Karnal Bunt; Compensation for the 1996-1997 Crop Season

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 301

[Docket No. 96-016-15]

RIN 0579-AA83

Karnal Bunt; Compensation for the 1996-1997 Crop Season

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: We are proposing to amend the Karnal bunt regulations by

adding compensation provisions for certain growers, handlers, owners of

grain storage facilities, flour millers, and participants in the

National Karnal Bunt Survey who incur losses and expenses because of

Karnal bunt in the 1996-1997 crop season. The payment of compensation

is necessary in order to reduce the economic impact of the Karnal bunt

regulations on affected wheat growers and other individuals, and to

help obtain cooperation from affected individuals in Karnal bunt

eradication efforts. The proposed amendments appear necessary to make

compensation appropriate for circumstances in the 1996-1997 crop

season.

DATES: Consideration will be given only to comments received on or

before September 9, 1997.

ADDRESSES: Please send an original and three copies of your comments to

Docket No. 96-016-15, Regulatory Analysis and Development, PPD, APHIS,

suite 3C03, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please

state that your comments refer to Docket No. 96-016-15. Comments

received may be inspected at USDA, room 1141, South Building, 14th

Street and Independence Avenue SW., Washington, DC, between 8 a.m. and

4:30 p.m., Monday through Friday, except holidays. Persons wishing to

inspect comments are requested to call ahead on (202) 690-2817 to

facilitate entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr. Mike Stefan, Operations Officer,

Domestic and Emergency Operations, PPQ, APHIS, 4700 River Road Unit

134, Riverdale, MD 20737-1236, (301) 734-8247.

SUPPLEMENTARY INFORMATION:

Background

Karnal bunt is a fungal disease of wheat (Triticum aestivum), durum

wheat (Triticum durum), and triticale (Triticum aestivum X Secale

cereale), a hybrid of wheat and rye. In the absence of measures taken

by the U.S. Department of Agriculture (USDA) to prevent its spread, the

establishment of Karnal bunt in the United States could have

significant consequences with regard to the export of wheat to

international markets. Karnal bunt is caused by the smut fungus

Tilletia indica (Mitra) Mundkur and is spread by spores. The

regulations regarding Karnal bunt are set forth in 7 CFR 301.89-1

through 301.89-14. Among other things, the regulations define areas

regulated for Karnal bunt and restrict the movement of certain

regulated articles, including wheat seed and grain, from the regulated

areas.

In an interim rule effective June 27, 1996, and published in the

Federal Register on July 5, 1996, the Animal and Plant Health

Inspection Service (APHIS) amended the regulations to provide

compensation for certain wheat growers and handlers, owners of grain

storage facilities, and flour millers in order to mitigate losses and

expenses incurred in the 1995-1996 crop season because of actions taken

by the Secretary to prevent the spread of Karnal bunt (61 FR 35102-

35107, Docket No. 96-016-7). On May 6, 1997, we published a document in

the Federal Register (62 FR 24745-24653, Docket No. 96-016-17) making

final the July 5 interim rule, and adding compensation provisions for

handlers of wheat that was tested and found negative for Karnal bunt

and for participants in the National Karnal Bunt Survey whose wheat

tested positive for Karnal bunt in the 1995-1996 crop season.

We believe it is appropriate at this time to revise the scope of

the 1995-1996 compensation program for wheat to be harvested in 1997.

We are, therefore, proposing to add compensation provisions for 1996-

1997 crop season wheat.1 These provisions would provide

compensation for growers and handlers, owners of grain storage

facilities, flour millers, and participants in the National Karnal Bunt

Survey in order to mitigate losses and expenses incurred during the

1996-1997 crop season because of the regulations for Karnal bunt.

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

\1\ The 1995-1996 crop season is that season in which wheat was

harvested in 1996. The 1996-1997 crop season is that season in which

wheat is harvested in 1997.

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

Compensation for Growers and Handlers

We are proposing to add a new Sec. 301.89-15 to the Karnal bunt

regulations, to apply to growers and handlers in the 1996-1997 crop

season. This section would provide compensation to growers and handlers

for the loss in value of 1996-1997 crop season wheat seed and grain

(referred to in the regulations as propagative and nonpropagative

wheat) due to Karnal bunt. The compensation calculation we would offer

for wheat seed would be the same as that offered for wheat grain. For

the 1996-1997 crop season, we are proposing to compensate only for

wheat that was tested by APHIS and found positive for Karnal bunt.

Movement of grain that tested negative out of the regulated area

during the 1996 harvest season also had restricted movement. It could

only move to approved facilities under specific safeguard and

sanitation requirements. An interim rule effective on April 25, 1997,

and published in the Federal Register on May 1, 1997 (62 FR 23620-

23628, Docket No. 96-016-19), amended the testing requirements and

movement restrictions for wheat from the regulated areas. These

regulations now allow wheat grain that tests negative to move under

certificate to any location in the United States without further

safeguarding or sanitation requirements. In light of the amended

movement restrictions, we do not believe that it would be necessary to

compensate growers and handlers for wheat that tests negative for

Karnal bunt in the 1996-1997 crop season.

For the 1996-1997 crop season, we are proposing different levels of

compensation for growers and handlers of positive wheat, depending on

which of the following two sets of

[[Page 37160]]

circumstances applies: (1) The wheat is from an area that became

regulated for Karnal bunt after the 1996-1997 crop was planted, or for

which an Emergency Action Notification (PPQ Form 523)(EAN) was issued

after the 1996-1997 crop was planted, and that remained regulated or

under an EAN at the time the wheat was sold; or (2) the wheat is from

an area that became regulated for Karnal bunt before the 1996-1997 crop

was planted, or for which an EAN was issued before the 1996-1997 crop

was planted, and that remained regulated or under an EAN at the time

the wheat was sold. We would call these areas ``areas under the first

regulated crop season'' and ``areas under the second regulated crop

season,'' respectively. Growers and handlers in areas under the first

regulated crop season would not have known that their area was to

become regulated for Karnal bunt at the time they made their planting

and many of their contracting decisions, and would not have been

prepared for the loss in value of their wheat due to Karnal bunt.

Growers and handlers in areas under the second regulated crop season

knew they were in an area regulated for Karnal bunt at the time

planting and contracting decisions were made for the 1996-1997 crop

season. Understanding the restrictions, growers and handlers could have

chosen to alter their planting or contract decisions to avoid

experiencing losses due to Karnal bunt. We believe the compensation we

are proposing for first regulated crop season areas and second

regulated crop season areas is appropriate for the circumstances in

each area.

At the present time, there are no areas under the first regulated

crop season. All currently regulated areas are in the second regulated

crop season. APHIS is continuing to monitor for Karnal bunt throughout

wheat producing areas in the United States. If Karnal bunt is found to

exist in an area outside the currently regulated area during the 1996-

1997 crop season, APHIS will regulate that area, and growers and

handlers would be eligible for compensation for the loss in value of

their wheat in accordance with the proposed provisions for areas under

the first regulated crop season.

First Regulated Crop Season

As stated previously, we would define an area in the first

regulated crop season as an area that became regulated for Karnal bunt

after the 1996-1997 crop was planted or for which an EAN was issued

after the 1996-1997 crop was planted. Further, the area must have

remained regulated or under an EAN at the time the wheat was sold in

order for a grower or handler to be eligible for compensation. An EAN

(issued in accordance with Sec. 301.89-3(d) of the regulations)

temporarily regulates a nonregulated area as a regulated area. Areas

temporarily regulated under an EAN are subject to the same

restrictions, and potential losses or expenses, as areas that are

listed in the regulations as ``regulated areas.'' However, the

Secretary of Agriculture is authorized to compensate only individuals

who are in States for which an extraordinary emergency has been

declared.

The compensation we are proposing for growers and handlers of

positive-testing wheat grown in an area under the first regulated crop

season is similar to the compensation offered to growers and handlers

of positive-testing wheat in the 1995-1996 crop season. In areas under

the first regulated crop season, we would compensate growers and

handlers for positive 1996-1997 crop season wheat and for positive

wheat inventories in their possession that were unsold at the time the

area became regulated for Karnal bunt.

We are proposing that growers of wheat in an area under the first

regulated crop season who sell propagative or nonpropagative wheat that

was tested by APHIS and found positive for Karnal bunt prior to sale,

or was tested by APHIS and found positive for Karnal bunt after sale

and the price received by the grower is contingent on the test results,

would be eligible to receive compensation as follows:

1. If the wheat was grown under contract and a price was determined

in the contract before the area where the wheat was grown became

regulated for Karnal bunt, compensation would equal the contract price

minus the actual price received by the grower; or

2. If the wheat was not grown under contract or a price was

determined in the contract after the area where the wheat was grown

became regulated for Karnal bunt, compensation would equal the

estimated market price for the relevant class of wheat (meaning type of

wheat, such as durum or hard red winter) minus the actual price

received by the grower.

We are proposing two different compensation calculations for

growers in the first regulated crop season because contract prices set

after the area where the wheat was grown became regulated for Karnal

bunt may reflect the loss-in-value of wheat due to the Karnal bunt

regulations. For both situations described above, compensation for

positive-testing wheat would not exceed $1.80 per bushel under any

circumstances.

Contract price is currently defined in the regulations to mean

``(t)he net price after adjustments for any premiums or discounts

stated in the contract.'' We would add a definition to the regulations

for ``actual price received'' to read ``the net price after adjustments

for any premiums or discounts stated on the sales receipt.'' This is to

ensure that individuals are not paid compensation for quality issues

not related to Karnal bunt.

For the 1995-1996 crop season, estimated market prices were

calculated for durum wheat and hard red winter wheat for the harvest

months of May and June. The estimated market prices for durum wheat

were calculated based on the following: the daily closing cash prices

for choice milling durum wheat traded on the Minneapolis Grain Exchange

during the period of May 1 to June 30, 1996, adjusted to account for

the handling and transportation charges incurred in getting the wheat

from the regulated area in California and Arizona to the central market

in Minneapolis. These adjustments were based on the average difference

between the Minneapolis cash price and the cash prices within the

regulated area for 1995. Estimated market prices for hard red winter

wheat were calculated in a similar manner, based on the daily closing

futures prices for the July hard red winter wheat contract traded on

the Kansas City Board of Trade during the period of May 1 to June 30,

1996, adjusted to account for the handling and transportation charges

incurred in getting the wheat from a central point in the regulated

area to the market in Kansas City. These adjustments were based on the

average difference between the Kansas City futures price and the cash

prices within the regulated area for 1995.

For the 1996-1997 crop season, estimated market prices would be

calculated in a similar manner, as appropriate for the types of wheat

grown in the regulated area that is under the first regulated crop

season and the relevant terminal markets and harvest months for that

area. Separate estimated market prices would be calculated for

propagative and nonpropagative wheat.

We are proposing that handlers who sell propagative or

nonpropagative wheat grown in an area under the first regulated crop

season would be eligible to receive compensation only if the wheat was

not tested by APHIS prior to purchase by the handler, but was tested by

APHIS and found positive for Karnal bunt after purchase by the handler,

as long as the price to be paid is not contingent on the test results.

Compensation would equal the

[[Page 37161]]

estimated market price for the relevant class of wheat (meaning type of

wheat, such as durum or hard red winter) minus the actual price

received by the handler. Separate estimated market prices would be

calculated for propagative and nonpropagative wheat. However,

compensation for positive-testing wheat would not exceed $1.80 per

bushel under any circumstances.

The calculation described above for handlers would provide

compensation only for handlers who experience a change in the expected

value of purchased wheat. Wheat that is negative for Karnal bunt is

expected to be worth more than positive wheat because of the

restrictions imposed by the Karnal bunt regulations on the movement and

use of positive wheat. In the 1995-1996 crop season, wheat was tested

twice before movement, with the first test being done from samples

taken in the field. Therefore, results of at least one test were known

before a grower sold the wheat to a handler. For the 1996-1997 crop

season, testing protocols will require wheat to be sampled and tested

for the first time at the means of conveyance, at which time the wheat

will usually already have been purchased by a handler. If a handler

purchases untested wheat at a price appropriate for negative wheat,

instead of making the price contingent on test results, and the wheat

later tests positive, the handler would experience a loss in value of

the wheat.

Second Regulated Crop Season

We would describe an area in the second regulated crop season as an

area that became regulated for Karnal bunt before the 1996-1997 crop

was planted or for which an EAN was issued before the 1996-1997 crop

was planted. Further, the area must have remained regulated or under an

EAN at the time the wheat was sold in order for a grower or handler to

be eligible for compensation. However, the Secretary of Agriculture is

authorized to compensate only individuals who are in States for which

an extraordinary emergency has been declared. As discussed previously

in this document, all of the areas currently listed as regulated areas

in the Karnal bunt regulations, and all the areas currently regulated

for Karnal bunt under EANs, would be considered to be in the second

regulated crop season.

We are proposing that growers in the second regulated crop season

who sell propagative or nonpropagative wheat are eligible to receive

compensation only if the wheat was tested by APHIS and found positive

for Karnal bunt prior to sale, or was tested by APHIS and found

positive for Karnal bunt after sale and the price received by the

grower is contingent on the test results. Compensation would be at the

rate of $.60 per bushel of positive testing wheat.

We are proposing that handlers who sell propagative or

nonpropagative wheat grown in an area under the second regulated crop

season are eligible to receive compensation only if the wheat was not

tested by APHIS prior to purchase, but was tested by APHIS and found

positive for Karnal bunt after purchase, as long as the price to be

paid is not contingent on the test results. Compensation would be at

the rate of $.60 per bushel of positive testing wheat.

Growers and Handlers--To Claim Compensation

We are proposing that the Farm Service Agency (FSA) of USDA would

issue compensation to growers and handlers for the loss in value of

their wheat. We would require that all compensation claims be received

by FSA on or before March 31, 1998. The Administrator of APHIS could

extend that deadline, upon request in specific cases, when unusual and

unforeseen circumstances occur which prevent or hinder a claimant from

requesting compensation on or before March 31, 1998.

Growers and handlers who are eligible for compensation under the

proposed first or second regulated crop season regulations would need

to provide the same documents for claiming compensation, with a few

exceptions. Both growers and handlers would have to submit a Karnal

Bunt Compensation Claim form, provided by FSA. (We have developed a

form to be used in claiming Karnal bunt compensation. See the

information under the ``Paperwork Reduction Act'' section of this

document for further information on this form.) If the wheat was grown

in an area that is not a regulated area, but for which an EAN has been

issued, the grower or handler would have to submit a copy of the EAN.

Both growers and handlers would also have to submit a copy of the

Karnal bunt certificate issued by APHIS that shows the Karnal bunt test

results, and verification as to the actual (not estimated) weight of

the wheat that tested positive (such as a copy of the limited permit

under which the wheat is being moved, or other verification).

In addition to the documents described above for both growers and

handlers, growers would have to submit a copy of the receipt for the

final sale of the wheat, showing the total bushels sold and the total

price received by the grower. Growers compensated under the regulations

for areas in the first regulated crop season would have to submit a

copy of the contract the grower has for the wheat, if the wheat was

under contract. Growers compensated under the regulations for areas in

the second regulated crop season who sold wheat that was not yet tested

by APHIS would have to submit documentation showing that the price paid

to the grower was contingent on test results (this information could

appear on the receipt for the final sale of the wheat or on a contract

the grower has for the wheat, if the wheat was under contract).

In addition to the documents described above for both growers and

handlers, handlers would have to provide the FSA office with a copy of

the receipt for the purchase of the wheat, and a copy of the receipt

for the final sale of the wheat. The handler would also have to submit

documentation showing that the price paid or to be paid to the grower

is not contingent on the test results (this documentation could appear

on the receipt for the purchase of the wheat from the grower or on a

contract for the purchase of the wheat, if the wheat was purchased

under contract).

Compensation for Grain Storage Facilities, Flour Millers, and National

Survey Participants

The Karnal bunt compensation regulations for the 1995-1996 crop

season provided compensation for the decontamination of grain storage

facilities, the treatment of millfeed, and participants in the National

Karnal Bunt Survey whose wheat or grain storage facility is found by

APHIS to be positive for Karnal bunt. We are proposing to include

compensation for these same losses and expenses in the 1996-1997 crop

season. Unlike for growers and handlers in the 1996-1997 crop season,

there would not be separate compensation for areas in the first and

second regulated crop season. The proposed compensation for the

decontamination of grain storage facilities, the treatment of millfeed,

and participants in the National Karnal Bunt Survey would appear in a

new Sec. 301.89-16.

Decontamination of Grain Storage Facilities

As part of the Karnal bunt program, APHIS may require the

decontamination of grain storage facilities that have been determined

by APHIS to be contaminated with Karnal bunt. Section 301.89-14(d) of

the Karnal bunt regulations provides compensation for

[[Page 37162]]

the 1995-1996 crop season to owners of grain storage facilities that

are in States where the Secretary has declared an extraordinary

emergency, and who have decontaminated their grain storage facilities

pursuant to an EAN issued by an inspector. We are proposing to offer

the same compensation for the decontamination of grain storage

facilities in the 1996-1997 crop season. Compensation for

decontamination of grain storage facilities would appear in paragraph

(a) of proposed Sec. 301.89-16, and would be as follows:

Owners of grain storage facilities that are in States where the

Secretary has declared an extraordinary emergency, and who have

decontaminated their grain storage facilities pursuant to an EAN issued

by an inspector would be eligible to be compensated, on a one time only

basis for each facility for each covered crop year wheat, for up to 50

percent of the direct cost of decontamination. However, compensation

would not exceed $20,000 per grain storage facility. General clean-up,

repair, and refurbishment costs would be excluded from compensation.

Compensation payments for the decontamination of grain storage

facilities would be issued by APHIS. To claim compensation, the owner

of the grain storage facility would have to submit to an inspector

records demonstrating that decontamination was performed on all

structures, conveyances, or materials ordered to be decontaminated by

the EAN on the facility. The records would have to include a copy of

the EAN, contracts with individuals or companies hired to perform the

decontamination, receipts for equipment and materials purchased to

perform the decontamination, time sheets for employees of the grain

storage facility who performed activities connected to the

decontamination, and any other documentation that helps show the cost

to the owner and that decontamination has been completed.

We would require that claims for compensation be received by APHIS

on or before March 31, 1998. The Administrator could extend this

deadline, upon written request in specific cases, when unusual and

unforeseen circumstances occur which prevent or hinder a claimant from

requesting compensation on or before March 31, 1998.

Compensation for Treating Millfeed

The compensation regulations for the 1995-1996 crop season provide

that flour millers who, in accordance with a compliance agreement with

APHIS, heat-treat millfeed made from wheat produced in regulated areas

that require such treatment are eligible to be compensated at the rate

of $35.00 per short ton of millfeed. Paragraph (b) of proposed

Sec. 301.89-16 would provide the same compensation for treating

millfeed in the 1996-1997 crop season. The amount of millfeed

compensated would be calculated by multiplying the weight of wheat from

the regulated area received by the miller by 25 percent (the average

percent of millfeed derived from a short ton of grain). Compensation

payments would be issued by APHIS. To claim compensation, the miller

would have to submit to an inspector verification as to the actual (not

estimated) weight of the wheat (such as a copy of the limited permit

under which the wheat was moved to the mill or a copy of the bill of

lading for the wheat, if the actual weight appears on those documents,

or other verification). Flour millers would also have to submit

verification that the millfeed was heat treated (such as a copy of the

limited permit under which the wheat was moved to a treatment facility

and a copy of the bill of lading accompanying that movement; or a copy

of PPQ Form 700 (which includes certification of processing) signed by

the inspector who monitors the mill). Claims for compensation would

have to be received by APHIS on or before March 31, 1998. The

Administrator may extend this deadline, upon written request in

specific cases, when unusual and unforeseen circumstances occur which

prevent or hinder a claimant from requesting compensation on or before

March 31, 1998.

We are considering proposing to eliminate the requirement to heat

treat millfeed made from wheat produced in regulated areas. If this

requirement is eliminated by a future rulemaking, compensation would

not be paid for millfeed that is heat treated after the effective date

of such a rule.

National Karnal Bunt Survey Participants

We are also proposing compensation provisions for participants in

the National Karnal Bunt Survey in the 1996-1997 crop season whose

wheat tests positive for Karnal bunt. APHIS is conducting a National

Karnal Bunt Survey to demonstrate to our trading partners that areas

producing wheat for export are free of the disease. APHIS is receiving

voluntary cooperation from many grain storage facilities in wheat

producing areas both within and outside the States in which the

Secretary of Agriculture has declared an extraordinary emergency. The

declarations of extraordinary emergency authorize the Secretary of

Agriculture to take emergency action with regard to Karnal bunt, and

authorize the Secretary to compensate growers and other persons for

economic losses incurred by them as a result of those emergency

actions. The Secretary is not authorized to pay compensation to

individuals who are not in States for which an extraordinary emergency

has been declared.

If a grain storage facility participating in the National Survey in

one of the States for which an extraordinary emergency has been

declared tests positive for Karnal bunt, APHIS will regulate the

facility under an EAN. We are proposing that APHIS would compensate the

owner for the loss in value of the wheat and for up to 50 percent of

the direct cost of decontaminating the facility (not to exceed $20,000)

on a one time only basis for any covered crop season wheat. In the

event that a grain storage facility participating in the National

Survey that is in a State not covered by a declaration of extraordinary

emergency should test positive for Karnal bunt, the State may offer to

compensate the owner of the facility for the loss in value of the

positive wheat and for the cost of decontamination. If the State is

unwilling or unable to offer compensation at a level equal to that

offered by APHIS (as proposed in this document), the Secretary may, in

consultation with the State Department of Agriculture, declare an

extraordinary emergency in that State. APHIS could then compensate the

owner as discussed above.

We completed the National Survey for the 1995-1996 crop season in

the fall of 1996. We plan to continue the National Survey after the

1996-1997 crop season wheat is harvested. If a grain storage facility

participating in the National Karnal Bunt Survey in the 1996-1997 crop

season tests positive for Karnal bunt, the facility will be regulated,

and may be ordered decontaminated, pursuant to an EAN issued by an

inspector. We are proposing that, if a declaration of extraordinary

emergency has been declared in the State in which the grain storage

facility is located, the owner would be eligible for compensation for

the loss in value of the positive-testing wheat and for the

decontamination of the grain storage facility, if decontamination is

required. These provisions would appear in paragraph (c) of proposed

Sec. 301.89-16.

Compensation for the loss in value of positive-testing wheat would

equal the estimated market price for the relevant class of wheat minus

the actual price received for the wheat. The estimated

[[Page 37163]]

market price would be calculated by APHIS for each class of wheat,

taking into account the prices offered by relevant terminal markets

(animal feed, milling, or export) during the relevant time period for

that facility, with adjustments for transportation and other handling

costs. However, compensation would not exceed $1.80 per bushel under

any circumstances. Compensation payments for loss in value of wheat

would be issued by FSA. To claim compensation, the owner of the

facility would have to submit to the local FSA office a Karnal Bunt

Compensation Claim form, provided by FSA; a copy of the EAN under which

the facility is or was regulated; verification as to the actual (not

estimated) weight of the wheat (such as a copy of the limited permit

under which the wheat was moved to a mill or a copy of the bill of

lading for the wheat, if the actual weight appears on those documents,

or other verification); and a copy of the receipt for the final sale of

the wheat, showing the total bushels sold and the total price received

by the owner of the grain storage facility. Claims for compensation

would have to be received by FSA on or before March 31, 1998. The

Administrator may extend this deadline, upon request in specific cases,

when unusual and unforeseen circumstances occur which prevent or hinder

a claimant from requesting compensation on or before March 31, 1998.

Compensation for the decontamination of the grain storage facility

would be on a one time only basis for each grain storage facility for

each covered crop year wheat for the direct costs of decontamination of

the facility at the same rate described previously in this document for

the decontamination of grain storage facilities (up to 50 per cent of

the direct costs of decontamination, not to exceed $20,000 per grain

storage facility)(see proposed Sec. 301.89-16(a)). Compensation

payments for decontamination of grain storage facilities would be

issued by APHIS, and claims for compensation would have to be submitted

in accordance with the provisions described previously in this document

for compensation for the decontamination of grain storage facilities.

Claims for compensation would have to be received by APHIS on or before

March 31, 1998. The Administrator may extend this deadline, upon

request in specific cases, when unusual and unforeseen circumstances

occur which prevent or hinder a claimant from requesting compensation

on or before March 31, 1998.

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been reviewed under Executive Order 12866.

This rule has been determined to be economically significant for

purposes of Executive Order 12866 and, therefore, has been reviewed by

the Office of Management and Budget.

This action would amend the regulations to establish compensation

for certain growers, handlers, owners of grain storage facilities,

flour millers, and participants in the National Karnal Bunt Survey to

mitigate losses and expenses incurred in the 1996-1997 crop season

because of the Karnal bunt quarantine and emergency actions. The

quarantine and regulations for Karnal bunt were established by a series

of interim rules and a final rule published in the Federal Register on

October 4, 1996. This proposed rule for 1996-1997 crop season

compensation is being issued on an expedited basis, so that we can

accept public comments and promulgate compensation regulations before

the end of the 1997 harvest. An interim rule effective on April 25,

1997, and published in the Federal Register on May 1, 1997,

substantially reduces the size of the area regulated for Karnal bunt,

which means that there will no longer be restrictions imposed upon the

movement of regulated articles such as grain, seed, and straw from

those areas released from regulation. The interim rule also eases

restrictions on the movement of grain and other regulated articles from

those areas that remain under regulation. We anticipate that the

changes made by the interim rule will have a significant deregulatory

impact on affected entities. This will significantly reduce the number

of entities in need of compensation, and the amount of compensation

those entities are ultimately paid will likely be reduced.

In the interim rule, we explained that the expedited basis on which

that rule was issued made compliance with section 603 and timely

compliance with section 604 of the Regulatory Flexibility Act (5 U.S.C.

603 and 604) impracticable. Given that we cannot yet assess the effects

of the interim rule, and the effects of the interim rule will

significantly affect the impact of this proposed rule, compliance with

section 603 of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is

also impracticable with regards to this proposed rule. We will discuss

the issues raised by section 604 of the Regulatory Flexibility Act in

our Final Regulatory Flexibility Analysis.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic

Assistance under No. 10.025 and is subject to Executive Order 12372,

which requires intergovernmental consultation with State and local

officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. If this proposed rule is adopted: (1) All State

and local laws and regulations that are inconsistent with this rule

will be preempted; (2) no retroactive effect will be given to this

rule; and (3) administrative proceedings will not be required before

parties may file suit in court challenging this rule.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3501 et seq.), we are requesting approval from the Office of Management

and Budget (OMB) of a revision of a currently approved information

collection in support of the Karnal bunt regulations.

Title: Karnal Bunt.

OMB Number: 0579-0121.

Expiration Date of Approval: April 30, 2000.

Type of Request: Revision of a currently approved information

collection.

Abstract: This rule would require that growers and handlers contact

a Farm Service Agency (FSA) office and provide certain documents to

that office in order to claim compensation. Growers and handlers would

also have to submit to FSA a Karnal Bunt Compensation Claim form. The

local FSA office would provide the form and would complete the form

using information provided by the grower or handler. The grower or

handler would have to sign the form to attest that the information on

the form is accurate and to demonstrate acceptance of the compensation.

In addition, for compensation claims from growers and handlers in the

first regulated crop season, the local FSA office would have to

complete a Karnal Bunt Compensation Worksheet in order to calculate the

rate of compensation in accordance with the regulations. This worksheet

would be completed using the information collected by FSA in completing

the Karnal Bunt Compensation Claim form. This rule would also require

that owners of grain storage facilities and flour millers provide

certain records and documents to an APHIS inspector in order to claim

compensation.

[[Page 37164]]

The above information collection is necessary in order to verify a

claimant's eligibility for compensation and to provide documentation of

compensation claims and payments.

Estimate of burden: Public reporting burden for this collection of

information is estimated to average .57 hours per response.

Respondents: Growers, handlers, owners of grain storage facilities,

and flour millers.

Estimated number of respondents: 2249.

Estimated number of responses per respondent: 4.20.

Estimated total annual burden on respondents: 5332 hours.

In addition, as discussed previously in this document, APHIS is

conducting a National Karnal Bunt Survey to demonstrate to our trading

partners that areas producing wheat for export are free of Karnal bunt.

APHIS is receiving voluntary cooperation in conducting this survey from

grain storage facilities in wheat producing areas throughout the United

States. To conduct the survey, APHIS is asking that personnel at

participating grain storage facilities set aside samples of grain at

the time that shipments of wheat enter the facility. The grain samples

will be collected, tested, and recorded by APHIS to determine if Karnal

bunt is present.

Estimate of burden: Public reporting burden for this collection of

information is estimated to average .1 hours per response.

Respondents: Employees of grain storage facilities.

Estimated number of respondents: 2100.

Estimated number of responses per respondent: 10.

Estimated total annual burden on respondents: 2100 hours.

We are soliciting comments from the public (as well as affected

agencies) concerning the information collection and recordkeeping

requirements in this proposed rule, and concerning the information

collection in support of the National Karnal Bunt Survey. We need this

outside input to help us:

(1) Evaluate whether the proposed information collection is

necessary for the proper performance of our agency's functions,

including whether the information will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the

proposed information collection, including the validity of the

methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to

be collected;

(4) Minimize the burden of the information collection on those who

are to respond (such as through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology, e.g., permitting electronic

submission responses).

Please send written comments to the Office of Information and

Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington,

DC 20503. Please state that your comments refer to Docket No. 96-016-

15. Please send a copy of your comments to: (1) Docket No. 96-016-15,

Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River

Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer,

OIRM, USDA, room 404-W, 14th Street and Independence Avenue SW.,

Washington, DC 20250. A comment to OMB is best assured of having its

full effect if OMB receives it within 30 days of publication of this

proposed rule.

Copies of this information collection can be obtained from:

Clearance Officer, OIRM, USDA, room 404-W, 14th Street and Independence

Avenue SW., Washington, DC 20250.

List of Subjects in 7 CFR Part 301

Agricultural commodities, Plant diseases and pests, Quarantine,

Reporting and recordkeeping requirements, Transportation.

Accordingly, 7 CFR part 301 would be amended as follows:

PART 301--DOMESTIC QUARANTINE NOTICES

1. The authority citation for part 301 would continue to read as

follows:

Authority: 7 U.S.C. 147a, 150bb, 150dd, 150ee, 150ff, 161, 162,

and 164-167; 7 CFR 2.22, 2.80, and 371.2(c).

2. In Sec. 301.89-1, a definition for Actual price received would

be added in alphabetical order to read as follows:

Sec. 301.89-1 Definitions.

Actual price received. The net price after adjustment for any

premiums or discounts stated on the sales receipt.

* * * * *

3. New Secs. 301.89-15 and 301.89-16 would be added to read as

follows:

Sec. 301.89-15 Compensation for growers and handlers in the 1996-1997

crop season.

Growers and handlers are eligible to receive compensation from the

United States Department of Agriculture (USDA) for the 1996-1997 crop

season to mitigate losses or expenses incurred because of the Karnal

bunt regulations and emergency actions, as follows:

(a) Growers and handlers in areas under first regulated crop

season. Growers and handlers are eligible to receive compensation for

the loss in value of their wheat in accordance with paragraphs (a)(1)

and (a)(2) of this section if: the wheat was grown in a State where the

Secretary has declared an extraordinary emergency; and, the wheat was

grown in an area of that State that became regulated for Karnal bunt

after the 1996-1997 crop was planted, or for which an Emergency Action

Notification (PPQ Form 523) was issued after the 1996-1997 crop was

planted; and, the wheat was grown in an area that remained regulated or

under Emergency Action Notification at the time the wheat was sold.

Growers and handlers in areas under the first regulated crop season are

eligible for compensation for 1996-1997 crop season wheat and for wheat

inventories in their possession that were unsold at the time the area

became regulated.

(1) Growers. Growers of wheat in an area under the first regulated

crop season, who sell propagative or nonpropagative wheat that was

tested by APHIS and found positive for Karnal bunt prior to sale, or

was tested by APHIS and found positive for Karnal bunt after sale and

the price received by the grower is contingent on the test results, are

eligible to receive compensation as described in paragraphs (a)(1)(i)

and (a)(1)(ii) of this section. However, compensation for positive-

testing wheat will not exceed $1.80 per bushel under any circumstances.

(i) If the wheat was grown under contract and a price was

determined in the contract before the area where the wheat was grown

became regulated, compensation will equal the contract price minus the

actual price received by the grower.

(ii) If the wheat was not grown under contract or a price was

determined in the contract after the area where the wheat was grown

became regulated, compensation will equal the estimated market price

for the relevant class of wheat (meaning type of wheat, such as durum

or hard red winter) minus the actual price received by the grower. The

estimated market price will be calculated by APHIS for each class of

wheat, taking into account the prices offered by relevant terminal

markets (animal feed, milling, or export) during the harvest months for

the area, with adjustments for transportation and other handling costs.

Separate estimated market prices will be calculated for propagative and

nonpropagative wheat.

(2) Handlers. Handlers who sell propagative or nonpropagative wheat

[[Page 37165]]

grown in an area under the first regulated crop season are eligible to

receive compensation only if the wheat was not tested by APHIS prior to

purchase by the handler, but was tested by APHIS and found positive for

Karnal bunt after purchase by the handler, as long as the price to be

paid is not contingent on the test results. Compensation will equal the

estimated market price for the relevant class of wheat (meaning type of

wheat, such as durum or hard red winter) minus the actual price

received by the handler. The estimated market price will be calculated

by APHIS for each class of wheat, taking into account the prices

offered by relevant terminal markets (animal feed, milling, or export)

during the harvest months for the area, with adjustments for

transportation and other handling costs. Separate estimated market

prices will be calculated for propagative and nonpropagative wheat.

However, compensation will not exceed $1.80 per bushel under any

circumstances.

(b) Growers and handlers in areas under second regulated crop

season. Growers and handlers are eligible to receive compensation for

the loss in value of their wheat in accordance with paragraphs (b)(1)

and (b)(2) of this section if: the wheat was grown in a State where the

Secretary has declared an extraordinary emergency; and, the wheat was

grown in an area of that State that became regulated for Karnal bunt

before the 1996-1997 crop was planted, or for which an Emergency Action

Notification (PPQ Form 523) was issued before the 1996-1997 crop was

planted; and, the wheat was grown in an area that remained regulated or

under Emergency Action Notification at the time the wheat was sold.

Growers and handlers in areas under the second regulated crop season

are eligible for compensation only for 1996-1997 crop season wheat.

(1) Growers. Growers of wheat in an area under the second regulated

crop season who sell propagative or nonpropagative wheat that was

tested by APHIS and found positive for Karnal bunt prior to sale, or

was tested by APHIS and found positive for Karnal bunt after sale and

the price received by the grower is contingent on the test results, are

eligible to receive compensation at the rate of $.60 per bushel of

positive testing wheat.

(2) Handlers. Handlers who sell propagative or nonpropagative wheat

grown in an area under the second regulated crop season are eligible to

receive compensation only if the wheat was not tested by APHIS prior to

purchase by the handler, but was tested by APHIS and found positive for

Karnal bunt after purchase by the handler, as long as the price to be

paid by the handler is not contingent on the test results. Compensation

will be at the rate of $.60 per bushel of positive testing wheat.

(c) To claim compensation. Compensation payments to growers and

handlers under paragraphs (a) and (b) of this section will be issued by

the Farm Service Agency (FSA). Compensation claims must be received by

FSA on or before March 31, 1998. The Administrator may extend the

deadline, upon request in specific cases, when unusual and unforeseen

circumstances occur which prevent or hinder a claimant from requesting

compensation on or before March 31, 1998. To claim compensation, a

grower or handler must complete and submit to the local FSA county

office the following documents:

(1) Both growers and handlers. A grower or handler must submit a

Karnal Bunt Compensation Claim form, provided by FSA. If the wheat was

grown in an area that is not a regulated area, but for which an

Emergency Action Notification (PPQ Form 523)(EAN) has been issued, the

grower or handler must submit a copy of the EAN. Growers and handlers

must also submit a copy of the Karnal bunt certificate issued by APHIS

that shows the Karnal bunt test results, and verification as to the

actual (not estimated) weight of the wheat that tested positive (such

as a copy of the limited permit under which the wheat is being moved,

or other verification).

(2) Growers. In addition to the documents required in paragraph

(c)(1) of this section, growers must submit a copy of the receipt for

the final sale of the wheat, showing the total bushels sold and the

total price received by the grower. Growers compensated under paragraph

(a)(1) of this section (first regulated crop season) must submit a copy

of the contract the grower has for the wheat, if the wheat was under

contract. Growers compensated under paragraph (b)(1) of this section

(second regulated crop season) whose wheat was not tested prior to sale

must submit documentation showing that the price paid to the grower was

contingent on test results (such as a copy of the receipt for the final

sale of the wheat or a copy of the contract the grower has for the

wheat, if this information appears on those documents).

(3) Handlers. In addition to the documents required in paragraph

(c)(1) of this section, handlers must submit a copy of the receipt for

the final sale of the wheat, showing the total bushels sold and the

total price received by the handler. The handler must also submit

documentation showing that the price paid or to be paid to the grower

is not contingent on the test results (such as a copy of the receipt

for the purchase of the wheat or a copy of the contract the handler has

with the grower, if this information appears on those documents).

Sec. 301.89-16 Compensation for grain storage facilities, flour

millers, and National Survey participants for the 1996-1997 crop

season.

Owners of grain storage facilities, flour millers, and participants

in the National Karnal Bunt Survey are eligible to receive compensation

from the United States Department of Agriculture (USDA) for the 1996-

1997 crop season to mitigate losses or expenses incurred because of the

Karnal bunt regulations and emergency actions, as follows:

(a) Decontamination of grain storage facilities. Owners of grain

storage facilities that are in States where the Secretary has declared

an extraordinary emergency, and who have decontaminated their grain

storage facilities pursuant to an Emergency Action Notification (PPQ

Form 523) issued by an inspector are eligible to be compensated, on a

one time only basis for each facility for each covered crop year wheat,

for up to 50 percent of the direct cost of decontamination. However,

compensation will not exceed $20,000 per grain storage facility (as

defined in Sec. 301.89-1). General clean-up, repair, and refurbishment

costs are excluded from compensation. Compensation payments will be

issued by APHIS. To claim compensation, the owner of the grain storage

facility must submit to an inspector records demonstrating that

decontamination was performed on all structures, conveyances, or

materials ordered to be decontaminated by the Emergency Action

Notification on the facility. The records must include a copy of the

Emergency Action Notification, contracts with individuals or companies

hired to perform the decontamination, receipts for equipment and

materials purchased to perform the decontamination, time sheets for

employees of the grain storage facility who performed activities

connected to the decontamination, and any other documentation that

helps show the cost to the owner and that decontamination has been

completed. Claims for compensation must be received by APHIS on or

before March 31, 1998. The Administrator may extend this deadline, upon

written request in specific cases, when unusual and unforeseen

circumstances occur which prevent or

[[Page 37166]]

hinder a claimant from requesting compensation on or before March 31,

1998.

(b) Flour millers. Flour millers who, in accordance with a

compliance agreement with APHIS, heat-treat millfeed made from wheat

produced in regulated areas that require such treatment are eligible to

be compensated at the rate of $35.00 per short ton of millfeed. The

amount of millfeed compensated will be calculated by multiplying the

weight of wheat from the regulated area received by the miller by 25

percent (the average percent of millfeed derived from a short ton of

grain). Compensation payments will be issued by APHIS. To claim

compensation, the miller must submit to an inspector verification as to

the actual (not estimated) weight of the wheat (such as a copy of the

limited permit under which the wheat was moved to the mill or a copy of

the bill of lading for the wheat, if the actual weight appears on those

documents, or other verification). Flour millers must also submit

verification that the millfeed was heat treated (such as a copy of the

limited permit under which the wheat was moved to a treatment facility

and a copy of the bill of lading accompanying that movement; or a copy

of PPQ Form 700 (which includes certification of processing) signed by

the inspector who monitors the mill). Claims for compensation must be

received by APHIS on or before March 31, 1998. The Administrator may

extend this deadline, upon written request in specific cases, when

unusual and unforeseen circumstances occur which prevent or hinder a

claimant from requesting compensation on or before March 31, 1998.

(c) National Karnal Bunt Survey participants. If a grain storage

facility participating in the National Karnal Bunt Survey tests

positive for Karnal bunt, the facility will be regulated, and may be

ordered decontaminated, pursuant to an Emergency Action Notification

(PPQ Form 523) issued by an inspector. If the Secretary has declared an

extraordinary emergency in the State in which the grain storage

facility is located, the owner will be eligible for compensation as

follows:

(1) Loss in value of positive wheat. The owner of the grain storage

facility will be compensated for the loss in value of positive wheat.

Compensation will equal the estimated market price for the relevant

class of wheat minus the actual price received for the wheat. The

estimated market price will be calculated by APHIS for each class of

wheat, taking into account the prices offered by relevant terminal

markets (animal feed, milling, or export) during the relevant time

period for that facility, with adjustments for transportation and other

handling costs. However, compensation will not exceed $1.80 per bushel

under any circumstances. Compensation payments for loss in value of

wheat will be issued by the Farm Service Agency (FSA). To claim

compensation, the owner of the facility must submit to the local FSA

office a Karnal Bunt Compensation Claim form, provided by FSA. The

owner of the facility must also submit to FSA a copy of the Emergency

Action Notification under which the facility is or was quarantined;

verification as to the actual (not estimated) weight of the wheat (such

as a copy of the limited permit under which the wheat was moved to a

mill or a copy of the bill of lading for the wheat, if the actual

weight appears on those documents, or other verification); and a copy

of the receipt for the final sale of the wheat, showing the total

bushels sold and the total price received by the owner of the grain

storage facility. Claims for compensation must be received by FSA on or

before March 31, 1998. The Administrator may extend this deadline, upon

request in specific cases, when unusual and unforeseen circumstances

occur which prevent or hinder a claimant from requesting compensation

on or before March 31, 1998.

(2) Decontamination of grain storage facilities. The owner of the

facility will be compensated on a one time only basis for each grain

storage facility for each covered crop year wheat for the direct costs

of decontamination of the facility at the same rate described under

paragraph (a) of this section (up to 50 per cent of the direct costs of

decontamination, not to exceed $20,000 per grain storage facility).

Compensation payments for decontamination of grain storage facilities

will be issued by APHIS, and claims for compensation must be submitted

in accordance with the provisions in paragraph (a) of this section.

Claims for compensation must be received by APHIS on or before March

31, 1998. The Administrator may extend this deadline, upon request in

specific cases, when unusual and unforeseen circumstances occur which

prevent or hinder a claimant from requesting compensation on or before

March 31, 1998.

Done in Washington, DC, this 3rd day of July 1997.

Terry L. Medley,

Administrator, Animal and Plant Health Inspection Service.

[FR Doc. 97-18181 Filed 7-10-97; 8:45 am]

BILLING CODE 3410-34-P