[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Proposed Rules]
[Pages 37159-37166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18181]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 62, No. 133 / Friday, July 11, 1997 / 
Proposed Rules  

[[Page 37159]]


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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.

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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.
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    \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.
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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