[Federal Register Volume 63, Number 109 (Monday, June 8, 1998)]
[Rules and Regulations]
[Pages 31097-31102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15337]



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  Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 / Rules 
and Regulations  

[[Page 31097]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 319

[Docket No. 97-060-2]
RIN 0579-AA88


Karnal Bunt Status of the Mexicali Valley of Mexico

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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

SUMMARY: We are amending the wheat diseases regulations by recognizing 
a wheat-growing area within the Mexicali Valley of Mexico as being free 
from the wheat disease Karnal bunt. Surveys conducted by Mexican plant 
health authorities in that area of the Mexicali Valley since 1990 have 
shown the area to be free from Karnal bunt, and Mexican authorities are 
enforcing restrictions designed to protect the area from the 
introduction of Karnal bunt. This change will have the effect of 
removing certain restrictions on the importation into the United States 
of wheat seed, straw, and other wheat products from the Karnal bunt 
free area of the Mexicali Valley.

EFFECTIVE DATE: June 8, 1998.

FOR FURTHER INFORMATION CONTACT: Mr. Peter M. Grosser, Senior Import 
Specialist, Phytosanitary Issues Management Team, PPQ, APHIS, USDA, 
4700 River Road Unit 140, Riverdale, MD 20737-1236; (301) 734-6799; fax 
(301) 734-5786; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The regulations in ``Subpart--Wheat Diseases'' (7 CFR 319.59 
through 319.59-2, referred to below as the regulations) restrict the 
importation into the United States of certain seeds, plants, and plant 
products from certain countries or localities in order to prevent the 
introduction of foreign strains of flag smut and Karnal bunt, two 
fungal diseases of wheat (Triticum spp.). Specific provisions relating 
to foreign strains of flag smut are located in paragraph (a) of 
Sec. 319.59-2 of the regulations, and specific provisions concerning 
Karnal bunt are found in paragraph (b) of that section.
    Under Sec. 319.59-2(b) of the regulations, wheat seeds, plants, 
straw (except straw without heads that has been processed or 
manufactured into articles such as decorative wall hangings, clothing, 
or toys), chaff, and products of the milling process other than flour 
(i.e., bran, thistle sharps, and pollards) are designated as prohibited 
articles if they are from Afghanistan, India, Iraq, Mexico, or 
Pakistan, which are countries in which Karnal bunt is considered to 
exist. Prohibited articles may be imported into the United States only 
by the U.S. Department of Agriculture for experimental or scientific 
purposes in accordance with Sec. 319.59-2(c).
    On January 27, 1998, we published in the Federal Register (63 FR 
3844-3848, Docket No. 97-060-1) a proposal to amend the regulations to 
recognize a wheat-growing area within the Mexicali Valley of Mexico as 
being free from the wheat disease Karnal bunt. We also proposed to make 
several other changes in the regulations for the sake of clarity or 
accuracy.
    We solicited comments concerning our proposal rule for 60 days 
ending March 30, 1998. We received 10 comments by that date. The 
comments were from farmers, seed companies, a State agriculture agency, 
and crop improvement, grain promotion, and grain export associations. 
Three of the commenters supported the proposed rule, while the 
remaining commenters disagreed with the proposed rule or aspects of its 
supporting economic analyses. Their comments are discussed below.
    Comment: The proposed rule and its establishment of a pest-free 
area for Karnal bunt should not proceed on the grounds that it 
perpetuates the idea that Karnal bunt is a pest of quarantine 
significance. The proposal is at odds with the widening international 
recognition that Karnal bunt should be considered only as a wheat 
grading factor and not a quarantine-significant pest.
    Response: The position that Karnal bunt is a grading issue rather 
than a quarantine issue is one that has been discussed in international 
trade and scientific circles. However, given the present international 
perception of Karnal bunt as a quarantine issue, we do not believe that 
it would serve the interests of American agriculture to unilaterally 
remove our regulatory restrictions through which we seek to prevent the 
introduction and dissemination of Karnal bunt. Therefore, until such 
time as our trading partners view the disease as a grading issue, we 
believe that it will be necessary to continue our Karnal bunt-related 
regulatory activities and restrictions in order to protect our 
international agricultural standing.
    With that in mind, APHIS and its partners in the North American 
Plant Protection Organization have asked the United Nations Food and 
Agriculture Organization (FAO) to coordinate the establishment of 
guidelines for addressing minor pests such as Karnal bunt that can 
cause significant trade disruptions due to their status as regulated 
pests. The FAO has agreed to assume that coordination role and plans to 
assemble a panel of scientists to begin work on those guidelines in 
June 1998.
    Comment: APHIS cannot justify declaring the Mexicali Valley free 
from Karnal bunt as long as the Agency continues to regulate adjacent 
areas of Arizona and California for the same disease. Given that Karnal 
bunt can spread by natural, as well as artificial means, one cannot 
expect that the Mexicali Valley could escape inoculation by the disease 
during the period that contiguous areas became infected.
    Response: We believe that it is indeed possible for the Mexicali 
Valley to be declared free of Karnal bunt while a regulatory program 
for the same disease remains in place across the border in Arizona and 
California. While natural spread can certainly occur, it has been shown 
that the greatest risk of spreading Karnal bunt is through artificial 
means, especially through the movement of infected seed from one area 
to another.
    If taking measures to prevent the artificial spread of Karnal bunt 
was an inadequate response to the disease, as

[[Page 31098]]

the commenter suggests, then it is logical to assume that the disease 
would have spread throughout all the agricultural areas of California, 
Arizona, New Mexico, and Texas and beyond, and not just into the 
Mexicali Valley. However, APHIS and its State cooperators have been 
able to confine Karnal bunt to limited pockets of the wheat-producing 
areas of the southwestern United States by restricting the movement of 
seed, grain, and regulated articles such as cultivating equipment. 
Mexico protects the Mexicali Valley's Karnal bunt free status by 
employing similar regulatory strategies to prevent the artificial 
spread of Karnal bunt. Additionally, the fact that an international 
border lies between the regulated areas in the United States and the 
Mexicali Valley helped prevent the spread of Karnal bunt into the 
Mexicali Valley by eliminating the influence of factors that played a 
role in the spread of Karnal bunt through the southwestern United 
States, such as the unrestricted movement of seed, grain, and 
cultivating and harvesting equipment.
    Comment: The proposed rule appears to be supported by available 
data, but we are concerned that APHIS would grant Karnal bunt free 
status to the Mexicali Valley while Mexico refuses to apply the same 
standards and continues to prohibit the importation of wheat from areas 
of California that are outside the Karnal bunt regulated areas in that 
State.
    Response: The proposed rule and this final rule deal with the 
Karnal bunt status of the Mexicali Valley. While we acknowledge that 
the U.S. Department of Agriculture is working with Mexican plant health 
authorities to resolve their remaining questions regarding the Karnal 
bunt status of California, the issue of U.S. wheat exports to Mexico is 
outside the scope of this rulemaking. In addition, to maintain 
restrictions in light of the area's demonstrated freedom from Karnal 
bunt would run counter to our obligations under international trade 
agreements.
    Comment: We are uncertain as to the intensity of the surveys that 
were conducted to establish the Mexicali Valley's Karnal bunt status. 
In addition, Karnal bunt may spread into the Mexicali Valley by natural 
means despite the Mexican regulatory policies designed to exclude the 
disease. Therefore, to ensure the Mexicali Valley remains free from 
Karnal bunt, there should be continued testing and review of the 
program.
    Response: There will be continued monitoring and review of the 
Karnal bunt status of the Mexicali Valley as called for by the 
commenter. The Mexican plant health regulations establishing the 
Mexicali Valley as a Karnal bunt free area require the State-level 
plant protection organizations in Baja California and Sonora (the 
States in which the free area is located) to cooperate with Mexican 
Federal plant protection authorities to establish a yearly sampling 
program. Samples must be collected in the field during the growing 
season, as well as at grain elevators after harvest, and the samples 
must be sent to an officially approved laboratory to be examined for 
spores. We believe that the required sampling and testing program, 
along with the restriction on the movement into the free area of 
articles that present a risk of disseminating Karnal bunt, will serve 
to protect the Karnal bunt free status of the Mexicali Valley. In the 
event that Karnal bunt is detected in the free area, the Mexican plant 
health regulations call for the immediate application of phytosanitary 
measures to respond to the situation, at which point APHIS would 
suspend imports of wheat from the affected area until the extent of the 
outbreak is delimited and a determination is made regarding the Karnal 
bunt status of the Mexicali Valley.
    Comment: The prohibition on the importation of wheat grown in the 
Mexicali Valley should remain in place unless there is ``a long term 
continuing rigid inspection that could absolutely guarantee'' the 
wheat's freedom from Karnal bunt.
    Response: As noted in the response to the previous comment, there 
will be a program of continued surveillance and monitoring to ensure 
that the Mexicali Valley remains free from Karnal bunt. No inspection 
system, however well designed and thorough, could ever ``absolutely 
guarantee'' that wheat or any other commodity is free from a pest or 
disease. To demand an absolute guarantee from Mexico would be to set a 
zero risk standard that cannot be attained by Mexico, the United 
States, or any other country that exports agricultural products. If 
zero tolerance for pest risk were the standard applied to international 
trade in agricultural commodities, it is quite likely that no country 
would ever be able to export a fresh agricultural commodity to any 
other country. There will always be some degree of pest risk associated 
with the movement of agricultural products; APHIS' goal is to reduce 
that risk to an insignificant level.
    Comment: The economic analysis presented in the proposed rule 
assumes that the economic impact of the rule would be spread among all 
the wheat growers across the United States, resulting in, at worst, a 
loss of about $100 per farm. Because growers in the Mexicali Valley 
will almost certainly begin producing durum-variety wheat in order to 
compete in the same markets as growers in the southwestern United 
States, it is much more likely that the economic impact of the rule 
will be felt almost exclusively in the southwestern United States, and 
far more acutely than predicted in the economic analysis.
    Response: As the commenter has noted, our examination of potential 
economic impacts in the proposed rule's economic analysis did not focus 
on any particular wheat-producing region in the United States. Rather, 
our economic analysis considered the potential effects that the 
importation of wheat from the Mexicali Valley could have on the 
domestic wheat industry as a whole. We took that broader approach 
because the available U.S. and Mexicali Valley wheat production data 
did not give us any reason to believe that any particular U.S. wheat-
producing region would be disproportionately affected by the proposed 
entry of Mexicali Valley wheat.
    The commenter's assertion that the economic impact of the rule will 
be felt almost exclusively in the southwestern United States is based 
on the presumption that growers in the Mexicali Valley will almost 
certainly begin producing durum-variety wheat in order to compete in 
the same markets as growers in the southwestern United States. Durum 
wheat does indeed account for a large share of wheat production in the 
southwestern United States--in 1996, approximately 42 percent of the 
wheat produced in Arizona and California was durum wheat, with winter 
wheat making up the remaining 58 percent. As noted in the proposed 
rule, the 1994 through 1996 averages for wheat class, production share, 
and use distribution of Mexicali Valley wheat indicate that durum 
variety wheat accounted for an average of only 2.23 percent of Mexicali 
Valley wheat production. Although we acknowledge the possibility that 
growers in the Mexicali Valley may decide to raise more durum wheat in 
order to compete with growers in the southwestern United States, we are 
unaware of any market or other incentives that would propel a large-
scale increase in durum production. Therefore, we do not believe that 
Mexicali Valley growers will increase their durum production from its 
current level of 2.23 percent to the levels envisioned by the 
commenter. For that reason, we continue to believe that the economic 
analysis presented in the

[[Page 31099]]

proposed rule adequately met its stated purpose of considering the 
potential effects on the domestic wheat industry of the importation of 
wheat from the Mexicali Valley.
    Comment: The economic analysis presented in the proposed rule 
states that the total economic cost of wheat production in the United 
States averages $155 per acre and compares that to an average total 
economic cost of $227.60 to $247.50 in Mexico to reach a conclusion 
that the costs of production in the Mexicali Valley are much higher 
than in the United States. The actual cost of irrigated production in 
the southwestern United States--the area that will likely be impacted 
almost exclusively by the rule--is approximately $350 per acre, roughly 
$100 higher than Mexicali Valley production costs.
    Response: As explained in the response to the previous comment, our 
economic analysis was based on available data, and not on the 
assumption that declaring the Mexicali Valley to be free from Karnal 
bunt would lead growers there to shift their choice of wheat variety 
almost exclusively to durum. Further, we could not accurately assess 
the costs of U.S. durum wheat production by looking exclusively at the 
cost of irrigated production in the southwestern United States. To gain 
an appreciation for the costs associated with the production of durum 
variety wheat in the United States, we need to consider the Northern 
Plains region, where approximately three quarters of U.S.-grown durum 
wheat is produced, and on the Pacific region, where the remaining 
quarter of U.S.-grown durum wheat is produced.
    The average costs of wheat production in the United States were 
$154.52, $170.03 and $180.48 per acre in 1994, 1995, and 1996, 
respectively, but, as the commenter notes, wheat production costs vary 
by region. The production costs in the Northern Plains region, which 
includes North Dakota, the largest U.S. producer of durum wheat, were 
$143.19 per acre/$4.44 per bushel in 1994, $156.66 per acre/$5.74 per 
bushel in 1995, and $168.37 per acre/$6.26 per bushel in 1996. For 
those same years, the production costs in the Pacific region, which 
includes Arizona and California, were $271.07 per acre/$2.93 per 
bushel, $303.19 per acre/$3.31 per bushel, and $344.78 per acre/$3.65 
per bushel, respectively. The production costs cited for the Northern 
Plains and Pacific regions are the full ownership costs and include the 
costs of general farm overhead, capital replacement, and land, as well 
as the costs of variable inputs such as seed, fertilizer, labor, etc. 
The higher per-acre production costs and lower per-bushel production 
costs in the Pacific region are attributable in large measure to the 
greater use of irrigation, and the resulting higher yields, in that 
region. For 1996, the weighted production cost for all U.S. durum-
producing areas was about $211.86 per acre/$4.86 per bushel.
    The 1996 average variable input cost for durum wheat production in 
the United States ranged from $1.95 per bushel in the Pacific region to 
$3.35 per bushel in the Northern Plains region; the weighted average 
cost for the two regions was $3.00 per bushel, compared to $2.47 to 
$3.54 per bushel in the Mexicali Valley.
    It is important to note that the production costs cited for the 
Mexicali Valley in the proposed rule were for variable inputs only and 
did not include general farm overhead, capital replacement, and land 
costs, which we were unable to obtain, so the full average cost of 
production in the Mexicali Valley is actually higher than the figures 
cited. As a result, growers in the Mexicali Valley would not enjoy the 
$100 per acre production cost advantage envisioned by the commenter. In 
the unlikely event that the production share of durum wheat in the 
Mexicali Valley increased significantly from its current average of 
2.23 percent, we consider that the economic impact of the entry of 
Mexicali Valley growers into direct competition with U.S. growers for 
the domestic durum wheat market would be minimal.
    Therefore, based on the rationale set forth in the proposed rule 
and in this document, we are adopting the provisions of the proposal as 
a final rule without change.

Effective Date

    This is a substantive rule that relieves restrictions and, pursuant 
to the provisions of 5 U.S.C. 553, may be made effective less than 30 
days after publication in the Federal Register. This rule recognizes a 
wheat-growing area in the Mexicali Valley of Mexico as being free from 
the wheat disease Karnal bunt. This will eliminate certain restrictions 
on the importation into the United States of wheat seed, straw, and 
other wheat products from the Karnal bunt free area of the Mexicali 
Valley. Therefore, the Administrator of the Animal and Plant Health 
Inspection Service has determined that this rule should be effective 
upon publication in the Federal Register.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. The rule 
has been determined to be significant for the purposes of Executive 
Order 12866 and, therefore, has been reviewed by the Office of 
Management and Budget.
    This rule amends the wheat diseases regulations by recognizing a 
wheat-growing area within the Mexicali Valley of Mexico as being free 
from the wheat disease Karnal bunt. This change is based on surveys 
conducted by Mexican plant health authorities in that area of the 
Mexicali Valley since 1990 that have shown the area to be free from 
Karnal bunt, and on the enforcement by Mexican authorities of 
restrictions designed to protect the area from the introduction of 
Karnal bunt. This change in the regulations will remove certain 
restrictions on the importation into the United States of wheat seed, 
straw, and other wheat products from the Karnal bunt free area of the 
Mexicali Valley.
    This rule primarily affects wheat growers in the United States. 
There were 292,464 farms growing wheat in the United States in 1992, 
and 96 percent of those farms would be considered small entities. 
(According to the standard set by the Small Business Administration for 
agricultural producers, a producer with less than $0.5 million annually 
in sales qualifies as a small entity.) We have, therefore, examined the 
potential economic impact of this rule on small entities, as required 
by the Regulatory Flexibility Act, and in doing so, have assessed the 
anticipated costs and benefits of this rule, as required by Executive 
Order 12866.
    The United States produced an average of 2,330 million bushels of 
wheat per year between 1992 and 1996. Of this amount, hard red winter 
wheat (grown primarily in Kansas, Oklahoma, and Texas) accounted for 
about 39 percent of production; hard red spring wheat (grown primarily 
in North Dakota, Minnesota, and Montana) accounted for about 24 percent 
of production; soft red winter wheat (grown primarily in Missouri, 
Illinois, and Ohio) accounted for about 19 percent of production; white 
wheat (grown primarily in Washington and Oregon) accounted for about 14 
percent of production; and durum wheat (grown primarily in North 
Dakota, Arizona, California, and Montana) accounted for about 4 percent 
of production.
    The United States is a net exporter of wheat, accounting for about 
11.4 percent of world wheat production and

[[Page 31100]]

approximately 32 percent of world wheat exports. Of the average 2,330 
million bushels of wheat produced per year between 1992 and 1996, an 
average of 51 percent of that wheat was exported from the United 
States, while wheat imports have accounted for less than 1 percent of 
the total U.S. wheat supply in recent years.
    Mexico produced an average of about 137 million bushels of wheat 
per year between 1994 and 1996, most of which was grown in the States 
of Baja California, Guanajuato, Sinaloa, and Sonora. Mexico is a net 
importer of wheat, having imported in 1996 an amount of wheat equal to 
about 53 percent of production while exporting less than 4 percent of 
production; imports made up about 35 percent of Mexico's total wheat 
supply in 1996.
    The Mexicali Valley is located in two of Mexico's leading wheat-
producing States, Baja California and Sonora. The Mexicali Valley 
produced 445,967 metric tons of wheat in 1995; about 53 percent 
(236,171 metric tons) of that wheat was shipped to markets elsewhere in 
Mexico. Nearly all of the Mexicali Valley's wheat is sown in October 
and November and harvested from late May to early July. Table 1 shows 
the classes of wheat grown in the Mexicali Valley between 1994 and 1996 
and the average production share and use distribution of each class.

    Table 1: Wheat Class, Production Share, and Use Distribution of Mexicali Valley Wheat; 1994-1996 Averages   
----------------------------------------------------------------------------------------------------------------
                                               Production                Use distribution (percent)             
                 Wheat class                     share    ------------------------------------------------------
                                               (percent)       Food          Feed          Seed         Other   
----------------------------------------------------------------------------------------------------------------
Hard Red Winter.............................         61.3          65            25             3.2          6.8
White.......................................         36.2          61.5          24.6           2.6         11.3
Durum.......................................          2.2          38.5           2.1          58.8          0.6
Soft Red Winter.............................          0.3          33.2          13.9          36           16.9
----------------------------------------------------------------------------------------------------------------

    Between 1994 and 1997, producers in the Mexicali Valley shipped an 
average of 9 million bushels each year to other markets in Mexico; we 
have used that amount in Table 2, below, as an estimate of the total 
amount of wheat potentially available for export to U.S. markets.

   Table 2: Potential Impact in the United States of the Redirection of Mexicali Valley Wheat to U.S. Markets   
                                          (Price Elasticity Is -0.63).                                          
----------------------------------------------------------------------------------------------------------------
                                             Percentage of Mexicali Valley-origin wheat shipments diverted from 
                                                    other (domestic or export) markets to the U.S. market       
                                           ---------------------------------------------------------------------
                                                 20            40            60            80            100    
----------------------------------------------------------------------------------------------------------------
Imports (millions of bushels).............         1.8          3.6           5.4           7.2           9     
Percent change in price...................        -0.09        -0.17         -0.27          -.036        -0.45  
Percent change in quantity................        -0.04        -0.08         -0.13         -0.17         -0.22  
Decrease in producer surplus (millions of                                                                       
 dollars).................................        (5.92)      (11.83)       (17.75)       (23.66)       (29.56) 
Increase in consumer surplus (millions of                                                                       
 dollars).................................         5.92        11.84         17.77         23.70         29.64  
Total surplus (millions of dollars).......         0.003        0.0119        0.0268        0.0477        0.0745
----------------------------------------------------------------------------------------------------------------

    Table 2 summarizes the estimated economic impacts, based on a price 
elasticity of -0.63, in the United States of different levels of wheat 
exports from the Mexicali Valley and of the estimated producer losses 
and consumer gains that would result. For example, a 20 percent 
diversion of Mexicali Valley wheat production from markets in other 
countries or the domestic Mexican market to the United States would be 
expected to result in a price decrease of 0.09 percent in the United 
States. U.S. producers would lose about $5.92 million (which, when 
distributed among the 292,464 wheat farms noted above, amounts to about 
$20.25 per farm), while consumers would gain about the same amount, for 
a net benefit in this scenario of about $3,000. At the other end of the 
spectrum, a 100 percent diversion of Mexicali Valley wheat production 
from other markets to the United States would be expected to result in 
a price decrease of 0.45 percent in the United States. U.S. wheat 
producers would lose about $29.56 million (or about $101.00 per farm), 
while consumers would gain about $29.64 million, for a net benefit in 
this scenario of about $74,500. In all cases, consumer gains slightly 
outweigh producer losses.
    How likely even a 20 percent diversion of Mexicali Valley wheat to 
the U.S. market will be, however, is unclear. The production area of 
the Mexicali Valley is closer to markets in the United States than it 
is to markets in central Mexico, which means that lower transportation 
costs may encourage Mexicali Valley producers to ship their wheat to 
the United States. However, the Mexican government is considering a 
transportation subsidy for growers in northwestern Mexico to offset the 
transportation advantage that growers in central Mexico have in 
marketing their crops in Mexico City. Such a subsidy may encourage 
Mexicali Valley producers to sell their wheat in Mexico.
    Prices for Mexicali Valley wheat may well prove to be a determining 
factor with regard to the level of exports, as the costs of production 
in the Mexicali Valley are much higher than U.S. production costs. The 
cost of Mexicali Valley wheat averaged between $2.47 and $3.54 per 
bushel, with total economic costs (which include fertilizers, 
irrigation, harvest costs, interest on credit, etc.) ranging between 
$227.60 to $247.50 per acre. The cost of wheat grown in the United 
States, on the other hand, averaged $2.47 per bushel, with total 
economic costs averaging $155 per acre. With its higher production 
costs and the added cost of transportation across the border into the 
United States, it may prove difficult for

[[Page 31101]]

Mexicali Valley wheat to compete in the U.S. market.
    The actual extent of any decrease in wheat prices in the United 
States resulting from this rule will depend to a great degree upon the 
size of the price elasticity of demand, the magnitude of the change in 
supply, and the size of the baseline price. For lower price 
elasticities, both losses and gains will be higher. We expect that the 
amount of wheat exported from the Mexicali Valley will not be large and 
will not, therefore, change wheat production and consumption patterns 
in the United States. Further, the increase in wheat supplies in the 
United States from an increase in imports from Mexico will likely be 
offset to some extent by an increase in exports of wheat from the 
United States to Mexico. Nevertheless, allowing the importation of 
wheat from the Mexicali Valley will likely have a net positive impact 
on the overall economy, since consumer benefits at any level of imports 
will be slightly higher than producer losses.
    The only significant alternative to this rule was to make no 
changes in the wheat diseases regulations, i.e., to continue to 
prohibit the importation of wheat and wheat products from Mexico. We 
rejected that alternative because we believe that Mexico has 
demonstrated that the wheat-growing areas of the Mexicali Valley are 
free from Karnal bunt, which means that there is no longer any 
biological justification for that area of Mexico to be listed with the 
countries and localities considered to be affected with Karnal bunt. 
Maintaining a prohibition on the importation of wheat and wheat 
products from the Mexicali Valley in light of that area's demonstrated 
freedom from Karnal bunt would run counter to the United States' 
obligations under international trade agreements and would likely be 
challenged through the World Trade Organization. Conversely, declaring 
the wheat-growing areas of the Mexicali Valley free from Karnal bunt 
will likely have a beneficial effect on international trade in general, 
and trade between the United States and Mexico in particular, by 
reaffirming the United States' continuing commitment to using 
scientifically valid principles as the basis for regulation.
    Under these circumstances, the Administrator of the Animal and 
Plant Health Inspection Service has determined that this action will 
not have a significant economic impact on a substantial number of small 
entities.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws and 
regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
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 final rule have been 
approved by the Office of Management and Budget (OMB). The assigned OMB 
control number is 0579-0132.

List of Subjects in 7 CFR Part 319

    Bees, Coffee, Cotton, Fruits, Honey, Imports, Incorporation by 
reference, Nursery Stock, Plant diseases and pests, Quarantine, 
Reporting and recordkeeping requirements, Rice, Vegetables.

    Accordingly, we are amending 7 CFR part 319 as follows:

PART 319--FOREIGN QUARANTINE NOTICES

    1. The authority citation for part 319 continues to read as 
follows:

    Authority: 7 U.S.C. 150dd, 150ee, 150ff, 151-167, 450, 2803, and 
2809; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.2(c).


Sec. 319.8-10  [Amended]

    2. In Subpart--Foreign Cotton and Covers, Sec. 319.8-10(d) is 
amended by removing the words ``Sec. 319.59 (notice of quarantine No. 
59 relating to the flag smut disease)'' and adding the words 
``Sec. 319.59-2(a)(2) of this part'' in their place, and footnote 5 and 
its reference in the text are removed.


Sec. 319.8-11  [Amended]

    3. In Subpart--Foreign Cotton and Covers, Sec. 319.8-11(a), in the 
introductory text of the paragraph, footnote 6 and its reference in the 
text are redesignated as footnote 5.


Sec. 319.8-17  [Amended]

    4. In Subpart--Foreign Cotton and Covers, Sec. 319.8-17(d), 
footnote 7 and its reference in the text are redesignated as footnote 
6.
    5. The authority citation for ``Subpart--Wheat Diseases'' is 
removed.


Sec. 319.59  [Amended]

    6. In Subpart--Wheat Diseases, Sec. 319.59 is amended as follows:
    a. In paragraph (a), in the first sentence, the reference 
``Sec. 319.59-2(b)'' is removed and the reference ``Sec. 319.59-2(c)'' 
is added in its place.
    b. In paragraph (a), in the last sentence, the reference 
``Sec. 319.59-2(a)'' is removed and the reference ``Sec. 319.59-2 (a) 
and (b)'' is added in its place, and the reference ``Sec. 319.59-2(b)'' 
is removed and the reference ``Sec. 319.59-2(c)'' is added in its 
place.
    c. In paragraph (b), in the first sentence, the words ``abandoned 
by the importer for destruction'' are removed and the words ``destroyed 
as deemed necessary by an inspector at the expense of the importer'' 
are added in their place.
    d. In paragraph (b), in the last sentence, the words ``abandoned 
for destruction by'' are removed and the words ``destroyed as deemed 
necessary by an inspector at the expense of'' are added in their place.
    7. In Subpart--Wheat Diseases, Sec. 319.59-2 is amended as follows:
    a. In the introductory text of paragraph (a), the words ``in 
paragraph (b)'' are removed and the words ``in paragraph (c)'' added in 
their place.
    b. In paragraph (a)(1)(i), the word ``Triticums'' is removed and 
the word ``Triticum'' added in its place.
    c. Paragraph (a)(2) is revised to read as set forth below.
    d. In paragraph (b)(2), the words ``(except for that portion of the 
Mexicali Valley described in paragraph (b)(3) of this section),'' are 
added after the word ``Mexico''.
    e. A new paragraph (b)(3) is added to read as set forth below.
    f. In paragraph (c)(2), the reference ``7 CFR 319.37-14(b)'' is 
removed and the reference ``Sec. 319.37-14(b) of this part'' added in 
its place.


Sec. 319.59-2  Prohibited articles.

    (a) * * *
    (2) Afghanistan, Algeria, Armenia, Australia, Azerbaijan, 
Bangladesh, Belarus, Bulgaria, Chile, China, Cyprus, Egypt, Estonia, 
Falkland Islands, Georgia, Greece, Guatemala, Hungary, India, Iran, 
Iraq, Israel, Italy, Japan, Kazakstan, Kyrgyzstan, Latvia, Libya, 
Lithuania, Moldova, Morocco, Nepal, North Korea, Oman, Pakistan, 
Portugal, Romania, Russia, Spain, Tajikistan, Tanzania, Tunisia, 
Turkey, Turkmenistan, South Africa, South Korea, Ukraine, Uzbekistan, 
and Venezuela.
    (b) * * *
    (3) The following area of the Mexicali Valley in Mexico has been 
determined to be free from Karnal bunt: Those portions of the 
municipality of Mexicali, in the State of Baja California, and the 
municipality of San Luis Rio Colorado, in the State of Sonora, that are 
included in the Distrito de Desarrollo Rural (Rural Development 
District) 002 Rio Colorado.

[[Page 31102]]

Except for wheat (Triticum spp.) plants, which are prohibited 
importation under Sec. 319.37-2(a) (see Poaceae) of this part, any 
articles described in paragraph (b)(1) of this section that are from 
that designated area may be imported into the United States subject to 
the following conditions:
    (i) The articles are offered for entry at the port of Calexico, CA; 
and
    (ii) The articles offered for entry are made available for 
examination by an inspector and remain at the port until released, or 
authorized further movement pending release, by an inspector; and
    (iii) The articles are accompanied by a phytosanitary certificate 
issued by the Mexican national plant protection organization that 
certifies that the articles are from the area of the Mexicali Valley 
described in this paragraph and remained within that area prior to and 
during their movement to the United States.
* * * * *
    8. In Subpart--Packing Materials, Sec. 319.69(b)(1) is revised to 
read as follows:


319.69  Notice of quarantine.

* * * * *
    (b) * * *
    (1) Cereal straw, hulls, and chaff (such as oats, barley, and rye) 
from all countries, except rice straw, hulls, and chaff, which are 
prohibited importation from all countries by paragraph (a)(1) of this 
section, and except wheat straw, hulls, and chaff, which are restricted 
importation by Sec. 319.59 of this part from any country or locality 
listed in Sec. 319.59-2 of this part.
* * * * *
    Done in Washington, DC, this 4th day of June, 1998.
Charles P. Schwalbe,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 98-15337 Filed 6-4-98; 3:22 pm]
BILLING CODE 3410-34-P