Karnal Bunt; Compensation for the 1997-1998 Crop Season

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 301

[Docket No. 96-016-31]

RIN 0579-AA83

Karnal Bunt; Compensation for the 1997-1998 Crop Season

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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

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

provide compensation for certain growers, handlers, seed companies,

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 1997-1998 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 efforts to contain and reduce the prevalence of Karnal bunt.

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

before February 16, 1999.

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

Docket No. 96-016-31, 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. 96-016-31. 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; or E-mail:

[email protected].

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. Karnal bunt is caused by the smut

fungus Tilletia indica (Mitra) Mundkur and is spread by spores,

primarily through the movement of infected seed. 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. The regulations regarding Karnal bunt are set

forth in 7 CFR 301.89-1 through 301.89-16 (referred to below as the

regulations). 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 a final rule published in the Federal Register and effective on

June 10, 1998 (63 FR 31593-31601, Docket No. 96-016-29), the Animal and

Plant Health Inspection Service (APHIS) amended the regulations by

adding compensation provisions for 1996-1997 crop season

wheat.1 The final rule provides compensation for certain

growers, handlers, seed companies, owners of grain storage facilities,

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

incurred losses and expenses because of Karnal bunt in the 1996-1997

crop season. These provisions are in Sec. 301.89-15, ``Compensation for

growers, handlers, and seed companies in the 1996-1997 crop season,''

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

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

season.''

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

\1\ The 1996-1997 crop season is that season in which wheat was

harvested in 1997. The 1997-1998 crop season is that season in which

wheat is harvested in 1998.

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

APHIS' regulatory program to control the spread of Karnal bunt is a

continuing program. We expect that any costs to growers and other

entities related to the Karnal bunt program in the 1997-1998 crop

season will be similar to those incurred in the 1996-1997 crop season.

Therefore, we are proposing to amend the regulations to provide the

same compensation for the 1997-1998 crop season as was provided in the

1996-1997 crop season.

Compensation for Growers and Handlers

Section 301.89-15 of the regulations provides compensation to

growers and handlers for the loss in value of 1996-1997 crop season

wheat seed and grain due to Karnal bunt. We are proposing to make these

provisions apply also to growers, handlers, and seed companies in the

1997-1998 crop season.

The compensation in Sec. 301.89-15 is for wheat grain, certified

wheat seed, and wheat grown with the intention of producing certified

wheat seed. The compensation calculation for certified wheat seed and

wheat grown with the intention of producing certified wheat seed is the

same as that offered for wheat grain. Requiring that wheat seed be

certified or grown with the intention of producing certified wheat seed

ensures that the compensation is limited to market-ready seed and will

not be paid for seed in other stages of development. Further, the

compensation in Sec. 301.89-15 is only for wheat that was tested by

APHIS and found positive for Karnal bunt.

For the 1996-1997 crop season, Sec. 301.89-15 provides two

different levels of compensation for growers and handlers of positive

wheat, depending on which of the following two sets of 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.

These

[[Page 69564]]

areas are called ``areas under the first regulated crop season'' and

``areas under the second regulated crop season,'' respectively.

Growers, handlers, and seed companies 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, handlers, and seed companies 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,

handlers, and seed companies could have chosen to alter their planting

or contract decisions to avoid experiencing losses due to Karnal bunt.

The compensation provisions for areas under the first regulated crop

season are in Sec. 301.89-15(a); the compensation provisions for areas

under the second regulated crop season are in Sec. 301.89-15(b).

The 1997-1998 crop season is the third regulated crop season for

most regulated areas. In order to make the compensation in Sec. 301.89-

15 also apply to growers, handlers, and seed companies in the 1997-1998

crop season, we would remove the designation of ``areas under the

second regulated crop season'' in paragraph (b) and refer instead to

``previously regulated areas.''

First Regulated Crop Season

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

crop season for 1997-1998. We would consider all areas that are

currently regulated to be previously regulated areas for the 1997-1998

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 areas during the 1997-

1998 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 provisions for areas under the first

regulated crop season.

Under Sec. 301.89-15(a), growers, handlers, and seed companies 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. For the 1997-1998 crop season, we would likewise state that

growers, handlers, and seed companies in areas under the first

regulated crop season are eligible for compensation for 1997-1998 crop

season wheat and for wheat inventories in their possession that were

unsold at the time the area became regulated for Karnal bunt.

Under Sec. 301.89-15(a)(1), growers of wheat in an area under the

first regulated crop season who sell wheat that was tested by APHIS and

found positive for Karnal bunt prior to sale, or that 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 follows:

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 will equal the contract

price minus the actual price received by the grower; or

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 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.

For both situations described above, compensation for positive-

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

Under Sec. 301.89-15(a)(2), handlers and seed companies who sell

wheat 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 or seed company, but was tested

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

handler or seed company, 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 minus the actual price

received by the handler or seed company. However, compensation for

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

circumstances.

Estimated market prices used in the compensation calculations

described above for growers and handlers are 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 are calculated for

certified wheat seed and wheat grown with the intention of producing

certified wheat seed, and wheat grain.

This proposal would make the provisions in Sec. 301.89-15(a)(1) and

(a)(2) apply to growers, handlers, and seed companies in the 1997-1998

crop season if they have wheat grown in areas under the first regulated

crop season.

Previously Regulated Areas

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 EAN's, would be

considered to be previously regulated areas for the 1997-1998 crop

season.

Under Sec. 301.89-15(b), growers, handlers, and seed companies in

areas under the second regulated crop season are eligible for

compensation only for 1996-1997 crop season wheat. We would amend

Sec. 301.89-15(b) to state that growers, handlers, and seed companies

in previously regulated areas would be eligible for compensation under

paragraph (b) only for 1996-1997 and 1997-1998 crop season wheat.

Under Sec. 301.89-15(b), growers who sell 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 will be at the

rate of $.60 per bushel of positive testing wheat. Handlers and seed

companies who sell wheat 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

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

proposal would make this same compensation available to growers,

handlers, and seed companies in the 1997-1998 crop season.

Growers, Handlers, and Seed Companies--To Claim Compensation

In past crop seasons, the Farm Service Agency (FSA) of USDA has

processed Karnal bunt compensation claims from growers, handlers, and

seed companies for the loss in value of their wheat. Under this

proposal, FSA would continue to process such claims in the 1997-1998

crop season.

Under Sec. 301.89-15(c), we require 1996-1997 crop season claimants

to submit a number of documents in support of their claim. We would

[[Page 69565]]

require the same documents to be submitted for 1997-1998 crop season

compensation. The requirements in paragraph (c) are as follows:

Growers, handlers, and seed companies who are eligible for

compensation under either the first regulated crop season compensation

or under the second regulated crop season compensation (proposed to be

designated as ``previously regulated areas'') need to provide the same

documents for claiming compensation, with a few exceptions. Growers,

handlers, and seed companies 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 EAN has been issued, the grower,

handler, or seed company must submit a copy of the EAN. Growers,

handlers, and seed companies 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 a facility weigh ticket, or

other verification). For compensation claims for wheat seed, a grower

or seed company must submit documentation showing that the wheat is

either certified seed or was grown with the intention of producing

certified seed. This documentation may include one or more of the

following types of documents: an application to the State seed

certification agency for field inspection; a bulk sale certificate;

certification tags or labels issued by the State seed certification

agency; or a document issued by the State seed certification agency

verifying that the wheat is certified seed.

In addition, 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 the regulations

for areas in the 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 the regulations for the second regulated crop

season (proposed to be designated as ``previously regulated areas'')

who sold wheat that was not yet tested by APHIS must 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, handlers and seed companies must provide the FSA

office with a copy of the receipt for the final sale of the wheat. The

handler or seed company must 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 June 1998 final rule (Docket No. 96-016-29) also added a new

Sec. 301.89-16 to the regulations. This section sets forth compensation

provisions for the decontamination of grain storage facilities, heat

treatment of millfeed, and losses to National Karnal Bunt Survey

participants whose wheat or grain storage facility tests positive for

Karnal bunt in the 1996-1997 crop season. We are proposing to amend

Sec. 301.89-16 to make its provisions also apply to the 1997-1998 crop

season.

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. For the 1996-1997 crop

season, Sec. 301.89-16(a) provides that 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 either an EAN issued by an inspector or

a letter issued by an inspector ordering decontamination of the

facilities, 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. General cleanup,

repair, and refurbishment costs are excluded from compensation. Under

this proposed rule, this same compensation would be available to owners

of grain storage facilities in the 1997-1998 crop season.

Paragraph (a) also states that compensation payments will be issued

by APHIS and sets forth provisions for claiming compensation. 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 by APHIS to be

decontaminated. The records must include a copy of the EAN or the

letter from an inspector ordering decontamination, 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. These provisions would also apply

to compensation claims in the 1997-1998 crop season.

Treatment of Millfeed

In the 1996-1997 crop season, millfeed made from wheat produced in

certain regulated areas was required to be heat treated in order to

help prevent the spread of Karnal bunt. Under the June 1998 final rule,

Sec. 301.89-16(b) provides that flour millers who, in accordance with a

compliance agreement with APHIS, heat treat millfeed that is required

by APHIS to be heat treated are eligible to be compensated at the rate

of $35.00 per short ton of millfeed.

Under a final rule published in the Federal Register and effective

on September 23, 1998 (63 FR 50747-50752, Docket No. 96-016-32), the

requirement for heat treating millfeed was revised, so that only

millfeed resulting from the milling of wheat, durum wheat, or triticale

that tested positive for Karnal bunt will require heat treatment.

Therefore, because heat treatment of millfeed continues to be a

requirement in the regulations, albeit under different criteria than in

previous crop seasons, we are proposing that the compensation in

Sec. 301.89-16(b) for the 1996-1997 crop season would also be available

to flour millers in the 1997-1998 crop season.

Paragraph (b) provides for the 1996-1997 crop season that 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 a

facility weigh ticket 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

[[Page 69566]]

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). This proposed rule would make these same provisions apply to

compensation claims for heat treatment of millfeed in the 1997-1998

crop season.

National Karnal Bunt Survey Participants

Each year since 1996, APHIS has conducted a National Karnal Bunt

Survey to demonstrate to our trading partners that areas producing

wheat for export are free of the disease. In past crop seasons, we

offered compensation to participants in the Survey whose wheat or grain

storage facility tests positive for Karnal bunt, if the participant is

in a State in which the Secretary of Agriculture has declared an

extraordinary emergency for Karnal bunt. For the 1996-1997 crop season,

the provisions for this compensation are in Sec. 301.89-16(c). We are

proposing to make these provisions also apply to participants in the

National Karnal Bunt Survey in the 1997-1998 crop season.

For the 1996-1997 crop season, paragraph (c) provides that, 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 either an EAN issued by an

inspector or a letter issued by an inspector ordering decontamination

of the facility. 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:

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 or letter from an

inspector under which the facility is or was quarantined; verification

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

a facility weigh ticket 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.

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 Sec. 301.89-16(a) (discussed earlier) (up

to 50 percent 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 Sec. 301.89-16(a).

Under this proposed rule, the compensation in Sec. 301.89-16(c)

described above would also be available to National Karnal Bunt Survey

participants in the 1997-1998 crop season.

For the 1996-1997 crop season, claims for compensation under

Secs. 301.89-15 and 301.89-16 must be received by FSA or APHIS on or

before October 8, 1998. This is 120 days after the date the June 1998

final rule was published in the Federal Register. For the 1997-1998

crop season, we would likewise require that claims for compensation be

received by APHIS on or before the date that is 120 days after a final

rule for this proposal is published in the Federal Register. The

Administrator may extend this deadline, upon written request in

specific cases, when unusual and unforeseen circumstances occur that

prevent or hinder a claimant from requesting compensation on or before

that date.

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been reviewed under Executive Order 12866.

The rule has been determined to be economically significant for the

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

the Office of Management and Budget.

This proposed rule would establish compensation provisions for

certain growers, handlers, seed companies, owners of grain storage

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

Survey to mitigate losses and expenses incurred in the 1997-1998 crop

season because of the Karnal bunt quarantine and emergency actions.

In accordance with Executive Order 12866, this analysis examines

the economic impact of providing such compensation. The wheat industry

within the regulated area is largely composed of businesses that can be

considered as ``small'' according to guidelines established by the

Small Business Administration. Therefore, this analysis also fulfills

the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), which require agencies to consider the economic impact of rule

changes on small entities.

Upon detection of Karnal bunt in Arizona in March 1996, Federal

quarantine and emergency actions were imposed to prevent the interstate

spread of the disease to other wheat producing areas in the United

States. The unexpected discovery of Karnal bunt and subsequent Federal

emergency actions disrupted the production and marketing flows of wheat

in the quarantined areas. It was estimated that the impact of Karnal

bunt and subsequent Federal actions on the wheat industry totaled $44

million in the 1995-1996 crop season.

In order to alleviate some of the economic hardships and to ensure

full and effective compliance with the quarantine program, compensation

to mitigate certain losses has been offered to growers, handlers, seed

companies, and other affected persons in the areas regulated for Karnal

bunt in the 1995-1996 and 1996-1997 crop seasons. The payment of

compensation is in recognition of the fact that, while benefits from

regulation accrue to a large portion of the wheat industry outside the

regulated areas, the regulatory burden falls predominately on a small

segment of the affected wheat industry within the regulated areas. A

final rule promulgating compensation regulations for the 1996-1997 crop

season was effective and published in the Federal Register on June 10,

1998 (63 FR 31593-31601, Docket No. 96-016-29). The compensation

proposed in this document for the 1997-1998 crop season is the same as

the compensation offered in the 1996-1997 crop season.

We are proposing that growers, handlers, and seed companies would

be eligible for compensation for losses in the 1997-1998 crop season

due to wheat grain or seed that tested positive for Karnal bunt. Only

positive-testing wheat would be eligible for compensation because of

the lack of restrictions on the movement of negative testing wheat. As

[[Page 69567]]

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

compensation depending on whether the wheat was grown in an area under

the first regulated crop season or in a previously regulated area. An

area in the first regulated crop season is an area that became

regulated for Karnal bunt after the 1997-1998 crop was planted. A

previously regulated area is an area that became regulated for Karnal

bunt before the 1997-1998 crop was planted. Currently, there are no

regulated areas in the first regulated crop season.

For growers, handlers, and seed companies in previously regulated

areas, the proposed compensation for positive grain or seed would be

$.60 per bushel. Growers, handlers, and seed companies in the first

regulated crop season would be eligible for compensation at a rate not

to exceed $1.80 per bushel. These compensation rates would apply to

both wheat grain and seed. The difference in compensation rates

reflects the fact that affected entities 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 that they made planting

and contracting decisions, and would not have been prepared for the

loss in value of their wheat due to Karnal bunt. Growers and handlers

in previously regulated areas knew they were in an area regulated for

Karnal bunt at the time that they made planting and contracting

decisions for the 1997-1998 crop season. Given the restrictions,

growers and handlers could have chosen to alter planting or contract

decisions to avoid experiencing potential losses due to Karnal bunt.

The proposed compensation rates are the same as those offered in the

1996-1997 crop season.

At this time, all areas that are regulated for Karnal bunt are

previously regulated areas. We estimate that approximately 181,000

acres of wheat will be harvested in 1998 from the regulated areas. In

the 1996-1997 crop season, less than 1 percent of wheat grown in the

regulated areas tested positive for Karnal bunt. If we assume that 1

percent of wheat harvested from the regulated areas will test positive

for Karnal bunt in the 1997-1998 crop season, compensation for wheat

grain and seed grown in currently regulated areas would total

approximately $87,000 (1 percent of 181,000 acres equals 1,810 acres;

using an estimate of 80 bushels per acre crop yield, 1,810 acres

multiplied by 80 equals 144,800 bushels; 144,800 bushels multiplied by

$.60 per bushel equals $86,880). This positive-testing wheat would have

a market value of approximately $724,000 in the absence of Karnal bunt.

To compare, compensation for wheat grain and seed in the 1996-1997

crop season is expected to total about $149,000. Approximately 122,000

acres of wheat were harvested from regulated areas in the 1996-1997

crop season, with a Karnal bunt infection rate of 0.8 percent. Seventy-

nine percent of the positive wheat was harvested from an area in San

Saba County, TX, which was in the first regulated crop season; this

positive wheat will receive a maximum of $1.80 per bushel for the 1996-

1997 crop season. The remaining 21 percent of positive wheat was from

an area in the second crop season of regulation; this positive wheat

will receive $.60 per bushel compensation for the 1996-1997 crop

season.

We cannot determine at this time whether there will be areas

eligible for compensation under the provisions for first regulated crop

season areas in the 1997-1998 crop season. APHIS is in the process of

conducting the 1998 National Karnal Bunt Survey in wheat producing

areas throughout the United States. Any areas that become regulated in

the 1997-1998 crop season as a result of the 1998 National Survey would

be eligible for first regulated crop season compensation. During the

1997 National Survey for Karnal bunt, only 2 of approximately 12,000

wheat samples tested positive for Karnal bunt.

This proposed rule would also provide compensation for the

decontamination of grain storage facilities found with positive wheat,

the treatment of millfeed, and participants in the National Karnal Bunt

Survey whose wheat or grain storage facility is found to be positive

for Karnal bunt. Compensation for decontamination of grain storage

facilities will be on a one-time-only basis for up to 50 percent of the

cost of decontamination, not to exceed $20,000. We cannot determine at

this time how many, if any, grain storage facilities in currently

regulated areas will store positive wheat in the 1997-1998 crop season,

or how many, if any, will be found to contain positive wheat during the

1998 National Survey for Karnal bunt. In the 1996-1997 crop season, 10

facilities that stored seed testing positive for Karnal bunt were found

in San Saba County, TX, and we estimate that compensation for the

decontamination of these facilities will total a maximum of $120,000.

We are also proposing compensation for the cost of heat treating

millfeed that APHIS requires to be treated, at the rate of $35.00 per

short ton of millfeed. No millfeed made from wheat grown in the

regulated area was required to be heat treated in the 1996-1997 crop

season. Under current regulations, APHIS requires heat treatment of

millfeed made from wheat that tested positive for Karnal bunt. Since

little or no positive wheat is expected to be used for milling in the

1997-1998 crop season, compensation for the heat treatment of millfeed

in the 1997-1998 crop season would be minimal or unnecessary.

There are approximately 15,000 acres within the areas regulated for

Karnal bunt where planting of wheat was prohibited in the 1997-1998

crop season. This proposed rule does not contain provisions for

compensating growers in areas where wheat planting is prohibited, since

many of these growers rotate wheat with other crops that are not

prohibited from being planted. These growers generate revenue from

these other crops, effectively minimizing the impact of the prohibition

on planting wheat.

The Regulatory Flexibility Act requires that agencies consider the

economic impact of rule changes on small businesses, organizations, and

governmental jurisdictions. Growers and handlers of wheat grain and

seed, and wheat seed companies, are those most affected by this

proposed rule. It is estimated that there are a total of 712 wheat

growers in the regulated areas: 378 in Arizona, 48 in California, 200

in New Mexico, and 86 in Texas. There are 149 growers in surveillance

areas, and 563 growers in regulated areas lying beyond surveillance

areas.2 Most of these entities have total sales of less than

$0.5 million, the Small Business Administration's threshold for

classifying wheat producers as small entities. Accordingly, the

economic impact of this proposed rule would largely be on small

entities.

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

\2\ The 149 growers in surveillance areas are distributed as

follows: 54 in Arizona, 27 in California, 68 in Texas, and none in

New Mexico. The 563 growers in regulated areas lying beyond

surveillance areas are distributed as follows: 324 in Arizona, 21 in

California, 200 in New Mexico, and 18 in Texas.

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

This proposed rule is expected to have a positive economic impact

on all affected entities, large and small. Compensation for the loss in

value of wheat that tests positive for Karnal bunt serves to encourage

compliance with testing requirements within the regulated area, thereby

aiding in the preservation of an important wheat growing region in the

United States. It also serves to encourage participation in the

National Karnal Bunt Survey.

Under these circumstances, the Administrator of the Animal and

Plant Health Inspection Service has determined that this action would

not

[[Page 69568]]

have a significant economic impact on a substantial number of small

entities.

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 section 3507(d) of the Paperwork Reduction Act

of 1995 (44 U.S.C. 3501 et seq.), the information collection or

recordkeeping requirements included in this proposed rule have been

submitted for approval to the Office of Management and Budget (OMB).

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-

31. Please send a copy of your comments to: (1) Docket No. 96-016-31,

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

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

OCIO, 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.

This proposed rule would require that growers, handlers, and seed

companies provide certain records and documents to a local Farm Service

Agency (FSA) office in order to claim compensation. Growers, handlers,

and seed companies would also have to sign a Karnal Bunt Compensation

Claim form (completed by an employee of FSA using the information

provided by the claimant) to attest that the information on the form is

accurate and to demonstrate acceptance of the compensation. This

proposal 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. This information collection

is necessary in order to verify a claimant's eligibility for

compensation and to provide documentation of compensation claims and

payments.

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

agencies) concerning our proposed information collection and

recordkeeping requirements. 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; and

(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).

Estimate of burden: Public reporting burden for this collection of

information is estimated to average .506 hours per response.

Respondents: Wheat growers, handlers, seed companies, owners of

grain storage facilities, flour millers, FSA personnel.

Estimated annual number of respondents: 38.

Estimated annual number of responses per respondent: 1.921.

Estimated annual number of responses: 73.

Estimated total annual burden on respondents: 37 hours.

Copies of this information collection can be obtained from;

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

Avenue SW., Washington, DC 20250.

List of Subjects in 7 CFR Part 301

Agricultural commodities, Incorporation by reference, Plant

diseases and pests, Quarantine, Reporting and recordkeeping

requirements, Transportation.

Accordingly, we propose to amend 7 CFR part 301 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. Section 301.89-15 would be amended by revising the section

heading, the introductory text to the section, the introductory text to

paragraph (a), paragraph (b), the introductory text to paragraph (c),

and the last sentence of paragraph (c)(2), to read as follows:

Sec. 301.89-15 Compensation for growers, handlers, and seed companies

in the 1996-1997 and 1997-1998 crop seasons.

Growers, handlers, and seed companies are eligible to receive

compensation from the United States Department of Agriculture (USDA)

for the 1996-1997 and 1997-1998 crop seasons to mitigate losses or

expenses incurred because of the Karnal bunt regulations and emergency

actions, as follows:

(a) Growers, handlers, and seed companies in areas under first

regulated crop season. Growers, handlers, and seed companies 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 crop was planted,

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

after the 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, handlers, and seed companies in areas

under the first regulated crop season are eligible for compensation for

1996-1997 crop season wheat or 1997-1998 crop season wheat (as

appropriate) and for wheat inventories in their possession that were

unsold at the time the area became regulated. The compensation provided

in this section is for wheat grain, certified wheat seed, and wheat

grown with the intention of producing certified wheat seed.

* * * * *

(b) Growers, handlers, and seed companies in previously regulated

areas. Growers, handlers, and seed companies 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 crop was planted, or for which an Emergency

Action Notification (PPQ Form 523) was issued before the crop was

planted; and, the

[[Page 69569]]

wheat was grown in an area that remained regulated or under Emergency

Action Notification at the time the wheat was sold. Growers, handlers,

and seed companies in previously regulated areas are eligible for

compensation only for 1996-1997 or 1997-1998 crop season wheat. The

compensation provided in this section is for wheat grain, certified

wheat seed, and wheat grown with the intention of producing certified

wheat seed.

(1) Growers. Growers of wheat in a previously regulated area who

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

prior to sale, or that 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 and seed companies. Handlers and seed companies who

sell wheat grown in a previously regulated area 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 or seed company, as long as

the price to be paid by the handler or seed company 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,

handlers, and seed companies under paragraphs (a) and (b) of this

section will be issued by the Farm Service Agency (FSA). Claims for

compensation for the 1996-1997 crop season must be received by FSA on

or before October 8, 1998. Claims for compensation for the 1997-1998

crop season must be received by FSA on or before [the date 120 days

after the final rule is published in the Federal Register]. 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 these dates. To

claim compensation, a grower, handler, or seed company must complete

and submit to the local FSA county office the following documents:

* * * * *

(2) Growers. * * * Growers compensated under paragraph (b)(1) of

this section (previously regulated areas) 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).

* * * * *

Sec. 301.89-16 [Amended]

3. Section 301.89-16 would be amended as follows:

a. In the heading, by removing the words ``1996-1997 crop season''

and adding the words ``1996-1997 and 1997-1998 crop seasons'' in their

place.

b. In the introductory text, by removing the words ``1996-1997 crop

season'' and adding the words ``1996-1997 and 1997-1998 crop seasons''

in their place.

c. In paragraphs (a), (b), (c)(1), and (c)(2), by removing the last

two sentences in each paragraph and by adding three sentences in their

place to read as follows: ``Claims for compensation for the 1996-1997

crop season must be received by APHIS on or before October 8, 1998.

Claims for compensation for the 1997-1998 crop season must be received

by APHIS on or before [the date 120 days after the final rule is

published in the Federal Register]. The Administrator may extend these

deadlines upon written request in specific cases, when unusual and

unforeseen circumstances occur which prevent or hinder a claimant from

requesting compensation on or before these dates.''

Done in Washington, DC, this 14th day of December 1998.

Joan M. Arnoldi,

Acting Administrator, Animal and Plant Health Inspection Service.

[FR Doc. 98-33434 Filed 12-16-98; 8:45 am]

BILLING CODE 3410-34-P