[Federal Register Volume 63, Number 242 (Thursday, December 17, 1998)]
[Proposed Rules]
[Pages 69563-69569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33434]


 ========================================================================
 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. 63, No. 242 / Thursday, December 17, 1998 / 
Proposed Rules  

[[Page 69563]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 301

[Docket No. 96-016-31]
RIN 0579-AA83


Karnal Bunt; Compensation for the 1997-1998 Crop Season

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the Karnal bunt regulations to 
provide compensation for certain growers, handlers, seed companies, 
owners of grain storage facilities, flour millers, and participants in 
the National Karnal Bunt Survey who incur losses and expenses because 
of Karnal bunt in the 1997-1998 crop season. The payment of 
compensation is necessary in order to reduce the economic impact of the 
Karnal bunt regulations on affected wheat growers and other 
individuals, and to help obtain cooperation from affected individuals 
in efforts to contain and reduce the prevalence of Karnal bunt.

DATES: Consideration will be given only to comments received on or 
before February 16, 1999.

ADDRESSES: Please send an original and three copies of your comments to 
Docket No. 96-016-31, Regulatory Analysis and Development, PPD, APHIS, 
suite 3C03, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please 
state that your comments refer to Docket No. 96-016-31. Comments 
received may be inspected at USDA, room 1141, South Building, 14th 
Street and Independence Avenue SW., Washington, DC, between 8 a.m. and 
4:30 p.m., Monday through Friday, except holidays. Persons wishing to 
inspect comments are requested to call ahead on (202) 690-2817 to 
facilitate entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr. Mike Stefan, Operations Officer, 
Domestic and Emergency Operations, PPQ, APHIS, 4700 River Road Unit 
134, Riverdale, MD 20737-1236, (301) 734-8247; or E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    Karnal bunt is a fungal disease of wheat (Triticum aestivum), durum 
wheat (Triticum durum), and triticale (Triticum aestivum X Secale 
cereale), a hybrid of wheat and rye. Karnal bunt is caused by the smut 
fungus Tilletia indica (Mitra) Mundkur and is spread by spores, 
primarily through the movement of infected seed. In the absence of 
measures taken by the U.S. Department of Agriculture (USDA) to prevent 
its spread, the establishment of Karnal bunt in the United States could 
have significant consequences with regard to the export of wheat to 
international markets. The regulations regarding Karnal bunt are set 
forth in 7 CFR 301.89-1 through 301.89-16 (referred to below as the 
regulations). Among other things, the regulations define areas 
regulated for Karnal bunt and restrict the movement of certain 
regulated articles, including wheat seed and grain, from the regulated 
areas.
    In a final rule published in the Federal Register and effective on 
June 10, 1998 (63 FR 31593-31601, Docket No. 96-016-29), the Animal and 
Plant Health Inspection Service (APHIS) amended the regulations by 
adding compensation provisions for 1996-1997 crop season 
wheat.1 The final rule provides compensation for certain 
growers, handlers, seed companies, owners of grain storage facilities, 
flour millers, and participants in the National Karnal Bunt Survey who 
incurred losses and expenses because of Karnal bunt in the 1996-1997 
crop season. These provisions are in Sec. 301.89-15, ``Compensation for 
growers, handlers, and seed companies in the 1996-1997 crop season,'' 
and Sec. 301.89-16, ``Compensation for grain storage facilities, flour 
millers, and National Survey participants for the 1996-1997 crop 
season.''
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    \1\ The 1996-1997 crop season is that season in which wheat was 
harvested in 1997. The 1997-1998 crop season is that season in which 
wheat is harvested in 1998.
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    APHIS' regulatory program to control the spread of Karnal bunt is a 
continuing program. We expect that any costs to growers and other 
entities related to the Karnal bunt program in the 1997-1998 crop 
season will be similar to those incurred in the 1996-1997 crop season. 
Therefore, we are proposing to amend the regulations to provide the 
same compensation for the 1997-1998 crop season as was provided in the 
1996-1997 crop season.
Compensation for Growers and Handlers
    Section 301.89-15 of the regulations provides compensation to 
growers and handlers for the loss in value of 1996-1997 crop season 
wheat seed and grain due to Karnal bunt. We are proposing to make these 
provisions apply also to growers, handlers, and seed companies in the 
1997-1998 crop season.
    The compensation in Sec. 301.89-15 is for wheat grain, certified 
wheat seed, and wheat grown with the intention of producing certified 
wheat seed. The compensation calculation for certified wheat seed and 
wheat grown with the intention of producing certified wheat seed is the 
same as that offered for wheat grain. Requiring that wheat seed be 
certified or grown with the intention of producing certified wheat seed 
ensures that the compensation is limited to market-ready seed and will 
not be paid for seed in other stages of development. Further, the 
compensation in Sec. 301.89-15 is only for wheat that was tested by 
APHIS and found positive for Karnal bunt.
    For the 1996-1997 crop season, Sec. 301.89-15 provides two 
different levels of compensation for growers and handlers of positive 
wheat, depending on which of the following two sets of circumstances 
applies: (1) The wheat is from an area that became regulated for Karnal 
bunt after the 1996-1997 crop was planted, or for which an Emergency 
Action Notification (PPQ Form 523)(EAN) was issued after the 1996-1997 
crop was planted, and that remained regulated or under an EAN at the 
time the wheat was sold; or (2) the wheat is from an area that became 
regulated for Karnal bunt before the 1996-1997 crop was planted, or for 
which an EAN was issued before the 1996-1997 crop was planted, and that 
remained regulated or under an EAN at the time the wheat was sold. 
These

[[Page 69564]]

areas are called ``areas under the first regulated crop season'' and 
``areas under the second regulated crop season,'' respectively. 
Growers, handlers, and seed companies in areas under the first 
regulated crop season would not have known that their area was to 
become regulated for Karnal bunt at the time they made their planting 
and many of their contracting decisions, and would not have been 
prepared for the loss in value of their wheat due to Karnal bunt. 
Growers, handlers, and seed companies in areas under the second 
regulated crop season knew they were in an area regulated for Karnal 
bunt at the time planting and contracting decisions were made for the 
1996-1997 crop season. Understanding the restrictions, growers, 
handlers, and seed companies could have chosen to alter their planting 
or contract decisions to avoid experiencing losses due to Karnal bunt. 
The compensation provisions for areas under the first regulated crop 
season are in Sec. 301.89-15(a); the compensation provisions for areas 
under the second regulated crop season are in Sec. 301.89-15(b).
    The 1997-1998 crop season is the third regulated crop season for 
most regulated areas. In order to make the compensation in Sec. 301.89-
15 also apply to growers, handlers, and seed companies in the 1997-1998 
crop season, we would remove the designation of ``areas under the 
second regulated crop season'' in paragraph (b) and refer instead to 
``previously regulated areas.''

First Regulated Crop Season

    At the present time, there are no areas under the first regulated 
crop season for 1997-1998. We would consider all areas that are 
currently regulated to be previously regulated areas for the 1997-1998 
crop season. APHIS is continuing to monitor for Karnal bunt throughout 
wheat producing areas in the United States. If Karnal bunt is found to 
exist in an area outside the currently regulated areas during the 1997-
1998 crop season, APHIS will regulate that area, and growers and 
handlers would be eligible for compensation for the loss in value of 
their wheat in accordance with the provisions for areas under the first 
regulated crop season.
    Under Sec. 301.89-15(a), growers, handlers, and seed companies in 
areas under the first regulated crop season are eligible for 
compensation for 1996-1997 crop season wheat and for wheat inventories 
in their possession that were unsold at the time the area became 
regulated. For the 1997-1998 crop season, we would likewise state that 
growers, handlers, and seed companies in areas under the first 
regulated crop season are eligible for compensation for 1997-1998 crop 
season wheat and for wheat inventories in their possession that were 
unsold at the time the area became regulated for Karnal bunt.
    Under Sec. 301.89-15(a)(1), growers of wheat in an area under the 
first regulated crop season who sell wheat that was tested by APHIS and 
found positive for Karnal bunt prior to sale, or that was tested by 
APHIS and found positive for Karnal bunt after sale and the price 
received by the grower is contingent on the test results, are eligible 
to receive compensation as follows:
     If the wheat was grown under contract and a price was 
determined in the contract before the area where the wheat was grown 
became regulated for Karnal bunt, compensation will equal the contract 
price minus the actual price received by the grower; or
     If the wheat was not grown under contract or a price was 
determined in the contract after the area where the wheat was grown 
became regulated for Karnal bunt, compensation will equal the estimated 
market price for the relevant class of wheat (meaning type of wheat, 
such as durum or hard red winter) minus the actual price received by 
the grower.
    For both situations described above, compensation for positive-
testing wheat will not exceed $1.80 per bushel under any circumstances.
    Under Sec. 301.89-15(a)(2), handlers and seed companies who sell 
wheat grown in an area under the first regulated crop season are 
eligible to receive compensation only if the wheat was not tested by 
APHIS prior to purchase by the handler or seed company, but was tested 
by APHIS and found positive for Karnal bunt after purchase by the 
handler or seed company, as long as the price to be paid is not 
contingent on the test results. Compensation will equal the estimated 
market price for the relevant class of wheat minus the actual price 
received by the handler or seed company. However, compensation for 
positive-testing wheat will not exceed $1.80 per bushel under any 
circumstances.
    Estimated market prices used in the compensation calculations 
described above for growers and handlers are calculated by APHIS for 
each class of wheat, taking into account the prices offered by relevant 
terminal markets (animal feed, milling, or export) during the harvest 
months for the area, with adjustments for transportation and other 
handling costs. Separate estimated market prices are calculated for 
certified wheat seed and wheat grown with the intention of producing 
certified wheat seed, and wheat grain.
    This proposal would make the provisions in Sec. 301.89-15(a)(1) and 
(a)(2) apply to growers, handlers, and seed companies in the 1997-1998 
crop season if they have wheat grown in areas under the first regulated 
crop season.

Previously Regulated Areas

    As discussed previously in this document, all of the areas 
currently listed as regulated areas in the Karnal bunt regulations, and 
all the areas currently regulated for Karnal bunt under EAN's, would be 
considered to be previously regulated areas for the 1997-1998 crop 
season.
    Under Sec. 301.89-15(b), growers, handlers, and seed companies in 
areas under the second regulated crop season are eligible for 
compensation only for 1996-1997 crop season wheat. We would amend 
Sec. 301.89-15(b) to state that growers, handlers, and seed companies 
in previously regulated areas would be eligible for compensation under 
paragraph (b) only for 1996-1997 and 1997-1998 crop season wheat.
    Under Sec. 301.89-15(b), growers who sell wheat are eligible to 
receive compensation only if the wheat was tested by APHIS and found 
positive for Karnal bunt prior to sale, or was tested by APHIS and 
found positive for Karnal bunt after sale and the price received by the 
grower is contingent on the test results. Compensation will be at the 
rate of $.60 per bushel of positive testing wheat. Handlers and seed 
companies who sell wheat are eligible to receive compensation only if 
the wheat was not tested by APHIS prior to purchase, but was tested by 
APHIS and found positive for Karnal bunt after purchase, as long as the 
price to be paid is not contingent on the test results. Compensation 
will be at the rate of $.60 per bushel of positive testing wheat. This 
proposal would make this same compensation available to growers, 
handlers, and seed companies in the 1997-1998 crop season.

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

    In past crop seasons, the Farm Service Agency (FSA) of USDA has 
processed Karnal bunt compensation claims from growers, handlers, and 
seed companies for the loss in value of their wheat. Under this 
proposal, FSA would continue to process such claims in the 1997-1998 
crop season.
    Under Sec. 301.89-15(c), we require 1996-1997 crop season claimants 
to submit a number of documents in support of their claim. We would

[[Page 69565]]

require the same documents to be submitted for 1997-1998 crop season 
compensation. The requirements in paragraph (c) are as follows:
    Growers, handlers, and seed companies who are eligible for 
compensation under either the first regulated crop season compensation 
or under the second regulated crop season compensation (proposed to be 
designated as ``previously regulated areas'') need to provide the same 
documents for claiming compensation, with a few exceptions. Growers, 
handlers, and seed companies must submit a Karnal Bunt Compensation 
Claim form, provided by FSA. If the wheat was grown in an area that is 
not a regulated area, but for which an EAN has been issued, the grower, 
handler, or seed company must submit a copy of the EAN. Growers, 
handlers, and seed companies must also submit a copy of the Karnal bunt 
certificate issued by APHIS that shows the Karnal bunt test results, 
and verification as to the actual (not estimated) weight of the wheat 
that tested positive (such as a copy of a facility weigh ticket, or 
other verification). For compensation claims for wheat seed, a grower 
or seed company must submit documentation showing that the wheat is 
either certified seed or was grown with the intention of producing 
certified seed. This documentation may include one or more of the 
following types of documents: an application to the State seed 
certification agency for field inspection; a bulk sale certificate; 
certification tags or labels issued by the State seed certification 
agency; or a document issued by the State seed certification agency 
verifying that the wheat is certified seed.
    In addition, growers must submit a copy of the receipt for the 
final sale of the wheat, showing the total bushels sold and the total 
price received by the grower. Growers compensated under the regulations 
for areas in the first regulated crop season must submit a copy of the 
contract the grower has for the wheat, if the wheat was under contract. 
Growers compensated under the regulations for the second regulated crop 
season (proposed to be designated as ``previously regulated areas'') 
who sold wheat that was not yet tested by APHIS must submit 
documentation showing that the price paid to the grower was contingent 
on test results (this information could appear on the receipt for the 
final sale of the wheat or on a contract the grower has for the wheat, 
if the wheat was under contract).
    In addition, handlers and seed companies must provide the FSA 
office with a copy of the receipt for the final sale of the wheat. The 
handler or seed company must submit documentation showing that the 
price paid or to be paid to the grower is not contingent on the test 
results (this documentation could appear on the receipt for the 
purchase of the wheat from the grower or on a contract for the purchase 
of the wheat, if the wheat was purchased under contract).

Compensation for Grain Storage Facilities, Flour Millers, and 
National Survey Participants

    The June 1998 final rule (Docket No. 96-016-29) also added a new 
Sec. 301.89-16 to the regulations. This section sets forth compensation 
provisions for the decontamination of grain storage facilities, heat 
treatment of millfeed, and losses to National Karnal Bunt Survey 
participants whose wheat or grain storage facility tests positive for 
Karnal bunt in the 1996-1997 crop season. We are proposing to amend 
Sec. 301.89-16 to make its provisions also apply to the 1997-1998 crop 
season.

Decontamination of Grain Storage Facilities

    As part of the Karnal bunt program, APHIS may require the 
decontamination of grain storage facilities that have been determined 
by APHIS to be contaminated with Karnal bunt. For the 1996-1997 crop 
season, Sec. 301.89-16(a) provides that owners of grain storage 
facilities that are in States where the Secretary has declared an 
extraordinary emergency, and who have decontaminated their grain 
storage facilities pursuant to either an EAN issued by an inspector or 
a letter issued by an inspector ordering decontamination of the 
facilities, are eligible to be compensated, on a one-time-only basis 
for each facility for each covered crop year wheat, for up to 50 
percent of the direct cost of decontamination. However, compensation 
will not exceed $20,000 per grain storage facility. General cleanup, 
repair, and refurbishment costs are excluded from compensation. Under 
this proposed rule, this same compensation would be available to owners 
of grain storage facilities in the 1997-1998 crop season.
    Paragraph (a) also states that compensation payments will be issued 
by APHIS and sets forth provisions for claiming compensation. To claim 
compensation, the owner of the grain storage facility must submit to an 
inspector records demonstrating that decontamination was performed on 
all structures, conveyances, or materials ordered by APHIS to be 
decontaminated. The records must include a copy of the EAN or the 
letter from an inspector ordering decontamination, contracts with 
individuals or companies hired to perform the decontamination, receipts 
for equipment and materials purchased to perform the decontamination, 
time sheets for employees of the grain storage facility who performed 
activities connected to the decontamination, and any other 
documentation that helps show the cost to the owner and that 
decontamination has been completed. These provisions would also apply 
to compensation claims in the 1997-1998 crop season.

Treatment of Millfeed

    In the 1996-1997 crop season, millfeed made from wheat produced in 
certain regulated areas was required to be heat treated in order to 
help prevent the spread of Karnal bunt. Under the June 1998 final rule, 
Sec. 301.89-16(b) provides that flour millers who, in accordance with a 
compliance agreement with APHIS, heat treat millfeed that is required 
by APHIS to be heat treated are eligible to be compensated at the rate 
of $35.00 per short ton of millfeed.
    Under a final rule published in the Federal Register and effective 
on September 23, 1998 (63 FR 50747-50752, Docket No. 96-016-32), the 
requirement for heat treating millfeed was revised, so that only 
millfeed resulting from the milling of wheat, durum wheat, or triticale 
that tested positive for Karnal bunt will require heat treatment. 
Therefore, because heat treatment of millfeed continues to be a 
requirement in the regulations, albeit under different criteria than in 
previous crop seasons, we are proposing that the compensation in 
Sec. 301.89-16(b) for the 1996-1997 crop season would also be available 
to flour millers in the 1997-1998 crop season.
    Paragraph (b) provides for the 1996-1997 crop season that the 
amount of millfeed compensated will be calculated by multiplying the 
weight of wheat from the regulated area received by the miller by 25 
percent (the average percent of millfeed derived from a short ton of 
grain). Compensation payments will be issued by APHIS. To claim 
compensation, the miller must submit to an inspector verification as to 
the actual (not estimated) weight of the wheat (such as a copy of a 
facility weigh ticket or a copy of the bill of lading for the wheat, if 
the actual weight appears on those documents, or other verification). 
Flour millers must also submit verification that the millfeed was heat 
treated (such as a copy of the limited permit under which the wheat was

[[Page 69566]]

moved to a treatment facility and a copy of the bill of lading 
accompanying that movement; or a copy of PPQ Form 700 (which includes 
certification of processing) signed by the inspector who monitors the 
mill). This proposed rule would make these same provisions apply to 
compensation claims for heat treatment of millfeed in the 1997-1998 
crop season.

National Karnal Bunt Survey Participants

    Each year since 1996, APHIS has conducted a National Karnal Bunt 
Survey to demonstrate to our trading partners that areas producing 
wheat for export are free of the disease. In past crop seasons, we 
offered compensation to participants in the Survey whose wheat or grain 
storage facility tests positive for Karnal bunt, if the participant is 
in a State in which the Secretary of Agriculture has declared an 
extraordinary emergency for Karnal bunt. For the 1996-1997 crop season, 
the provisions for this compensation are in Sec. 301.89-16(c). We are 
proposing to make these provisions also apply to participants in the 
National Karnal Bunt Survey in the 1997-1998 crop season.
    For the 1996-1997 crop season, paragraph (c) provides that, if a 
grain storage facility participating in the National Karnal Bunt Survey 
tests positive for Karnal bunt, the facility will be regulated, and may 
be ordered decontaminated, pursuant to either an EAN issued by an 
inspector or a letter issued by an inspector ordering decontamination 
of the facility. If the Secretary has declared an extraordinary 
emergency in the State in which the grain storage facility is located, 
the owner will be eligible for compensation as follows:
     The owner of the grain storage facility will be 
compensated for the loss in value of positive wheat. Compensation will 
equal the estimated market price for the relevant class of wheat minus 
the actual price received for the wheat. The estimated market price 
will be calculated by APHIS for each class of wheat, taking into 
account the prices offered by relevant terminal markets (animal feed, 
milling, or export) during the relevant time period for that facility, 
with adjustments for transportation and other handling costs. However, 
compensation will not exceed $1.80 per bushel under any circumstances. 
Compensation payments for loss in value of wheat will be issued by the 
Farm Service Agency (FSA). To claim compensation, the owner of the 
facility must submit to the local FSA office a Karnal Bunt Compensation 
Claim form, provided by FSA. The owner of the facility must also submit 
to FSA a copy of the Emergency Action Notification or letter from an 
inspector under which the facility is or was quarantined; verification 
as to the actual (not estimated) weight of the wheat (such as a copy of 
a facility weigh ticket or a copy of the bill of lading for the wheat, 
if the actual weight appears on those documents, or other 
verification); and a copy of the receipt for the final sale of the 
wheat, showing the total bushels sold and the total price received by 
the owner of the grain storage facility.
     The owner of the facility will be compensated on a one 
time only basis for each grain storage facility for each covered crop 
year wheat for the direct costs of decontamination of the facility at 
the same rate described under Sec. 301.89-16(a) (discussed earlier) (up 
to 50 percent of the direct costs of decontamination, not to exceed 
$20,000 per grain storage facility). Compensation payments for 
decontamination of grain storage facilities will be issued by APHIS, 
and claims for compensation must be submitted in accordance with the 
provisions in Sec. 301.89-16(a).
    Under this proposed rule, the compensation in Sec. 301.89-16(c) 
described above would also be available to National Karnal Bunt Survey 
participants in the 1997-1998 crop season.
    For the 1996-1997 crop season, claims for compensation under 
Secs. 301.89-15 and 301.89-16 must be received by FSA or APHIS on or 
before October 8, 1998. This is 120 days after the date the June 1998 
final rule was published in the Federal Register. For the 1997-1998 
crop season, we would likewise require that claims for compensation be 
received by APHIS on or before the date that is 120 days after a final 
rule for this proposal is published in the Federal Register. The 
Administrator may extend this deadline, upon written request in 
specific cases, when unusual and unforeseen circumstances occur that 
prevent or hinder a claimant from requesting compensation on or before 
that date.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The rule has been determined to be economically significant for the 
purposes of Executive Order 12866 and, therefore, has been reviewed by 
the Office of Management and Budget.
    This proposed rule would establish compensation provisions for 
certain growers, handlers, seed companies, owners of grain storage 
facilities, flour millers, and participants in the National Karnal Bunt 
Survey to mitigate losses and expenses incurred in the 1997-1998 crop 
season because of the Karnal bunt quarantine and emergency actions.
    In accordance with Executive Order 12866, this analysis examines 
the economic impact of providing such compensation. The wheat industry 
within the regulated area is largely composed of businesses that can be 
considered as ``small'' according to guidelines established by the 
Small Business Administration. Therefore, this analysis also fulfills 
the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), which require agencies to consider the economic impact of rule 
changes on small entities.
    Upon detection of Karnal bunt in Arizona in March 1996, Federal 
quarantine and emergency actions were imposed to prevent the interstate 
spread of the disease to other wheat producing areas in the United 
States. The unexpected discovery of Karnal bunt and subsequent Federal 
emergency actions disrupted the production and marketing flows of wheat 
in the quarantined areas. It was estimated that the impact of Karnal 
bunt and subsequent Federal actions on the wheat industry totaled $44 
million in the 1995-1996 crop season.
    In order to alleviate some of the economic hardships and to ensure 
full and effective compliance with the quarantine program, compensation 
to mitigate certain losses has been offered to growers, handlers, seed 
companies, and other affected persons in the areas regulated for Karnal 
bunt in the 1995-1996 and 1996-1997 crop seasons. The payment of 
compensation is in recognition of the fact that, while benefits from 
regulation accrue to a large portion of the wheat industry outside the 
regulated areas, the regulatory burden falls predominately on a small 
segment of the affected wheat industry within the regulated areas. A 
final rule promulgating compensation regulations for the 1996-1997 crop 
season was effective and published in the Federal Register on June 10, 
1998 (63 FR 31593-31601, Docket No. 96-016-29). The compensation 
proposed in this document for the 1997-1998 crop season is the same as 
the compensation offered in the 1996-1997 crop season.
    We are proposing that growers, handlers, and seed companies would 
be eligible for compensation for losses in the 1997-1998 crop season 
due to wheat grain or seed that tested positive for Karnal bunt. Only 
positive-testing wheat would be eligible for compensation because of 
the lack of restrictions on the movement of negative testing wheat. As

[[Page 69567]]

in the 1996-1997 crop season, we are proposing different levels of 
compensation depending on whether the wheat was grown in an area under 
the first regulated crop season or in a previously regulated area. An 
area in the first regulated crop season is an area that became 
regulated for Karnal bunt after the 1997-1998 crop was planted. A 
previously regulated area is an area that became regulated for Karnal 
bunt before the 1997-1998 crop was planted. Currently, there are no 
regulated areas in the first regulated crop season.
    For growers, handlers, and seed companies in previously regulated 
areas, the proposed compensation for positive grain or seed would be 
$.60 per bushel. Growers, handlers, and seed companies in the first 
regulated crop season would be eligible for compensation at a rate not 
to exceed $1.80 per bushel. These compensation rates would apply to 
both wheat grain and seed. The difference in compensation rates 
reflects the fact that affected entities in areas under the first 
regulated crop season would not have known that their area was to 
become regulated for Karnal bunt at the time that they made planting 
and contracting decisions, and would not have been prepared for the 
loss in value of their wheat due to Karnal bunt. Growers and handlers 
in previously regulated areas knew they were in an area regulated for 
Karnal bunt at the time that they made planting and contracting 
decisions for the 1997-1998 crop season. Given the restrictions, 
growers and handlers could have chosen to alter planting or contract 
decisions to avoid experiencing potential losses due to Karnal bunt. 
The proposed compensation rates are the same as those offered in the 
1996-1997 crop season.
    At this time, all areas that are regulated for Karnal bunt are 
previously regulated areas. We estimate that approximately 181,000 
acres of wheat will be harvested in 1998 from the regulated areas. In 
the 1996-1997 crop season, less than 1 percent of wheat grown in the 
regulated areas tested positive for Karnal bunt. If we assume that 1 
percent of wheat harvested from the regulated areas will test positive 
for Karnal bunt in the 1997-1998 crop season, compensation for wheat 
grain and seed grown in currently regulated areas would total 
approximately $87,000 (1 percent of 181,000 acres equals 1,810 acres; 
using an estimate of 80 bushels per acre crop yield, 1,810 acres 
multiplied by 80 equals 144,800 bushels; 144,800 bushels multiplied by 
$.60 per bushel equals $86,880). This positive-testing wheat would have 
a market value of approximately $724,000 in the absence of Karnal bunt.
    To compare, compensation for wheat grain and seed in the 1996-1997 
crop season is expected to total about $149,000. Approximately 122,000 
acres of wheat were harvested from regulated areas in the 1996-1997 
crop season, with a Karnal bunt infection rate of 0.8 percent. Seventy-
nine percent of the positive wheat was harvested from an area in San 
Saba County, TX, which was in the first regulated crop season; this 
positive wheat will receive a maximum of $1.80 per bushel for the 1996-
1997 crop season. The remaining 21 percent of positive wheat was from 
an area in the second crop season of regulation; this positive wheat 
will receive $.60 per bushel compensation for the 1996-1997 crop 
season.
    We cannot determine at this time whether there will be areas 
eligible for compensation under the provisions for first regulated crop 
season areas in the 1997-1998 crop season. APHIS is in the process of 
conducting the 1998 National Karnal Bunt Survey in wheat producing 
areas throughout the United States. Any areas that become regulated in 
the 1997-1998 crop season as a result of the 1998 National Survey would 
be eligible for first regulated crop season compensation. During the 
1997 National Survey for Karnal bunt, only 2 of approximately 12,000 
wheat samples tested positive for Karnal bunt.
    This proposed rule would also provide compensation for the 
decontamination of grain storage facilities found with positive wheat, 
the treatment of millfeed, and participants in the National Karnal Bunt 
Survey whose wheat or grain storage facility is found to be positive 
for Karnal bunt. Compensation for decontamination of grain storage 
facilities will be on a one-time-only basis for up to 50 percent of the 
cost of decontamination, not to exceed $20,000. We cannot determine at 
this time how many, if any, grain storage facilities in currently 
regulated areas will store positive wheat in the 1997-1998 crop season, 
or how many, if any, will be found to contain positive wheat during the 
1998 National Survey for Karnal bunt. In the 1996-1997 crop season, 10 
facilities that stored seed testing positive for Karnal bunt were found 
in San Saba County, TX, and we estimate that compensation for the 
decontamination of these facilities will total a maximum of $120,000.
    We are also proposing compensation for the cost of heat treating 
millfeed that APHIS requires to be treated, at the rate of $35.00 per 
short ton of millfeed. No millfeed made from wheat grown in the 
regulated area was required to be heat treated in the 1996-1997 crop 
season. Under current regulations, APHIS requires heat treatment of 
millfeed made from wheat that tested positive for Karnal bunt. Since 
little or no positive wheat is expected to be used for milling in the 
1997-1998 crop season, compensation for the heat treatment of millfeed 
in the 1997-1998 crop season would be minimal or unnecessary.
    There are approximately 15,000 acres within the areas regulated for 
Karnal bunt where planting of wheat was prohibited in the 1997-1998 
crop season. This proposed rule does not contain provisions for 
compensating growers in areas where wheat planting is prohibited, since 
many of these growers rotate wheat with other crops that are not 
prohibited from being planted. These growers generate revenue from 
these other crops, effectively minimizing the impact of the prohibition 
on planting wheat.
    The Regulatory Flexibility Act requires that agencies consider the 
economic impact of rule changes on small businesses, organizations, and 
governmental jurisdictions. Growers and handlers of wheat grain and 
seed, and wheat seed companies, are those most affected by this 
proposed rule. It is estimated that there are a total of 712 wheat 
growers in the regulated areas: 378 in Arizona, 48 in California, 200 
in New Mexico, and 86 in Texas. There are 149 growers in surveillance 
areas, and 563 growers in regulated areas lying beyond surveillance 
areas.2 Most of these entities have total sales of less than 
$0.5 million, the Small Business Administration's threshold for 
classifying wheat producers as small entities. Accordingly, the 
economic impact of this proposed rule would largely be on small 
entities.
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    \2\ The 149 growers in surveillance areas are distributed as 
follows: 54 in Arizona, 27 in California, 68 in Texas, and none in 
New Mexico. The 563 growers in regulated areas lying beyond 
surveillance areas are distributed as follows: 324 in Arizona, 21 in 
California, 200 in New Mexico, and 18 in Texas.
---------------------------------------------------------------------------

    This proposed rule is expected to have a positive economic impact 
on all affected entities, large and small. Compensation for the loss in 
value of wheat that tests positive for Karnal bunt serves to encourage 
compliance with testing requirements within the regulated area, thereby 
aiding in the preservation of an important wheat growing region in the 
United States. It also serves to encourage participation in the 
National Karnal Bunt Survey.
    Under these circumstances, the Administrator of the Animal and 
Plant Health Inspection Service has determined that this action would 
not

[[Page 69568]]

have a significant economic impact on a substantial number of small 
entities.

Executive Order 12372

    This program/activity is listed in the Catalog of Federal Domestic 
Assistance under No. 10.025 and is subject to Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) All State 
and local laws and regulations that are inconsistent with this rule 
will be preempted; (2) no retroactive effect will be given to this 
rule; and (3) administrative proceedings will not be required before 
parties may file suit in court challenging this rule.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection or 
recordkeeping requirements included in this proposed rule have been 
submitted for approval to the Office of Management and Budget (OMB). 
Please send written comments to the Office of Information and 
Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, 
DC 20503. Please state that your comments refer to Docket No. 96-016-
31. Please send a copy of your comments to: (1) Docket No. 96-016-31, 
Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River 
Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, 
OCIO, USDA, room 404-W, 14th Street and Independence Avenue SW., 
Washington, DC 20250. A comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication of this 
proposed rule.
    This proposed rule would require that growers, handlers, and seed 
companies provide certain records and documents to a local Farm Service 
Agency (FSA) office in order to claim compensation. Growers, handlers, 
and seed companies would also have to sign a Karnal Bunt Compensation 
Claim form (completed by an employee of FSA using the information 
provided by the claimant) to attest that the information on the form is 
accurate and to demonstrate acceptance of the compensation. This 
proposal would also require that owners of grain storage facilities and 
flour millers provide certain records and documents to an APHIS 
inspector in order to claim compensation. This information collection 
is necessary in order to verify a claimant's eligibility for 
compensation and to provide documentation of compensation claims and 
payments.
    We are soliciting comments from the public (as well as affected 
agencies) concerning our proposed information collection and 
recordkeeping requirements. We need this outside input to help us:
    (1) Evaluate whether the proposed information collection is 
necessary for the proper performance of our agency's functions, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of our estimate of the burden of the 
proposed information collection, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the information collection on those who 
are to respond (such as through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission responses).
    Estimate of burden: Public reporting burden for this collection of 
information is estimated to average .506 hours per response.
    Respondents: Wheat growers, handlers, seed companies, owners of 
grain storage facilities, flour millers, FSA personnel.
    Estimated annual number of respondents: 38.
    Estimated annual number of responses per respondent: 1.921.
    Estimated annual number of responses: 73.
    Estimated total annual burden on respondents: 37 hours.
    Copies of this information collection can be obtained from; 
Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence 
Avenue SW., Washington, DC 20250.

List of Subjects in 7 CFR Part 301

    Agricultural commodities, Incorporation by reference, Plant 
diseases and pests, Quarantine, Reporting and recordkeeping 
requirements, Transportation.

    Accordingly, we propose to amend 7 CFR part 301 as follows:

PART 301--DOMESTIC QUARANTINE NOTICES

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

    Authority: 7 U.S.C. 147a, 150bb, 150dd, 150ee, 150ff, 161, 162, 
and 164-167; 7 CFR 2.22, 2.80, and 371.2(c).

    2. Section 301.89-15 would be amended by revising the section 
heading, the introductory text to the section, the introductory text to 
paragraph (a), paragraph (b), the introductory text to paragraph (c), 
and the last sentence of paragraph (c)(2), to read as follows:


Sec. 301.89-15  Compensation for growers, handlers, and seed companies 
in the 1996-1997 and 1997-1998 crop seasons.

    Growers, handlers, and seed companies are eligible to receive 
compensation from the United States Department of Agriculture (USDA) 
for the 1996-1997 and 1997-1998 crop seasons to mitigate losses or 
expenses incurred because of the Karnal bunt regulations and emergency 
actions, as follows:
    (a) Growers, handlers, and seed companies in areas under first 
regulated crop season. Growers, handlers, and seed companies are 
eligible to receive compensation for the loss in value of their wheat 
in accordance with paragraphs (a)(1) and (a)(2) of this section if: the 
wheat was grown in a State where the Secretary has declared an 
extraordinary emergency; and, the wheat was grown in an area of that 
State that became regulated for Karnal bunt after the crop was planted, 
or for which an Emergency Action Notification (PPQ Form 523) was issued 
after the crop was planted; and, the wheat was grown in an area that 
remained regulated or under Emergency Action Notification at the time 
the wheat was sold. Growers, handlers, and seed companies in areas 
under the first regulated crop season are eligible for compensation for 
1996-1997 crop season wheat or 1997-1998 crop season wheat (as 
appropriate) and for wheat inventories in their possession that were 
unsold at the time the area became regulated. The compensation provided 
in this section is for wheat grain, certified wheat seed, and wheat 
grown with the intention of producing certified wheat seed.
* * * * *
    (b) Growers, handlers, and seed companies in previously regulated 
areas. Growers, handlers, and seed companies are eligible to receive 
compensation for the loss in value of their wheat in accordance with 
paragraphs (b)(1) and (b)(2) of this section if: the wheat was grown in 
a State where the Secretary has declared an extraordinary emergency; 
and, the wheat was grown in an area of that State that became regulated 
for Karnal bunt before the crop was planted, or for which an Emergency 
Action Notification (PPQ Form 523) was issued before the crop was 
planted; and, the

[[Page 69569]]

wheat was grown in an area that remained regulated or under Emergency 
Action Notification at the time the wheat was sold. Growers, handlers, 
and seed companies in previously regulated areas are eligible for 
compensation only for 1996-1997 or 1997-1998 crop season wheat. The 
compensation provided in this section is for wheat grain, certified 
wheat seed, and wheat grown with the intention of producing certified 
wheat seed.
    (1) Growers. Growers of wheat in a previously regulated area who 
sell wheat that was tested by APHIS and found positive for Karnal bunt 
prior to sale, or that was tested by APHIS and found positive for 
Karnal bunt after sale and the price received by the grower is 
contingent on the test results, are eligible to receive compensation at 
the rate of $.60 per bushel of positive testing wheat.
    (2) Handlers and seed companies. Handlers and seed companies who 
sell wheat grown in a previously regulated area are eligible to receive 
compensation only if the wheat was not tested by APHIS prior to 
purchase by the handler, but was tested by APHIS and found positive for 
Karnal bunt after purchase by the handler or seed company, as long as 
the price to be paid by the handler or seed company is not contingent 
on the test results. Compensation will be at the rate of $.60 per 
bushel of positive testing wheat.
    (c) To claim compensation. Compensation payments to growers, 
handlers, and seed companies under paragraphs (a) and (b) of this 
section will be issued by the Farm Service Agency (FSA). Claims for 
compensation for the 1996-1997 crop season must be received by FSA on 
or before October 8, 1998. Claims for compensation for the 1997-1998 
crop season must be received by FSA on or before [the date 120 days 
after the final rule is published in the Federal Register]. The 
Administrator may extend the deadline, upon request in specific cases, 
when unusual and unforeseen circumstances occur which prevent or hinder 
a claimant from requesting compensation on or before these dates. To 
claim compensation, a grower, handler, or seed company must complete 
and submit to the local FSA county office the following documents:
* * * * *
    (2) Growers. * * * Growers compensated under paragraph (b)(1) of 
this section (previously regulated areas) whose wheat was not tested 
prior to sale must submit documentation showing that the price paid to 
the grower was contingent on test results (such as a copy of the 
receipt for the final sale of the wheat or a copy of the contract the 
grower has for the wheat, if this information appears on those 
documents).
* * * * *


Sec. 301.89-16  [Amended]

    3. Section 301.89-16 would be amended as follows:
    a. In the heading, by removing the words ``1996-1997 crop season'' 
and adding the words ``1996-1997 and 1997-1998 crop seasons'' in their 
place.
    b. In the introductory text, by removing the words ``1996-1997 crop 
season'' and adding the words ``1996-1997 and 1997-1998 crop seasons'' 
in their place.
    c. In paragraphs (a), (b), (c)(1), and (c)(2), by removing the last 
two sentences in each paragraph and by adding three sentences in their 
place to read as follows: ``Claims for compensation for the 1996-1997 
crop season must be received by APHIS on or before October 8, 1998. 
Claims for compensation for the 1997-1998 crop season must be received 
by APHIS on or before [the date 120 days after the final rule is 
published in the Federal Register]. The Administrator may extend these 
deadlines upon written request in specific cases, when unusual and 
unforeseen circumstances occur which prevent or hinder a claimant from 
requesting compensation on or before these dates.''

    Done in Washington, DC, this 14th day of December 1998.
Joan M. Arnoldi,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 98-33434 Filed 12-16-98; 8:45 am]
BILLING CODE 3410-34-P