(a) Lots of peanuts which have not been certified as meeting the requirements for disposition to human consumption outlets may be disposed for non-human consumption uses: Provided, That each such lot is positive lot identified using red tags, identified using a traceability system as defined in § 996.73, or other methods acceptable to the Inspection Service, and certified as to aflatoxin content (actual numerical count), unless they are designated for crushing. However, on the shipping papers covering the disposition of each such lot, the handler or importer shall cause the following statement to be shown: “The peanuts covered by this bill of lading (or invoice, etc.) are not to be used for human consumption.”

(b)(1) Sheller oil stock residuals shall be positive lot identified using red tags, identified using a traceability system as defined in § 996.73, or other methods acceptable to the Inspection Service, and may be disposed of domestically or to the export market in bulk or bags or other suitable containers. Disposition to crushing may be to approved crushers. However, sheller oil stock residuals may be moved from a handler's facility to another facility owned by the same handler or another handler without PLI so long as such handler maintains a satisfactory records system for traceability purposes as defined in § 996.73.

(2) If such peanuts are not tested and certified as to aflatoxin content, pursuant to paragraph (a) of this section, the handler or importer shall cause the following statement to be shown on the shipping papers: “The peanuts covered by this bill of lading (or invoice, etc.) are limited to crushing only and may contain aflatoxin.”

(c) Remilling. Handlers and importers may remill, or cause to have remilled, lots of shelled or cleaned-inshell peanuts failing to meet the applicable outgoing quality standards in the table in § 996.31(a). If, after remilling, such peanut lot meets the applicable quality standards in § 996.31, the lot may be moved for human consumption under positive lot identification procedures and accompanied by applicable grade and aflatoxin certificates.

(d) Blanching. Handlers and importers may blanch, or cause to have blanched, shelled peanuts failing to meet the outgoing quality standards specified in the table in § 996.31(a). If after blanching, such peanut lot meets the quality standards in § 996.31(a), the lot may be moved for human consumption under positive lot identification procedures and accompanied by applicable grade and aflatoxin certificates. Peanut lots certified as meeting the fall through standard or the damaged kernels and minor defects standard as specified in § 996.31(a), prior to blanching shall be exempt from fall through, damaged kernels and minor defects standards after blanching.

(e) Lots of shelled peanuts moved for remilling or blanching shall be positive lot identified and accompanied by valid grade inspection certificate, Except That, a handler's shelled peanuts may be moved without PLI and grade inspection to the handler's blanching facility that blanches only the handler's peanuts. Lots of shelled peanuts may be moved for remilling or blanching to another handler without PLI if the handler uses a traceability system as defined in § 996.73, Except That, any grade inspection certificates associated with these lots would no longer be valid. The title of such peanuts shall be retained by the handler or importer until the peanuts have been certified by the Inspection Service as meeting the outgoing quality standards specified in the table in § 996.31(a). Remilling or blanching under the provisions of this paragraph shall be performed only by those remillers and blanchers approved by USDA. Such approved entities must agree to comply with the handling standards in this part and to report dispositions of all failing peanuts and residual peanuts to USDA, unless they are designated for crushing.

(f) Residual peanuts resulting from remilling or blanching of peanuts shall be red tagged, identified using a traceability system as defined in § 996.73, or identified by other means acceptable to the Inspection Service, and returned directly to the handler for further disposition or, in the alternative, such residual peanuts shall be positive lot identified by the Inspection Service and shall be disposed of to handlers who are crushers, or to approved crushers, Except That, a handler may move the residual peanuts without PLI to a facility for crushing owned by the handler. Handlers who are crushers and crushers approved by USDA must agree to comply with the terms and conditions of this part.

(g) Re-inspection. Whenever USDA has reason to believe that domestic or imported peanuts may have been damaged or deteriorated while in storage, USDA may reject the then effective inspection certificate and may require the owner of the peanuts to have a re-inspection to establish whether or not such peanuts may be disposed of for human consumption.

(h) The cost of transportation, sampling, inspection, certification, chemical analysis, and identification, as well as remilling and blanching, and further inspection of remilled and blanched lots, and disposition of failing peanuts, shall be borne by the applicant. Whenever peanuts are presented for inspection, the handler or importer shall furnish any labor and pay any costs incurred in moving, opening containers, and shipping samples as may be necessary for proper sampling and inspection. The Inspection Service shall bill the applicant or other responsible entity separately for applicable fees covering sampling and inspection, delivering aflatoxin samples to laboratories, positive lot identification measures, and other certifications as may be necessary to certify edible quality or non-edible disposition. The USDA and USDA-approved laboratories shall bill the applicant or other responsible entity separately for applicable fees for aflatoxin assays.