide no less 
assurance of positive lot identity than is provided under the Agreement 
for domestically produced peanuts.
    The commenter's suggestion that positive lot identification be 
placed on failing lots is accepted by the Department. This final rule 
makes the identification procedures for failing residual peanuts more 
precise by establishing that residual peanuts resulting from the 
reconditioning, remilling or blanching of a failing imported lot must 
be positive lot identified. At this point in the handling process, 
residual peanuts from a milling process are capable of being handled 
the same as domestically produced peanuts--and therefore, should be 
subject to the same positive lot identity labeling requirements (such 
as sewing tags on bags or stamping individual containers of failing 
peanuts) that are required for domestically produced failing peanuts. 
Clarifying sentences are added to paragraphs (c)(3) and (g)(2) 
requiring positive lot identification of residual lots.
    Several commenters addressed the proposed provision which states 
that superior quality shelled peanuts do not have to be tested for 
aflatoxin prior to shipment for human consumption. Two addressed the 
dangers of aflatoxin contamination in food products and recommended 
that aflatoxin testing be required on all peanut lots imported into the 
United States.
    Under the Agreement, all domestically produced, shelled peanuts 
intended for human consumption use must meet specified minimum quality 
requirements found in the Agreement's ``Other Edible Quality'' table 
and must

[[Page 31310]]

undergo chemical analysis for aflatoxin content prior to shipment for 
human consumption. Other edible quality grade is referred to as minimum 
grade in this import regulation. Further, the Agreement provides that 
peanuts which meet the higher quality requirements found in the 
``Indemnifiable Grades'' table do not need to undergo such chemical 
analysis. Indemnifiable grade is referred to as superior grade in this 
import regulation.
    One commenter referred to paragraph (l)(3) of section 998.300 
``Terms and Conditions for Indemnification'' as a requirement for 
aflatoxin analysis. However, this section of the Agreement refers to 
indemnified lots and has no relevance to imported peanuts as those 
peanuts cannot be indemnified under the Agreement.
    One commenter, while recognizing that the superior grade peanuts do 
not have to be tested for aflatoxin, suggested that uncontrolled 
temperature, humidity, and moisture could degrade the condition of a 
peanut lot during shipment. Therefore, the commenter recommended that 
all imported peanuts, even those that meet ``Superior Quality 
Requirements'' upon arrival in the U.S., should be chemically tested 
for aflatoxin content. Imported peanut lots which are not properly 
packaged or handled during shipment and are degraded or otherwise 
damaged as a result, would most likely fail ``Superior Quality 
Requirements'' and would be subject to aflatoxin analysis. Therefore, 
the recommendation is denied.
    One commenter asked whether the regulations in the proposed rule 
represented an overlap of responsibility between the Department and FDA 
with regards to the methodology used for sampling and testing peanut 
shipments and the enforcement of test results. As stated in the 
proposed rule, this rule does not supersede laws or requirements of 
other Federal government agencies. Thus, this rule does not prevent FDA 
from inspecting imported peanut shipments, should it choose to do so. 
The Department has initiated a Memorandum of Understanding with FDA to 
minimize possible duplication of inspections.
    Three commenters recommended that the implementation of the 
regulation be delayed. Two suggested that because some members of the 
Agreement wish to amend the regulations regarding the handling of 
farmers stock peanuts, it would be better to delay implementation of 
the import regulation until such a change, if approved by the 
Secretary, is implemented. They commented that such delay would avoid 
confusion regarding applicable import requirements. One commenter 
complained that some peanut shipments are already in transit to the 
United States and should not be held to requirements established after 
departure of the shipment. Because of concerns such as these, the 
Department has decided to make this rule effective 30 days after the 
date of publication in the Federal Register. Since the rule was first 
proposed on February 1, 1996, importers should have ample time to 
prepare for its implementation.
    As noted in the proposed rule, whenever the quality requirements 
and handling procedures are changed in the Agreement, the same or 
equivalent changes will be made in the quality requirements and 
handling procedures of this import regulation.
    In preparing for implementation of this regulation, the inspection 
service has issued instructions to its field offices which will receive 
and collect the samples of imported peanut shipments. To reduce the 
possibility of split kernels caused in the sampling process, special 
instructions have been issued for collecting the samples from bags. 
While no comments were received regarding this issue, the Department 
wants the industry to be aware that precautions have been taken to 
avoid causing defects in lots during the handling. The same procedures 
are followed when sampling domestically produced peanuts presented in 
bags.
    Several minor corrections and clarifications also are made to 
correct references to paragraphs in the regulatory text and clarify 
procedures presented in the proposed rule. The changes are based on 
comments received and on the Department's review of the published 
proposed rule.

Customs Service Entry Requirements and USDA Safeguard Procedures

    Importer obligations include filing documents notifying the Customs 
Service and the Department of different actions taken concerning 
foreign produced inshell and shelled peanuts. Customs Service 
importation procedures and requirements are set out in title 19 of the 
Code of Federal Regulations (19 CFR). The Customs Service regulations 
applicable to peanut handling and processing include, but are not 
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 parts 19.13 and 19.2); and 
manipulation in bonded warehouses (19 CFR part 19.11); transfer of 
ownership (19 CFR parts 141.113 and 141.20); failure to recondition (19 
CFR part 113.62(e); and redelivery of merchandise 19 CFR part 
113.62(d). For purposes of this regulation, the term ``consumption'' 
means ``use in the United States.'' Customs Service entry procedures 
are not superseded by this import regulation.
    Foreign produced peanuts may be entered for ``warehouse'' or 
entered for ``consumption,'' or may be transported to another Customs 
Service port-of-entry to be entered there for warehouse or consumption. 
Peanuts transported from one Customs Service port-of-entry to another 
Customs Service port-of-entry must be transported by a carrier 
designated by the Customs Service under 19 U.S.C. 1551. Peanuts entered 
for warehouse are stored in a Customs Service bonded warehouse. Such 
peanuts remain in Customs Service custody until they are withdrawn from 
warehouse, or entered, for consumption--and are released from Customs 
Service custody. Peanuts entered for consumption, or withdrawn from 
warehouse for consumption, are released conditionally, pending 
certification that the peanuts meet the handling and quality 
requirements of this regulation and conform to Customs Service entry 
requirements. The Customs Service can demand redelivery of peanuts that 
fail these requirements.
    The importer, or import broker acting on behalf of the importer, is 
required to file with the Customs Service required entry documentation 
for each foreign produced peanut shipment to be entered. More than one 
lot can be filed on one entry document. Under safeguard procedures 
established in this rule, each importer is also required to file 
completed entry documentation (Customs Form 3461 or other equivalent 
form) with the inspection service office that will perform the sampling 
of the lot for inspection to provide that office with advanced notice 
of requested inspection. The entry documentation may be filed by mail 
or facsimile transmission (fax). The filing should occur prior to 
arrival of the shipment at the port-of-entry in order to expedite entry 
procedures. The inspection service office will stamp, sign, and date 
the entry document and return it to the importer or broker by fax or 
mail. The importer/broker will then submit the stamped copy to the 
Customs Service. This ``stamp-and-fax'' procedure is similar to a 
procedure in place for other imported agricultural commodities under 
AMS jurisdiction. Failure to show the Customs Service a copy of the 
entry

[[Page 31311]]

documentation stamped by the inspection service will result in a delay 
or denial of entry of a peanut lot. The importer/broker must also mail 
or fax a completed copy of the document to AMS to initiate the 
Department's monitoring process.
    The location and telephone numbers of inspection service offices 
that perform peanut sampling and/or grade inspections are provided in 
paragraph (d)(3) of this rule. Inspection service offices at other 
locations may be contacted to sample the imported peanut lot. In such 
cases, the collected peanut samples will be shipped to an inspection 
service office which has equipment and personnel qualified to perform 
grade inspections. Samples of lots meeting minimum grade requirements 
will also be sent to an approved laboratory (listed in paragraph 
(d)(4)) for aflatoxin analysis. The lot will have to remain in storage 
pending grade and aflatoxin certification.
    It is the importer's responsibility to provide, in the mailed or 
faxed documentation, sufficient information to identify the peanut lot 
being entered and to ensure that arrangements are made for sampling and 
inspection. The information will include the 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 or number at the destination. If the 
destination is changed from that listed on the stamp-and-fax document, 
it is the importer's responsibility to immediately advise inspection 
service offices at both the original destination and the new 
destination of such change. Shipments which are not made available 
pursuant to the entry document, or are not properly displayed for 
sampling purposes, will be reported to the Customs Service.
    Falsification of reports submitted to AMS is a violation of Federal 
law punishable by fine or imprisonment, or both.
    A bond secured by surety or U.S. Treasury obligations is required 
to be posted by the importer with the Customs Service to guarantee the 
importer's performance. Peanuts can be determined inadmissible because 
the importer failed to follow Customs Service importation procedures, 
the peanuts failed to meet quality requirements, or because the 
handling procedures (including lot identification and certification) 
specified in this regulation were not followed.
    Redelivery will be demanded for failure to comply with the quality, 
handling, and reporting requirements of this import regulation, 
including: arrival at the inland destination with a broken Customs 
Service or inspection service seal; failure to maintain lot identity; 
mislabeling of the peanuts being imported; failure to receive required 
inspection; commingling of peanut lots not of like quality or 
condition; disposition of non-edible peanuts to an edible peanut outlet 
or an improper, non-edible peanut outlet; and failure to fully report 
the disposition of foreign produced peanuts. Disposition reports will 
include grade, aflatoxin, and identification certifications and bills 
of lading, sales receipts, and other documentation showing the peanuts 
were disposed to a non-edible peanut outlet, exported, or destroyed.
    Following Customs Service regulations, a redelivery demand must be 
issued by the Customs Service within 30 days of Customs Service entry 
of the peanuts--if the peanuts are not certified as meeting 
requirements of this import regulation. Because the Customs Service 
requires one week to prepare and issue a redelivery demand notice, this 
import rule establishes that importers must report disposition of lots 
of peanuts to AMS within 23 calendar days of the date of entry. 
Although a 23-day reporting deadline may be considered burdensome by 
some, the deadline is necessary because of the Customs Service 30-day 
notification requirement.
    If an importer has difficulty meeting edible consumption 
certification or completing necessary shelling, remilling, or other 
reconditioning by the 23rd day after entry, the importer should notify 
AMS of such difficulty. If the importer fails to so notify AMS, or 
fails to report necessary certification, AMS will request the Customs 
Service to issue a redelivery demand for the out-of-compliance lot.
    As covered above, after receiving a notice of redelivery, the 
importer may continue to try to recondition the failing lot or 
redeliver the failing lot to the port-of-entry. The redelivery notice, 
in effect, provides an additional 60 days, from the date of issuance, 
for the importer to comply with requirements of this import regulation. 
The exception to this is for peanuts labeled as cleaned-inshell which 
are determined by the inspection service to be unprepared farmers stock 
peanuts. Such peanuts must be redelivered immediately and may not be 
reconditioned.
    If the importer is unable to meet these import requirements by the 
end of the 60-day redelivery period, the importer may request an 
extension of the period from the Customs Service. The Customs Service 
may authorize an appropriate extension for good cause. The importer is 
responsible for reporting any such extension to AMS.
    When moving a conditionally released lot inland, the importer will 
cause a copy of the entry documentation applicable to the peanut lot to 
be forwarded with the peanuts to the lot's inland destination. If the 
shipment is sealed by Customs Service or the inspection service, the 
seal must remain intact and can be broken only by an authorized 
official at the destination point.
    The identification requirements in this regulation are similar to 
the Agreement's lot identification requirements. Lot size is limited to 
200,000 pounds to comply with Agreement requirements and sampling 
provisions of the inspection service. Boatload shipments exceeding 
200,000 pounds must be entered as two or more lots, but may be entered 
under one Customs Service entry document. For instance, five containers 
averaging 40,000 pounds each (the domestic industry standard) may be 
entered as five lots on one entry document. Lot size and identification 
arrangements must be made consistent with the port-of-entry inspection 
service office requirements and should be established cooperatively 
between the inspection service, Customs Service offices and the 
importer at the port-of entry. This will facilitate subsequent lot 
identification, inspection, and reporting of large imported shipments.
    Foreign produced peanuts placed in storage may be commingled only 
with like-quality, foreign produced peanuts belonging to the same 
importer. Similarly, failing quality peanuts may be commingled with 
other such foreign produced peanuts prior to clean-up or non-edible 
disposition. Reports certifying disposition of all peanuts in the 
commingled lot must be filed within 23 days of Customs Service entry of 
the earliest-entered lot commingled, or, if a redelivery notice is 
issued on the earliest entered lot, within the 60-day redelivery period 
for that lot. The remaining commingled peanuts must be withdrawn, 
inspected, properly disposed, and reported before the end of that 60-
day redelivery period. If necessary, the importer may request that 
Customs Service extend the redelivery period for the remaining peanuts 
in the commingled lot.
    The objective of the lot identification requirements is to help 
ensure that individual peanut lots are disposed as required and that 
defects in poor quality peanut lots are not blended out by commingling 
poor quality peanuts with higher quality peanuts. The lot 
identification requirements in this

[[Page 31312]]

import regulation are similar to positive lot identification 
requirements specified for domestically produced peanuts. Positive lot 
identification involves a Federal or Federal-State Inspection Service 
seal or tag that clearly identifies the peanuts covered by the seal or 
tag, and which is affixed in such a way that the peanut lot cannot be 
tampered with, without destroying the seal or tag. Because of the size 
of some imported shipments (up to 200,000 pounds) it would be 
impractical to have a seal or tag sewed onto every bag or container in 
such a lot. Thus, an imported lot may be lot identified in such a way 
as to clearly distinguish the peanuts in the lot, but not require tags 
on individual bags or plastic wrap around the entire lot. However, 
residual sublots resulting from the reconditioning, remilling or 
blanching of a failing lot must be positive lot identified, consistent 
with the provisions of lot identification provisions of the Agreement.
    All USDA required sampling, quality certification, and lot 
identification must be conducted by the inspection service. Chemical 
analysis must be conducted by a USDA or an approved laboratory. Foreign 
produced peanuts stored in bonded warehouses are subject to Customs 
Service audits. Importers will reimburse the inspection service, 
laboratories, and the Customs Service for services provided and costs 
incurred with regard to the entry of the importer's peanuts.
    Depending on condition (shelled or cleaned-inshell) and 
containerization, foreign produced peanuts may be either: (1) Sampled, 
inspected, and held in a Customs Service bonded warehouse at the port-
of-entry until certified by the inspection service as meeting the 
edible quality requirements of this rule; or, (2) conditionally 
released at the port-of-entry and entered under Customs Service entry 
procedures for later inspection and certification.
    Under option (1), foreign produced shelled or cleaned-inshell 
peanuts which are cleaned, sorted, sized, and otherwise prepared for 
edible consumption prior to importation, are sampled at the port-of-
entry. The importer must present such peanuts 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 lot identification requirements of the inspection 
service, pending results of the inspection and chemical analysis. 
Depending on location of the port-of-entry, portions of the samples are 
sent to an inspection service inspection facility for grade inspection 
and to an aflatoxin laboratory for chemical analysis. If determined to 
meet the applicable edible quality requirements in paragraph (c) of 
this rule, 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 AMS because the lots cleared all requirements 
while under Customs Service custody.
    Such shelled or cleaned-inshell peanuts, sampled and held at the 
port-of-entry, which fail edible quality requirements may, at the 
importer's discretion, be: (1) re exported; (2) entered for 
reconditioning, and if satisfactorily remilled or blanched, certified 
for edible consumption; or (3) entered for non-edible consumption. 
Failing peanuts that are re-exported do not have be reported to AMS 
because the peanuts were not entered into the U.S. The importer must 
file certifications which report all actions taken on each lot entered 
for reconditioning or non-edible consumption. Such certifications must 
be reported within 23 days of entry, or, if a redelivery notice is 
issued, within the 60-day redelivery period.
    Under option (2), shelled and cleaned-inshell peanuts which are 
cleaned, sorted, sized, and otherwise prepared for edible consumption 
prior to importation, may be entered and transported inland for 
subsequent sampling, inspection, and certification. Farmers stock 
peanuts also must be shipped inland for sampling and inspection because 
specialized, farmers stock sampling facilities are not available at 
ports-of-entry. Certifications reporting disposition of these lots must 
be filed within 23 days of entry, or, if a redelivery notice is issued 
on the lot, within the 60-day redelivery period.

Categories of Peanuts Submitted for Importation

Farmers Stock Peanuts

    Such peanuts are required to undergo incoming inspection at a 
prearranged buying point prior to arrival at a shelling or storage 
destination. All required inspections, shelling, and dispositions of 
farmers stock peanuts must be completed and reported within 23 days of 
entry, or, if a redelivery notice is issued on the lot, within the 60-
day redelivery period.
    Foreign produced farmers stock peanut lots cannot be commingled 
with other peanut lots prior to incoming inspection. 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. The inspection service will issue USDA 
form CFSA-1007, ``Inspection Certificate and Sales Memorandum'' 
(formerly ASCS-1007) designating the lot as either Segregation 1, 2, or 
3 quality.
    Only Segregation 1 peanuts can be prepared for human consumption 
use. Such peanuts may be shelled or prepared for cleaned-inshell use. 
For quality control and reporting purposes, Segregation 1 lots intended 
for human consumption outlets may be commingled only with other like 
quality peanuts of the same importer. A Segregation 1 lot which is 
commingled with Segregation 2 or 3 peanuts must assume the lower 
Segregation 2 or 3 quality and must be disposed as non-edible quality 
peanuts.
    Foreign produced farmer stock peanuts received by importers and 
determined at incoming inspection to be Segregation 2 and 3 quality 
peanuts must be disposed only as non-edible peanuts. Segregation 3 and 
commingled Segregation 2 and 3 farmers stock peanuts may be exported 
inshell or exported shelled if fragmented prior to export. Segregation 
2 and 3 peanuts also may be destroyed by burying (under inspection 
service and Customs Service supervision) or exported (certified by 
Customs Service). The importer must report non-edible disposition by 
providing a copy of the incoming inspection certificate, bills of 
lading and sales receipts, or other official certifications as proof of 
disposition to crushing, exportation, other non-edible outlets, or 
burying. Segregation 2 and 3 peanuts that are exported must be lot 
identified by the inspection service and certified as exported by the 
Customs Service. Certification of non-edible disposition or export must 
be filed with AMS within 23 days of entry, or, if a redelivery notice 
is issued, within the 60-day redelivery period. Customs Service re-
export procedures must be followed.
    Foreign produced Segregation 2 and 3 quality peanuts may be shelled 
by a custom seed sheller for seed use and, if so disposed, such peanuts 
must be dyed or chemically treated so as to be unfit for human or 
animal consumption. Domestically produced Segregation 2 and 3 peanuts 
shelled for seed need not be dyed or treated but must be produced under 
the auspices of a State agency, shelled by a custom seed sheller, and 
subject to PAC oversight. Measures such as these are necessary to 
ensure that peanuts used for human consumption are safe and wholesome. 
Proof of dyeing or chemical treatment of foreign produced peanuts must 
be filed with AMS within 23 days of entry, or, if a

[[Page 31313]]

redelivery notice is issued on the lot, within the 60-day redelivery 
period.
    Foreign produced farmers stock peanuts do not qualify for the 
support program administered by the Department's Farm Service Agency, 
formerly the Agricultural Stabilization and Conservation Service.
    Shelled peanuts: Foreign produced shelled peanuts may: (1) 
Originate from foreign produced Segregation 1 farmers stock milled at 
facilities in the U.S., or (2) be peanuts produced and milled in 
another country which are conditionally released at the port-of-entry 
for inland sampling and inspection. Both categories of shelled peanuts 
must be sampled and inspected against outgoing quality requirements 
specified in paragraph (c) of this regulation.
    Domestically produced shelled peanuts intended for edible markets 
must originate from farmers stock peanuts which have undergone incoming 
inspection and are determined to be of Segregation 1 quality. AMS 
cannot determine whether peanuts produced and shelled in a foreign 
country originated from Segregation 1 quality peanuts prior to 
shelling. However, because outgoing inspection and chemical analysis is 
more reliable and precise in determining aflatoxin content in peanut 
kernels, this import regulation provides that peanuts shelled prior to 
importation are exempt from incoming inspection before delivery for 
outgoing inspection. Such shelled peanuts must be sampled and tested 
against outgoing quality requirements prior to disposition to edible 
outlets.
    Two grade levels for shelled peanuts are in effect under the 
Agreement and are established in this import regulation. The Agreement 
provides that shelled peanut lots meeting the quality requirements 
specified in a table entitled ``Other Edible Quality,'' under paragraph 
(a) of Sec. 998.200, must be chemically analyzed for aflatoxin content 
prior to disposition to edible outlets. The quality requirements 
specified in the Other Edible Quality table are duplicated in ``Table 
1, Minimum Grade Requirements--Peanuts for Human Consumption'' of this 
import regulation. The outgoing quality requirements also include a 
parts-per-billion tolerance for aflatoxin, determined by chemical 
analysis.
    The Department has corrected an entry in Table 1. Minimum Grade 
Requirements'' as published in the proposed rule. Under the ``Lots of 
splits'' category, the cite for Virginia peanuts should read ``Virginia 
(not less than 90% splits).'' The proposed rule incorrectly stated not 
more than 90%.
    Aflatoxin appears most frequently in damaged, stressed, under-
developed and malformed kernels. Domestic lots with fewer poor quality 
kernels are less likely to be contaminated and, thus, do not have to be 
chemically tested. The Agreement's ``Indemnifiable Grades'' table in 
paragraph (a) of Sec. 998.200, provides for a superior quality level 
with more rigorous percentage tolerances than those found in the Other 
Edible Quality table. Foreign produced shelled lots meeting the 
superior quality standards do not have to be chemically analyzed prior 
to their disposition for human consumption. The quality requirements 
specified in the ``Indemnifiable Grades'' table are duplicated in 
``Table 2 Superior Quality Requirements--Peanuts for Human 
Consumption'' of this rule.
    Paragraph (c)(4) of Sec. 998.200 provides that peanuts are 
considered edible quality if the chemical assay shows the lot contains 
15 ppb or less of aflatoxin. Thus, the level of aflatoxin in foreign 
produced peanut lots intended for edible peanut markets must not exceed 
15 ppb. Consistent with paragraphs (c)(4) and (g)(3) of Sec. 998.200, 
non-edible quality peanut lots with 25 ppb or less must be disposed to 
certain non-edible peanut outlets. Disposition of non-edible quality 
peanut lots with aflatoxin exceeding 25 ppb must be further restricted 
to certain other non-edible peanut outlets. The sampling, testing, 
certification and identification of foreign produced peanut lots must 
be performed in accordance with paragraph (d)(4) of this rule.
    Chemical testing is performed by an AMS, Science and Technology 
Division laboratory or a laboratory approved by the PAC. The PAC 
locally administers the Agreement with Department oversight. A list of 
approved laboratories is provided in paragraph (d)(4)(iv) of this 
regulation. These are the same laboratories specified in the Agreement 
and any changes to the list will be incorporated in this section.
    Thus, to obtain approval for human consumption use of a foreign 
produced shelled peanut lot, the importer must present to AMS and the 
Customs Service two certifications: (1) Quality certification Form FV-
184-9A ``Milled Peanut Inspection Certificate'' and (2) aflatoxin 
certification Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' issued by USDA laboratories, or equivalent forms issued by a 
PAC approved lab. An aflatoxin certificate is not required if the lot 
meets the superior grade requirements, but may be required by the 
buyer. The certificates are the same as those used to report grade and 
chemical analysis results for domestically produced peanuts. The 
required certificates must be received by AMS within 23 days of entry, 
or, if a redelivery notice is issued, within 60 days of the redelivery 
notice.

Cleaned-Inshell Peanuts

    Inshell peanuts that have been cleaned, sorted, and prepared in 
another country for edible inshell peanut markets in the U.S. may be 
presented for importation at the port-of-entry. Such peanuts can be 
declared as cleaned-inshell peanuts on the Customs Service entry 
document and can either be presented for outgoing inspection at the 
port-of-entry, if delivered in bags and presented is such a way as to 
be accessible for sampling by the inspection service, or conditionally 
released for outgoing inspection at a facility inside the U.S. Because 
the Department is unable to determine if foreign produced cleaned-
inshell peanuts come from Segregation 1 peanuts, peanuts declared as 
cleaned-inshell on a Customs Service entry document must not undergo 
additional cleaning, sorting, sizing, or drying prior to outgoing 
inspection at the destination point inside the U.S.
    Cleaned-inshell lots that fail outgoing inspection for inshell 
peanuts may be reconditioned (remilled) and subsequently sampled and 
graded for outgoing inspection. If there is any indication that an 
imported farmers stock lot is mislabeled or misrepresented as cleaned-
inshell peanuts when entered, redelivery of the lot will be required 
and the lot may not be reconditioned prior to redelivery to the port-
of-entry.
    Cleaned-inshell peanut lots destined for edible peanut markets are 
required to meet certain minimum quality inshell requirements for 
damage, moisture and foreign material. Cleaned-inshell lots containing 
more than 1 percent kernels with visible mold have to be chemically 
tested and meet minimum aflatoxin requirements. The cleaned-inshell 
quality requirements specified in paragraph (c)(2) of this rule are the 
same as the quality requirements in paragraph (b) of Sec. 998.200 of 
the Agreement.
    Foreign produced farmers' stock Segregation 1 peanuts also can be 
prepared and presented at outgoing inspection as cleaned-inshell 
peanuts. Such peanuts inspected and certified as meeting grade 
requirements for edible cleaned-inshell peanuts must be designated as 
imported peanuts on inspection service form FV-184-9A. The importer 
must file form FV-184-9A with AMS for each lot of foreign produced 
cleaned-inshell peanuts

[[Page 31314]]

meeting edible quality requirements for cleaned-inshell peanuts.
    Imported peanuts certified as meeting edible requirements can be 
used any way desired. Only after shelled and cleaned-inshell peanuts 
are certified as meeting applicable requirements can such peanuts be 
commingled with imported lots of other importers or domestically 
produced peanuts which also have been certified for human consumption.

Disposition of Failing Peanuts

    The following peanuts cannot be used for human consumption: (1) 
Farmers' stock peanuts that grade either Segregation 2 or Segregation 
3; (2) cleaned-inshell and shelled peanuts that fail outgoing quality 
and/or aflatoxin requirements and are not reconditioned or reworked 
(the removal of defective kernels); and (3) below grade residue from 
any shelling, milling or blanching operations.
    Cleaned-inshell lots that fail outgoing inspection requirements of 
paragraph (c)(2) can be reconditioned by remilling the peanuts, which 
can include shelling. If shelled or remilled, the peanuts must meet 
outgoing requirements of paragraph (c)(1) for shelled peanuts or (c)(2) 
for inshell peanuts.
    Failing lots of shelled peanuts, which originated from Segregation 
1 peanuts, can be reconditioned following procedures established in 
paragraph (f) of this rule. These provisions are the same as those 
established under various provisions of the Agreement. Segregation 1 
shelled peanuts which fail quality requirements in Table 1 and/or 
exceed 15 ppb aflatoxin content can be reconditioned by remilling and/
or blanching and, when subsequently reinspected and certified as 
meeting edible quality and aflatoxin requirements, can be disposed to 
edible peanut outlets. If not reconditioned, failing Segregation 1 lots 
must be disposed to non-edible peanut outlets as unrestricted or 
restricted peanuts as described below.
    Provisions controlling the disposition of residue peanuts from 
inshell remilling and shelled remilling and blanching that continue to 
fail edible quality requirements are also provided in this rule. Two 
categories of non-edible peanuts are specified under the Agreement--
``unrestricted'' and ``restricted.'' The designation is based on the 
amount of aflatoxin detected in the lot. ``Unrestricted'' peanuts are 
peanuts which fail one or more quality requirements and, when 
chemically assayed, contain more than 15 ppb but 25 ppb or less 
aflatoxin. While such peanuts are of non-edible quality, they can be 
crushed for oil, exported or used in animal feed, provided that certain 
handling and container labeling requirements are followed. Unrestricted 
peanuts also can be used for seed (if dyed or treated to prevent edible 
use), crushed for oil, exported, or buried. Meal resulting from the 
crushing of unrestricted peanuts does not have to be tested a second 
time for aflatoxin content. Disposition of meal resulting from the 
crushing of peanuts is not regulated under the Agreement or this 
regulation.
    Peanuts containing more than 25 ppb aflatoxin are designated as 
``restricted'' peanuts. Restricted peanut lots may or may not meet 
quality requirements of Table 1. At the direction of the importer, 
restricted peanut lots must be used either for seed (if dyed or 
treated), crushed for oil, destroyed by burying (under supervision of 
the inspection service), or exported. Meal resulting from the crushing 
of restricted peanuts must be certified as to aflatoxin content and 
such certification must accompany the meal into the channels of 
commerce.
    The importer can dispose of a failing peanut lot directly to a non-
edible peanut outlet or set aside and commingle several failing lots 
for eventual disposition to one or more non-edible outlets. Commingled 
failing quality peanuts must be held separate and apart from edible 
peanuts and identified with red tags indicating non-edible peanuts. 
Eventual disposition must be to non-edible peanut outlets consistent 
with the failing quality of the peanuts, pursuant to paragraph (e) of 
this rule.
    If an importer chooses to destroy unrestricted or restricted 
peanuts by burying, the peanuts must be lot identified and disposition 
must be reported to AMS. The importer must provide inspection service 
and Customs Service certification if a lot is buried, or a Customs 
Service export declaration if a lot is exported. Customs Service 
procedures controlling re-exported merchandise must also be followed by 
the importer. Burying and exportation expenses are borne by the 
importer.
    It is the importer's responsibility to file inspection certificates 
and other documentation sufficient to account for disposition of all 
failing quality peanuts acquired by the importer. Such proof consists 
of copies of bills of lading and sales receipts between the importer 
and non-edible peanut outlet receivers. The documentation must contain 
identifying information, such as container or lot numbers, that tie the 
peanuts reported on the documents to failing quality peanuts on 
inspection service or aflatoxin certificates. The name and address of 
the non-edible peanut receiver and valid contact information must also 
be specified on the documentation.
    Disposition of unrestricted and restricted peanut lots must be 
reported to AMS within 23 days of filing for entry with the Customs 
Service, or, if a redelivery notice is issued, within the 60-day 
redelivery period. As noted in above, disposition of unrestricted and 
restricted peanut lots may be carried out and reported during the 
redelivery demand period.
    The inspection service identifies imported peanuts as peanuts of 
foreign origin on the inspection certificate to assist in lot 
identification. Foreign origin designations also help AMS meet its 
monitoring responsibilities.
    From time to time, the PAC may recommend to the Secretary that 
quality requirements or handling procedures specified in the Agreement 
be revised. If such changes are approved by the Secretary and 
implemented for the domestic peanut industry in 7 CFR Part 998, 
corresponding changes will be made in Sec. 999.600. Changes in 
regulations for domestically produced peanuts are generally made 
effective July 1. Thus, corresponding changes to the import regulation 
will be made effective on that date, or as close to that date as 
possible under informal rulemaking, unless otherwise specified in the 
regulation. Quality requirements in effect on the date of inspection of 
a foreign produced lot will be applied to the inspected lot.

Safeguard Procedures

    This rule establishes a procedure to verify importers' compliance 
with import requirements. The safeguard procedures provide for 
monitoring of peanut lots from importation to final disposition. The 
purpose of these procedures are to ensure that foreign produced peanuts 
either meet edible requirements or are appropriately disposed to non-
edible peanut outlets, exported or destroyed. The safeguard procedures 
are similar to safeguard procedures already in place for other imported 
commodities and are consistent with the inspection, identification and 
certification requirements applied to domestically produced peanuts 
under the Agreement.
    The safeguard process includes the ``stamp-and-fax'' entry 
procedure, as already described, whereby the importer provides the 
Customs Service with an entry document stamped by the inspection 
service. The importer also files a copy of the entry document with AMS 
and forwards a copy, with the released lot, to the inland destination

[[Page 31315]]

where the lot is to be inspected or warehoused. Edible certification 
and non-edible disposition is reported by filing with AMS copies of all 
grade certificates, aflatoxin certificates, and proof of non-edible 
disposition. Such certifications must be filed within 23 days of filing 
for entry, or, if a redelivery notice is issued, within the 60-day 
redelivery period.
    Failure to report or redeliver peanuts within applicable time 
frames could result in liquidated damages against the importer.
    Certificates and other supplementary documentation must be sent to 
AMS, Marketing Order Administration Branch (MOAB) which oversees the 
domestic peanut program and this import program. Facsimile or express 
mail deliveries can be used to ensure timely receipt of certificates 
and other required documentation. Overnight and express mail deliveries 
should be addressed to the USDA, AMS, Marketing Order Administration 
Branch, 14th and Independence Avenue, SW., Room 2525, Washington, DC 
20250, Attn: Report of Imported Peanuts. The MOAB's fax number is (202) 
720-5698, Attn: Report of Imported Peanuts.
    For the purposes of checking and verifying reports filed by 
importers and disposition outlets, this regulation provides that 
importers must allow the Secretary, through duly authorized agents, to 
have access to any premises where peanuts may be held and processed. 
Authorized agents, at any time during regular business hours, are 
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 by that importer.
    USDA record retention requirements also are established to require 
importers to retain information for at least two years beyond the year 
of applicability. Customs Service record retention requirements are 
longer.
    The handling of each imported lot must be consistent with Customs 
Service procedures and reported in accordance with normal Customs 
Service requirements. Any Customs Service reporting or recordkeeping 
requirements for disposition of imported merchandise or clearance of 
bonding requirements are not superseded by this regulation.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
Chapter 35) as amended in 1995, the information and collection 
requirements that are contained in this rule have been approved by the 
Office of Management and Budget (OMB) on a temporary basis and have 
been assigned OMB number 0581-0176. A 60-day period was established in 
the proposed rule to receive comments on the information collection 
requirements. All responses to the request for comments will be 
summarized and included in the request for OMB approval. All comments 
will become a matter of public record.
    In addition to the reporting requirements, this rule establishes 
that importers and customs brokers retain copies of all certifications 
and entry documentation for not less than two years after the calendar 
year of acquisition. This is a commonly accepted records retention 
period and within good business practices. The time for maintaining 
records by filing each document internally is included in the filing 
estimate. The information collected is used only for compliance 
purposes by personnel of the Department.
    The reporting and recordkeeping requirements established in this 
rule will enable the Department to oversee the entry of peanuts and 
help ensure that only good quality, wholesome peanuts will be used in 
edible peanut outlets in the U.S. Without the quality requirements 
specified in the Agreement (7 CFR Part 998), regulations for non-
signatory handlers (7 CFR Part 997), and these regulations, poor 
quality peanuts could more easily be entered into edible channels, 
causing consumer dissatisfaction and having a negative impact on the 
market for peanuts and peanut products. Compliance with these standards 
help the peanut industry in its efforts to expand markets.
    Although these requirements result in some additional costs for 
importers, the benefits from restricting low quality peanuts from 
edible markets outweigh any additional inspection, handling, 
recordkeeping and reporting costs resulting from the requirements. 
These requirements have been carefully reviewed and every effort has 
been made to minimize any unnecessary reporting and recordkeeping 
costs.

List of Subjects in 7 CFR part 999

    Dates, Filberts, Food grades and standards, Imports, Nuts, Peanuts, 
Prunes, Raisins, Reporting and recordkeeping requirements, Walnuts.
    For the reasons set forth in the preamble, 7 CFR part 999 is 
amended as follows:

PART 999--SPECIALTY CROPS; IMPORT REGULATIONS

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

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

    2. A new Sec. 999.600 is added to part 999 to read as follows:


Sec. 999.600   Regulation governing imports of peanuts.

    (a) Definitions. (1) Peanuts means the seeds of the legume Arachis 
hypogaea and includes both inshell and shelled peanuts produced in 
countries other than the United States, other than those marketed in 
green form for consumption as boiled peanuts.
    (2) Farmers stock peanuts means picked and threshed raw peanuts 
which have not been shelled, crushed, cleaned or otherwise changed 
(except for removal of foreign material, loose shelled kernels, and 
excess moisture) from the form in which customarily marketed by 
producers.
    (3) Inshell peanuts means peanuts, the kernels or edible portions 
of which are contained in the shell.
    (4) Incoming inspection means the sampling and inspection of 
farmers stock peanuts to determine Segregation quality.
    (5) Segregation 1 peanuts, unless otherwise specified, means 
farmers stock peanuts with not more than 2 percent damaged kernels nor 
more than 1.00 percent concealed damage caused by rancidity, mold, or 
decay and which are free from visible Aspergillus flavus mold.
    (6) Segregation 2 peanuts, unless otherwise specified, means 
farmers stock peanuts with more than 2 percent damaged kernels or more 
than 1.00 percent concealed damage caused by rancidity, mold, or decay 
and which are free from visible Aspergillus flavus mold.
    (7) Segregation 3 peanuts, unless otherwise specified, means 
farmers' stock peanuts with visible Aspergillus flavus mold.
    (8) Shelled peanuts means the kernels of peanuts after the shells 
are removed.
    (9) Outgoing inspection means the sampling and inspection of 
either: shelled peanuts which have been cleaned, sorted, sized and 
otherwise prepared for human consumption markets; or inshell peanuts 
which have been cleaned, sorted and otherwise prepared for inshell 
human consumption markets.
    (10) Negative aflatoxin content means 15 parts-per-billion (ppb) or 
less for peanuts which have been certified as meeting edible quality 
grade requirements, and 25 ppb or less for non-edible quality peanuts.
    (11) Person means an individual, partnership, corporation, 
association, or any other business unit.

[[Page 31316]]

    (12) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the United States Department of 
Agriculture (Department or USDA) who is, or who may hereafter be, 
authorized to act on behalf of the Secretary.
    (13) Inspection service means the Federal or Federal-State 
Inspection Service, Fruit and Vegetable Division, Agricultural 
Marketing Service, USDA.
    (14) USDA laboratory means laboratories of the Science and 
Technology Division, Agricultural Marketing Service, USDA, that 
chemically analyze peanuts for aflatoxin content.
    (15) PAC approved laboratories means laboratories approved by the 
Peanut Administrative Committee, pursuant to Peanut Marketing Agreement 
No. 146 (7 CFR Part 998), that chemically analyze peanuts for aflatoxin 
content.
    (16) Conditionally released means released from Customs Service 
custody for further handling (sampling, inspection, chemical analysis, 
or storage) before final release.
    (17) Importation means the arrival of a peanut shipment at a port-
of-entry with the intent to enter the peanuts into channels of commerce 
of the United States.
    (b) Incoming regulation: (1) Farmers stock peanuts presented for 
consumption must undergo incoming inspection. Only Segregation 1 
peanuts may be used for human consumption. All foreign produced farmers 
stock peanuts for human consumption must be sampled and inspected at a 
buying point or other handling facility capable of performing incoming 
sampling and inspection. Sampling and inspection shall be conducted by 
the inspection service. Only Segregation 1 peanuts certified as meeting 
the following requirements may be used in human consumption markets:
    (i) Moisture. Except as provided under paragraph (b)(2) Seed 
peanuts, of this section, peanuts may not contain more than 10.49 
percent moisture: Provided, That peanuts of a higher moisture content 
may be received and dried to not more than 10.49 percent moisture prior 
to storage or milling.
    (ii) Foreign material. Peanuts may not contain more than 10.49 
percent foreign material, except that peanuts having a higher foreign 
material content may be held separately until milled, or moved over a 
sand-screen before storage, or shipped directly to a plant for prompt 
shelling. The term sand-screen means any type of farmers stock cleaner 
which, when in use, removes sand and dirt.
    (iii) Damage. For the purpose of determining damage, other than 
concealed damage, on farmers stock peanuts, all percentage 
determinations shall be rounded to the nearest whole number.
    (iv) Loose shelled kernels. Peanuts may not contain more than 14.49 
percent loose shelled kernels, except that peanuts having a higher 
loose shelled kernel content may be imported if held separately until 
milled or shipped directly to a shelling facility for prompt shelling. 
All percentage determinations shall be rounded to the nearest whole 
number. Kernels which ride screens with the following or larger slot 
openings may be separated from loose shelled kernels: Runner--\16/64\ x 
\3/4\ inch; Spanish and Valencia--\15/64\ x \3/4\ inch; Virginia--\15/
64\ x 1 inch. If so separated, those loose shelled kernels which ride 
the screens may be included with shelled peanuts prepared for 
inspection and sale for human consumption: Provided, That no more than 
5 percent of such loose shelled kernels are kernels which would fall 
through screens with such minimum prescribed openings. Those loose 
shelled kernels which do not ride the screens shall be removed from the 
farmers' stock peanuts and shall be held separate and apart from other 
peanuts and disposed of for non-edible use, pursuant to paragraph (e) 
of this section. If the kernels which ride the prescribed screen are 
not separated from the kernels which do not ride the prescribed screen, 
the entire amount of loose shelled kernels shall be removed from the 
farmers stock peanuts and shall be held separate and apart and disposed 
of for non-edible use, pursuant to paragraph (e) of this section.
    (2) Seed peanuts. Farmers stock peanuts determined to be 
Segregation 1 quality, and shelled peanuts certified negative to 
aflatoxin (15 ppb or less), may be imported for seed purposes. 
Disposition of such peanuts to a seed outlet must be reported to the 
Secretary by submitting a copy of the bill of lading or sales contract 
which reports the weight of the peanuts so disposed, and the name, 
address and telephone number of the receiving seed outlet. Residuals 
from the shelling of Segregation 1 seed peanuts shall be held and/or 
milled separate and apart from other peanuts, and such residuals 
meeting quality requirements specified in paragraph (c)(1) of this 
section may be disposed to human consumption channels, and any portion 
not meeting such quality requirements shall be disposed to non-edible 
peanut channels pursuant to paragraph (e) of this section. Segregation 
2 and 3 peanuts may be shelled for seed purposes but must be dyed or 
chemically treated so as to be unfit for human or animal consumption. 
All disposition of seed peanuts and residuals from seed peanuts shall 
be reported to the Secretary pursuant to paragraphs (g)(2) and (g)(3) 
of this section. The receiving seed outlet must retain records of the 
transaction, pursuant to paragraph (h)(7) of this section.
    (3) Oilstock and exportation. Farmers stock peanuts of lower 
quality than Segregation 1 (Segregation 2 and 3 peanuts) shall be used 
only in non-edible outlets as provided herein. Segregation 2 and 3 
peanuts may be commingled but shall be kept separate and apart from 
edible quality peanut lots. Commingled Segregation 2 and 3 peanuts and 
Segregation 3 peanuts shall be disposed only to oilstock, exported 
inshell, or exported as shelled if fragmented as provided in paragraph 
(e)(3) of this section. Shelled peanuts and cleaned-inshell peanuts 
which fail to meet the requirements for human consumption in paragraph 
(b)(1) may be crushed for oil or exported.
    (4) Whenever the Secretary has reason to believe that peanuts may 
have been damaged or deteriorated while in storage, the Secretary may 
reject the then effective inspection certificate and may require the 
importer to have the peanuts reinspected to establish whether or not 
such peanuts may be disposed of for human consumption.
    (c) Outgoing regulation. No person shall import peanuts for human 
consumption into the United States unless such peanuts are lot 
identified and certified by the inspection service as meeting the 
following requirements:
    (1)(i) Shelled peanuts. All shelled peanuts shall at least meet the 
requirements specified in Table 1 as follows:

[[Page 31317]]



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

    (ii) Peanuts meeting the specifications in Table 1 must also be 
certified ``negative'' to aflatoxin content, pursuant to paragraph 
(d)(4) of this section, prior to shipment to domestic human consumption 
markets. Shelled peanuts meeting requirements specified in Table 2 must 
be sampled pursuant to paragraph (d)(4) of this section but may be 
disposed to human consumption outlets without testing for aflatoxin.

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

[[Page 31318]]

                                                                                                                                                        
Virginia U.S. Splits (not less             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \14/64\ x 1    4.00%; both screens.          .20         9.00
 than 90% splits and not more than                             round screen.         inch, slot screen.                                                 
 3.00% sound whole kernels and                                                                                                                          
 portions passing through \20/64\                                                                                                                       
 inch round screen).                                                                                                                                    
Spanish and Valencia U.S. Splits           1.25         2.00  2.00%; \16/64\ inch,  3.00%; \13/64\ x \3/  4.00%; both screens.          .20         9.00
 (not more than 4% sound, whole                                round screen.         4\ inch, slot                                                      
 kernels).                                                                           screen.                                                            
Runner with splits (not more than          1.25         2.00  3.00%; \17/64\ inch,  3.00%; \16/64\ x \3/  4.00%; both screens.          .10         9.00
 15% sound splits).                                            round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
Virginia with splits (not more             1.25         2.00  3.00%; \17/64\ inch,  3.00%; \15/64\ x 1    4.00%; both screens.          .10         9.00
 than 15% sound splits).                                       round screen.         inch, slot screen.                                                 
Spanish and Valencia with splits           1.25         2.00  3.00%; \16/64\ inch,  2.00%; \15/64\ x \3/  4.00%; both screens.          .10         9.00
 (not more than 15% sound splits).                             round screen.         4\ inch, slot                                                      
                                                                                     screen.                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------


    (2) Cleaned-inshell peanuts. Peanuts declared as cleaned-inshell 
peanuts may be presented for sampling and outgoing inspection in bags 
at the port-of-entry. Alternatively, peanuts may be conditionally 
released as cleaned-inshell peanuts but shall not subsequently undergo 
any cleaning, sorting, sizing or drying process prior to presentation 
for outgoing inspection as cleaned-inshell peanuts. Cleaned-inshell 
peanuts which fail outgoing inspection may be reconditioned or 
redelivered to the port-of-entry, at the option of the importer. 
Cleaned-inshell peanuts determined to be unprepared farmers stock 
peanuts must be inspected against incoming quality requirements and 
determined to be Segregation 1 peanuts prior to outgoing inspection for 
cleaned-inshell peanuts. Cleaned-inshell peanuts intended for human 
consumption may not contain more than:
    (i) 1.00 percent kernels with mold present, unless a sample of such 
peanuts is drawn by the inspection service and analyzed chemically by a 
USDA or PAC approved laboratory and certified ``negative'' as to 
aflatoxin.
    (ii) 2.00 percent peanuts with damaged kernels;
    (iii) 10.00 percent moisture (carried to the hundredths place); and
    (iv) 0.50 percent foreign material.
    (3) Reconditioned peanuts. Peanuts shelled, sized and sorted in 
another country prior to arrival in the U.S. and shelled peanuts which 
originated from Segregation 1 peanuts that fail quality requirements of 
Table 1 (excessive damage, minor defects, moisture, or foreign 
material) or are positive to aflatoxin may be reconditioned by 
remilling and/or blanching. After such reconditioning, peanuts meeting 
the quality requirements of Table 1 and which are negative to aflatoxin 
(15 ppb or less) may be disposed for edible peanut use. Residuals 
resulting from such reconditioning of failing lots shall be positive 
lot identified, and red-tagged if in sacks, and disposed of pursuant to 
paragraphs (g)(2) and (g)(3) of this section.
    (d) Sampling and inspection. (1) All sampling and inspection, 
quality certification, chemical analysis, and lot identification, 
required under this section, shall be done by the inspection service, a 
USDA laboratory, or a PAC-approved laboratory, as applicable, in 
accordance with the procedures specified herein. The importer shall 
make arrangements with the inspection service for sampling, inspection, 
lot identification and certification of all peanuts accumulated by the 
importer. The importer also shall make arrangements for the appropriate 
disposition of peanuts failing edible quality requirements of this 
section. All costs of sampling, inspection, certification, 
identification, and disposition incurred in meeting the requirements of 
this section shall be paid by the importer. Whenever peanuts are 
offered for inspection, the importer shall furnish any labor and pay 
any costs incurred in moving and opening containers as may be necessary 
for proper sampling and inspection.
    (2) For farmers stock inspection, the importer shall cause the 
inspection service to perform an incoming inspection and to issue an 
CFSA-1007, ``Inspection Certificate and Sales Memorandum'' form 
designating the lot as Segregation 1, 2, or 3 quality peanuts. For 
shelled and cleaned-inshell peanuts, the importer shall cause the 
inspection service to perform an outgoing inspection and issue an FV-
184-9A, ``Milled Peanut Inspection Certificate'' reporting quality and 
size of the shelled or cleaned-inshell peanuts, whether the lot meets 
or fails to meet quality requirements for human consumption of this 
section, and that the lot originated in a country other than the United 
States. The importer shall provide to the Secretary copies of all CFSA 
1007 and FV-184-9A applicable to each peanut lot conditionally released 
to the importer. Such reports shall be submitted as provided in 
paragraphs (g)(2) and (g)(3) of this section.
    (3) Procedures for sampling and testing peanuts. Sampling and 
testing of

[[Page 31319]]

peanuts for incoming and outgoing inspections of peanuts presented for 
consumption into the United States will be conducted as follows:
    (i) Application for sampling. The importer shall request inspection 
and certification services from one of the following inspection service 
offices convenient to the location where the peanuts are presented for 
incoming and/or outgoing inspection. To avoid possible delays, the 
importer should make arrangements with the inspection service in 
advance of the inspection date. A copy of the Customs Service entry 
document specific to the peanuts to be inspected shall be presented to 
the inspection official prior to sampling of the lot.
    (A) The following offices provide incoming farmers stock 
inspection:

Dothan, AL, tel: (205) 792-5185,
Graceville, FL, tel: (904) 263-3204,
Winter Haven, FL, tel: (813) 291-5820, ext 260,
Albany, GA, tel: (912) 432-7505,
Williamston, NC, tel: (919) 792-1672,
Columbia, SC, tel: (803) 253-4597,
Suffolk, VA, tel: (804) 925-2286,
Portales, NM, tel: (505) 356-8393,
Oklahoma City, OK, tel: (405) 521-3864,
Gorman, TX, tel: (817) 734-3006,
Yuma, AZ, tel: (602) 344-3869.

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

Eastern U.S.

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

Central U.S.

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

Western U.S.

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

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

Science and Technology Division, AMS/USDA, P.O. Box 279, 301 West 
Pearl St., Aulander, NC 27805, Tel: (919) 345-1661 Ext. 156, Fax: 
(919) 345-1991
Science and Technology Division, AMS/USDA, 1211 Schley Ave., Albany, 
GA 31707, Tel: (912) 430-8490 / 8491, Fax: (912) 430-8534
Science and Technology Division, AMS/USDA, P.O. Box 488, Ashburn, GA 
31714, Tel: (912) 567-3703
Science and Technology Division, AMS/USDA, 610 North Main St., 
Blakely, GA 31723, Tel: (912) 723-4570, Fax: (912) 723-3294
Science and Technology Division, AMS/USDA, P.O. Box 1368, Dothan, AL 
36301, Tel: (205) 792-5185, Fax: (205) 671-7984

[[Page 31320]]

Science and Technology Division, AMS/USDA, 107 South Fourth St., 
Madill, OK 73446, Tel: (405) 795-5615, Fax: (405) 795-3645
Science and Technology Division, AMS/USDA, P.O. Box 272, 715 N. Main 
Street, Dawson, GA 31742, Tel: (912) 995-7257, Fax: (912) 995-3268
Science and Technology Division, AMS/USDA, P.O. Box 1130, 308 
Culloden St., Suffolk, VA 23434, Tel: (804) 925-2286, Fax: (804) 
925-2285
ABC Research, 3437 SW 24th Avenue, Gainesville, FL 32607-4502, Tel: 
(904) 372-0436, Fax: (904) 378-6483
J. Leek Associates, Inc., P.O. Box 50395, 1200 Wyandotte (31705), 
Albany, GA 31703-0395, Tel: (912) 889-8293, Fax: (912) 888-1166
J. Leek Associates, Inc., P.O. Box 368, 675 East Pine, Colquitt, GA 
31737, Tel: (912) 758-3722, Fax: (912) 758-2538
J. Leek Associates, Inc., P.O. Box 6, 502 West Navarro St., DeLeon, 
TX 76444, Tel: (817) 893-3653, Fax: (817) 893-3640
J. Leek Associates, Inc., P.O. Box 548, 42 N. Ellis St., Camilla, GA 
31730, Tel: (912) 336-8781, Fax: (912) 336-0146
Pert Laboratories, P.O. Box 267, Peanut Drive, Edenton, NC 27932, 
Tel: (919) 482-4456, Fax: (919) 482-5370
Pert Laboratory South, P.O. Box 149, Hwy 82 East, Seabrook Drive, 
Sylvester, GA 31791, Tel: (912) 776-7676, Fax: (912) 776-1137
Professional Service Industries, Inc., 3 Burwood Lane, San Antonio, 
TX 78216, Tel: (210) 349-5242, Fax: (210) 342-9401
Southern Cotton Oil Company, 600 E. Nelson Street, P.O. Box 180, 
Quanah, TX 79252, Tel: (817) 663-5323, Fax: (817) 663-5091
Quanta Lab, 9330 Corporate Drive, Suite 703, Selma, TX 78154-1257, 
Tel: (210) 651-5799, Fax: (210) 651-9271.

    (B) Further information concerning the chemical analyses required 
pursuant to this section may be obtained from: Science and Technology 
Division, USDA/AMS, P.O. Box 96456, room 3507-S, Washington, DC 20090-
6456, telephone (202) 720-5231, or facsimile (202) 720-6496.
    (v) Reporting aflatoxin assays. A separate aflatoxin assay 
certificate, Form CSSD-3 ``Certificate of Analysis for Official 
Samples'' or equivalent PAC approved laboratory form, shall be issued 
by the laboratory performing the analysis for each lot. The assay 
certificate shall identify the importer, the volume of the peanut lot 
assayed, date of the assay, and numerical test result of the assay. The 
results of the assay shall be reported as follows.
    (A) Lots containing 15 ppb or less aflatoxin content shall be 
certified as ``Meets U.S. import requirements for edible peanuts under 
Sec. 999.600 with regard to aflatoxin.''
    (B) Lots containing more than 15 ppb aflatoxin content shall be 
certified as ``Fails to meet U.S. import requirements for edible 
peanuts under Sec. 999.600 with regard to aflatoxin.'' The importer 
shall file USDA Form CSSD-3, or equivalent form, with the Secretary, 
regardless of result.
    (5) Appeal inspection. In the event an importer questions the 
results of a quality and size inspection, an appeal inspection may be 
requested by the importer and performed by the inspection service. A 
second sample will be drawn from each container and shall be double the 
size of the original sample. The results of the appeal sample shall be 
final and the fee for sampling, grading and aflatoxin analysis shall be 
charged to the importer.
    (e) Disposition of peanuts failing edible quality requirements. (1) 
Peanuts failing grade and/or aflatoxin requirements shall be designated 
as non-edible quality ``unrestricted'' peanuts or ``restricted'' 
peanuts and shall be crushed for oil, exported, or disposed to other 
non-edible outlets as specified in this section. For the purposes of 
this regulation, the term ``non-edible quality unrestricted peanuts'' 
means loose shelled kernels, fall through, and pickouts from--and the 
entire milled production of--Segregation 1, Segregation 2, and 
commingled Segregation 1 and 2 farmers stock peanuts which contain more 
than 15 ppb and 25 ppb or less aflatoxin. The term ``non-edible quality 
restricted peanuts'' means loose shelled kernels, fall through, and 
pickouts from--and the entire milled production of--Segregation 1, 
Segregation 2, and commingled Segregation 1 and 2 farmers stock peanuts 
which contain in excess of 25 ppb aflatoxin. The term loose shelled 
kernels means peanut kernels or portions of kernels completely free of 
their hulls, as found in deliveries of farmers stock peanuts or those 
which fail to ride the screens prescribed in paragraph (b)(1)(iv) of 
this section; the term fall through means sound split and broken 
kernels and whole kernels which pass through specified screens; and the 
term pickouts means those peanuts removed during the final milling 
process at the picking table, by electronic equipment, or otherwise 
during the milling process.
    (2) Non-edible quality unrestricted peanuts may be disposed to 
animal feed: Provided, That such peanuts are certified by the 
inspection service as to moisture, foreign material content and treated 
with a coloring agent or dyeing solution covering at least 80 percent 
of the peanuts, handled and shipped under lot identification 
procedures. Except for bulk loads, red tags shall be used and marked 
``Animal Feed, Not For Human Consumption.''
    (3) Lots of non-edible quality unrestricted peanuts may be 
commingled during or after fragmentation and, if certified as meeting 
fragmentation requirements by the inspection service, such fragmented 
peanuts may be exported. For the purposes of this section, the term 
fragmented means that not more than 30 percent of the peanuts shall be 
whole kernels that ride the following screens, by type: Spanish--\15/
64\ x \3/4\ inch slot; Runner--\16/64\ x \3/4\ inch slot; and 
Virginia--\15/64\ x 1 inch slot. All peanut lots exported must be lot 
identified by the inspection service, certified as exported by the 
Customs Service, and reported to AMS pursuant to paragraphs (g)(2) and 
(g)(3) of this section. Applicable Customs Service procedures for the 
export of merchandise must be followed.
    (4) Unrestricted fall through may be disposed for use as wild-life 
feed and rodent bait, if in labeled containers.
    (5) Seed peanuts which are chemically treated causing them to be 
unfit for edible or animal feed use shall be exempt from the 
requirements of paragraph (c) of this section.
    (6) Meal produced from the crushing of unrestricted peanuts shall 
be exempt from further aflatoxin testing. Meal produced from the 
crushing of restricted peanuts shall be tested and the numerical test 
result of the chemical assay shall be shown on a certificate covering 
each lot and the certification shall accompany each shipment or 
disposition.
    (7) Non-edible quality restricted peanuts may be crushed for oil or 
exported: Provided, That such peanuts are positive lot identified, 
bagged, red tagged, and so certified by the inspection service.
    (8) All certifications and proof of non-edible dispositions 
sufficient to account for all peanuts in each consumption entry filed 
by the importer must be reported to the Secretary by the importer 
pursuant to paragraphs (g)(2) and (g)(3) of this section.
    (f) Reconditioning of failing peanuts: (1) Importers may remill 
and/or blanch shelled peanuts which originated from Segregation 1 
peanuts that fail quality requirements of Table 1 or are positive to 
aflatoxin. After such reconditioning, peanuts meeting the quality 
requirements of Table 1 and which are certified negative to aflatoxin 
(15 ppb or less) may be disposed for edible use.
    (2) Whole lots of remilled and/or blanched peanuts, and residuals 
of such peanuts, which continue to fail quality requirements of Table 1 
and contain 25 ppb or less aflatoxin content shall be considered ``non-
edible quality unrestricted'' peanuts and shall be disposed as 
``unrestricted'' peanuts

[[Page 31321]]

crushed for oil, exported, or animal feed, pursuant to provisions of 
paragraph (e) of the section. Meal produced from unrestricted peanuts 
shall be disposed pursuant to paragraph (e)(6) of this section.
    (3) Whole lots of remilled and/or blanched peanuts, and residuals 
of such peanuts, which continue to fail quality requirements of Table 1 
and contain more than 25 ppb aflatoxin content, shall be considered 
``non-edible quality restricted'' peanuts and shall be disposed as 
``restricted'' peanuts pursuant to paragraph (e)(6) of this section. 
Meal produced from restricted peanuts shall be disposed pursuant to 
paragraph (e)(6).
    (4) All certifications and proof of non-edible dispositions 
sufficient to account for all peanuts in each consumption entry filed 
by the importer must be reported to the Secretary by the importer 
pursuant to paragraphs (g)(2) and (g)(3) of this section.
    (g) Safeguard procedures. (1) Prior to 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 
identifying lot(s) or container number(s) and volume of the peanuts in 
each lot being entered, and the location (including city and street 
address), date and time for inspection sampling. The inspection office 
shall sign, stamp, and return the entry document to the importer. The 
importer shall present the stamped document to the Customs Service at 
the port-of-entry and send a copy of the document to the Secretary. The 
importer also shall cause a copy of the entry document to accompany the 
peanut lot and be presented to the inspection service at the inland 
destination of the lot.
    (2) The importer shall file with the Secretary copies of the entry 
document and grade, aflatoxin, and lot identification certifications 
sufficient to account for all peanuts in each lot listed on the entry 
document filed by the importer. Positive lot identification of residual 
lots, transfer certificates, and other documentation providing proof of 
non-edible disposition, such as bills of lading, certificates of 
burying, export declarations, and sales receipts which report the 
weight of peanuts being disposed and the name, address and telephone 
number of the non-edible peanut receiver, must be sent to the Marketing 
Order Administration Branch, Attn: Report of Imported Peanuts. 
Facsimile transmissions and overnight mail may be used to ensure timely 
receipt of inspection certificates and other documentation. Fax reports 
should be sent to (202) 720-5698. Overnight and express mail deliveries 
should be addressed to USDA, AMS, Marketing Order Administration 
Branch, 14th and Independence Avenue, SW, Room: 2525-S, Washington, DC, 
20250, Attn: Report of Imported Peanuts. Regular mail should be sent to 
AMS, USDA, P.O. Box 96456, room 2526-S, Washington, DC 20090-6456, 
Attn: Report of Imported Peanuts. Telephone inquiries should be made to 
(202) 720-6862.
    (3) Certificates and other documentation for each peanut lot must 
be filed within 23 days of the date of filing for consumption entry, 
or, if a redelivery notice is issued on the peanut lot, subsequently 
filed prior to conclusion of the redelivery period which will be 60 
days, unless otherwise specified by the Customs Service.
    (4) The Secretary shall ask the Customs Service to issue a 
redelivery demand for foreign produced peanut lots failing to meet 
requirements of this section. Extensions in a redelivery period granted 
by the Customs Service will be correspondingly extended by the 
Secretary, upon request of the importer. Importers unable to account 
for the disposition of all peanuts covered in a redelivery order, or 
redeliver such peanuts, shall be liable for liquidated damages. Failure 
to fully comply with quality and handling requirements or failure to 
notify the Secretary of disposition of all foreign produced peanuts, as 
required under this section, may result in a compliance investigation 
by the Secretary. Falsification of reports submitted to the Secretary 
is a violation of Federal law punishable by fine or imprisonment, or 
both.
    (h) Additional requirements: (1) Nothing contained in this section 
shall preclude any importer from milling or reconditioning, prior to 
importation, any shipment of peanuts for the purpose of making such lot 
eligible for importation into the United States. However, all peanuts 
presented for entry for human consumption use must be certified as 
meeting the quality requirements specified in paragraph (c) of this 
section.
    (2) Conditionally released peanut lots of like quality and 
belonging to the same importer may be commingled. Defects in an 
inspected lot may not be blended out by commingling with other lots of 
higher quality. Commingling also must be consistent with applicable 
Customs Service regulations. Commingled lots must be reported and 
disposed of pursuant to paragraphs (e)(2) and (e)(3) respectively of 
this section.
    (3) Inspection by the Federal or Federal-State Inspection Service 
shall be available and performed in accordance with the rules and 
regulations governing certification of fresh fruits, vegetables and 
other products (7 CFR part 51). The importer shall make each 
conditionally released lot available and accessible for inspection as 
provided herein. Because inspectors may not be stationed in the 
immediate vicinity of some ports-of-entry, importers must make 
arrangements for sampling, inspection, and certification through one of 
the offices and laboratories listed in paragraphs (d)(3) and (d)(4), 
respectively, of this section.
    (4) Imported peanut lots sampled and inspected at the port-of-
entry, or at other locations, shall meet the quality requirements of 
this section in effect on the date of inspection.
    (5) A foreign-produced peanut lot entered for consumption or for 
warehouse may be transferred or sold to another person: Provided, That 
the original importer shall be the importer of record unless the new 
owner applies for bond and files Customs Service documents pursuant to 
19 CFR Secs. 141.113 and 141.20: and Provided further, That such 
peanuts must be certified and reported to the Secretary pursuant to 
paragraphs (g)(2) and (g)(3) of this section.
    (6) The cost of transportation, sampling, inspection, 
certification, chemical analysis, and identification, as well as 
remilling and blanching, and further inspection of remilled and 
blanched lots, and disposition of failing peanuts, shall be borne by 
the importer. Whenever peanuts are presented for inspection, the 
importer shall furnish any labor and pay any costs incurred in moving, 
opening containers, and shipment of samples as may be necessary for 
proper sampling and inspection. The inspection service shall bill the 
importer for fees covering quality and size inspections; time for 
sampling; packaging and delivering aflatoxin samples to laboratories; 
certifications of lot identification and lot transfer to other 
locations, and other inspection certifications as may be necessary to 
verify edible quality or non-edible disposition, as specified herein. 
The USDA and PAC-approved laboratories shall bill the importer 
separately for fees for aflatoxin assay. The importer also shall pay 
all required Customs Service costs as required by that agency.

[[Page 31322]]

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

    Dated: June 11, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-15361 Filed 6-18-96; 8:45 am]
BILLING CODE 3410-02-P