[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Proposed Rules]
[Pages 3505-3511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1198]


 ========================================================================
 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. 66, No. 10 / Tuesday, January 16, 2001 / 
Proposed Rules  

[[Page 3505]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 301

[Docket No. 96-016-33]
RIN 0579-AA83


Karnal Bunt; Compensation for the 1999-2000 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 1999-2000 crop season. The payment of 
compensation is necessary in order to reduce the economic effect 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: We invite you to comment on this docket. We will consider all 
comments that we receive by March 19, 2001.

ADDRESSES: Please send your comment and three copies to:
    Docket No. 96-016-33, Regulatory Analysis and Development, PPD, 
APHIS, Suite 3C03, 4700 River Road, Unit 118, Riverdale, MD 20737-1238
    Please state that your comment refers to Docket No. 96-016-33.
    You may read any comments that we receive on this docket in our 
reading room. The reading room is located in room 1141 of the USDA 
South Building, 14th Street and Independence Avenue, SW., Washington, 
DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through 
Friday, except holidays. To be sure someone is there to help you, 
please call (202) 690-2817 before coming.
    APHIS documents published in the Federal Register, and related 
information, including the names of organizations and individuals who 
have commented on APHIS rules, are available on the Internet at http://www.aphis.usda.gov/ppd/rad/webrepor.html.

FOR FURTHER INFORMATION CONTACT: Dr. Vedpal S. Malik, National Karnal 
Bunt Coordinator, PPQ, APHIS, 4700 River Road Unit 134, Riverdale, MD 
20737-1236; (301) 734-6774.

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 25, 1999 (64 FR 34109-34113, Docket No. 96-016-35), the Animal and 
Plant Health Inspection Service (APHIS) amended the regulations by 
adding compensation provisions for 1997-1998 crop season wheat.\1\ That 
final rule made compensation available 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 1997-1998 crop season. These 
provisions are in Sec. 301.89-15, ``Compensation for growers, handlers, 
and seed companies in the 1996-1997 and 1997-1998 crop seasons,'' and 
Sec. 301.89-16, ``Compensation for grain storage facilities, flour 
millers, and National Survey participants for the 1996-1997 and 1997-
1998 crop seasons.''
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    \1\ The 1997-1998 crop season is that season in which wheat was 
harvested in 1998. The 1999-2000 crop season is that season in which 
wheat is harvested in 2000.
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    APHIS did not propose to provide compensation for the 1998-1999 
crop season. Surveys conducted in 1999 determined that no Karnal bunt 
host crops harvested in 1999 in the regulated area were positive for 
Karnal bunt. Therefore, no growers, handlers, seed companies, owners of 
grain storage facilities, flour millers, or participants in the 
National Karnal Bunt Survey incurred losses or expenses because of 
Karnal bunt for the 1998-1999 crop season. We have no reason to believe 
the situation will be different for this crop season. However, we are 
proposing to establish compensation provisions for the 1999-2000 crop 
season so that, if Karnal bunt is detected, compensation may be 
provided in a timely manner to those who incur losses or expenses.
    In the future, for crop seasons beyond the 1999-2000 crop season, 
APHIS will not propose to provide compensation for growers, handlers, 
or seed companies in regulated areas. These persons know they are in an 
area regulated for Karnal bunt at the time planting and contracting 
decisions are made for future crop seasons. Understanding the 
restrictions, growers, handlers, and seed companies can choose to alter 
their planting or contract decisions to avoid experiencing losses due 
to Karnal bunt. However, APHIS may, for crop seasons beyond the 1999-
2000 crop season, propose to provide compensation for National Karnal 
Bunt Survey participants whose wheat or grain storage facility tests 
positive for Karnal bunt. We expect, however, that the proposed 
compensation for these persons would be limited to one crop season.
    We expect that any costs to growers and other entities related to 
the Karnal bunt program in the 1999-2000 crop season would be similar 
to those incurred in the 1997-1998 crop season. Therefore, we are 
proposing to amend the regulations to provide the same compensation for 
the 1999-2000 crop season as was provided in the 1997-1998 crop season.

[[Page 3506]]

Compensation for Growers and Handlers

    Section 301.89-15 of the regulations provides compensation to 
growers and handlers for the loss in value of wheat seed and grain from 
the 1996-1997 and 1997-1998 crop seasons due to Karnal bunt. We are 
proposing to make these provisions apply also to growers, handlers, and 
seed companies in the 1999-2000 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 and 1997-1998 crop seasons, 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 or 1997-1998 crop 
was planted, or for which an Emergency Action Notification (PPQ Form 
523)(EAN) was issued after the 1996-1997 crop or 1997-1998 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 or 1997-1998 crop was 
planted, or for which an EAN was issued before the 1996-1997 crop or 
1997-1998 crop was planted, and that remained regulated or under an EAN 
at the time the wheat was sold. These areas are called ``areas under 
the first regulated crop season'' and ``previously regulated areas,'' 
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 previously regulated areas 
knew they were in an area regulated for Karnal bunt at the time 
planting and contracting decisions were made for the 1996-1997 or 1997-
1998 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 
1999-2000 crop season is the fifth regulated crop season for most 
regulated areas. The compensation provisions for areas under the first 
regulated crop season are in Sec. 301.89-15(a); the compensation 
provisions for previously regulated areas are in Sec. 301.89-15(b).

First Regulated Crop Season

    At the present time, there are no areas that meet the first 
regulated crop season criteria for 1999-2000. We would consider all 
areas that are currently regulated to be previously regulated areas for 
the 1999-2000 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 1999-2000 crop season, APHIS will regulate that area, and if 
the area is under a declaration of extraordinary emergency, 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 criteria 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. For the 1999-
2000 crop season, we would likewise state that growers, handlers, and 
seed companies in areas under the first regulated crop season criteria 
are eligible for compensation for 1999-2000 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 criteria 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 criteria 
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 1999-2000 
crop season if they have wheat grown in areas under the first regulated 
crop season criteria.

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 1999-2000 crop 
season.
    Under Sec. 301.89-15(b), growers, handlers, and seed companies in

[[Page 3507]]

previously regulated areas are eligible for compensation only for 1996-
1997 and 1997-1998 crop season wheat. We would amend Sec. 301.89-15(b) 
to state that growers, handlers, and seed companies in previously 
regulated areas are eligible for compensation under paragraph (b) only 
for 1996-1997, 1997-1998, and 1999-2000 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 1999-2000 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 1999-2000 
crop season.
    Under Sec. 301.89-15(c), we require 1996-1997 and 1997-1998 crop 
season claimants to submit a number of documents in support of their 
claim. We would require the same documents to be submitted for 1999-
2000 crop season compensation. The requirements in paragraph (c) are as 
follows:
    Growers, handlers, and seed companies who are eligible for 
compensation under either the provisions for the first regulated crop 
season or the provisions for 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 provisions 
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 provisions for previously regulated areas 
and 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 1999 final rule (Docket No. 96-016-35) also amended 
Sec. 301.89-16 of 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 or 1997-1998 crop season. We are proposing 
to amend Sec. 301.89-16 to make its provisions also apply to the 1999-
2000 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 and 
1997-1998 crop seasons, 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 1999-2000 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 1999-2000 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, and we paid

[[Page 3508]]

compensation to flour millers who incurred expenses for heat 
treatments. Under a final rule published in the Federal Register and 
effective on September 23, 1998 (63 FR 50747-50752), only millfeed 
resulting from the milling of wheat, durum wheat, or triticale that 
tested positive for Karnal bunt was required to be heat treated. 
However, we continued to provide compensation in the 1997-1998 crop 
season at the same rate. In Sec. 301.89-16, paragraph (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. We would make this same rate of compensation available to 
flour millers in the 1999-2000 crop season.
    Paragraph (b) provides for the 1996-1997 and 1997-1998 crop seasons 
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 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 1999-2000 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 tested 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 and 1997-
1998 crop seasons, 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 1999-2000 
crop season.
    For the 1996-1997 and 1997-1998 crop seasons, 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 
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 
EAN 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 1999-2000 crop season.
    For the 1997-1998 crop season, claims for compensation under 
Sec. Sec. 301.89-15 and 301.89-16 had to be received by FSA or APHIS on 
or before October 25, 1999. This is 120 days after the date the June 
1999 final rule was published in the Federal Register. For the 1999-
2000 crop season, we would likewise require that claims for 
compensation be received by APHIS on or before October 25, 2000, or the 
date that is 120 days after a final rule for this proposal is published 
in the Federal Register, whichever is later. 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 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 1999-2000 crop 
season because of the Karnal bunt quarantine and emergency actions.
    In accordance with Executive Order 12866, this analysis examines 
the economic effects of providing such compensation. The wheat industry 
within the regulated area is largely composed of businesses that can be 
considered ``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 requires agencies to consider the economic impact of rule changes 
on small entities.
    Upon detection of Karnal bunt in Arizona in March 1996, the U.S. 
Department of Agriculture (USDA) imposed Federal quarantine and 
emergency actions to prevent the interstate spread of the disease to 
other wheat producing areas in the United States. The unexpected 
discovery of

[[Page 3509]]

Karnal bunt and subsequent Federal emergency actions disrupted the 
production and marketing flows of wheat in the quarantined areas. It 
was estimated that the effect 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, USDA offered 
compensation to mitigate certain losses incurred by growers, handlers, 
seed companies, and other affected persons in the areas regulated for 
Karnal bunt in the 1995-1996, 1996-1997, and 1997-1998 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 1997-1998 crop season was effective and published in the 
Federal Register on June 25, 1999 (64 FR 34109-34113, Docket No. 96-
016-35). The compensation proposed in this document for the 1999-2000 
crop season is the same as the compensation offered in the 1997-1998 
crop season.
    We are proposing that growers, handlers, and seed companies would 
be eligible for compensation for losses in the 1999-2000 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 
in the 1997-1998 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 1999-2000 crop was planted. A 
previously regulated area is an area that became regulated for Karnal 
bunt before the 1999-2000 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 1999-2000 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 
1997-1998 crop season.
    At this time, all areas that are regulated for Karnal bunt are 
previously regulated areas. We estimate that approximately 37,000 acres 
of wheat will be harvested in 2000 from the regulated areas. In the 
1998-1999 crop season, no wheat grown in the regulated areas tested 
positive for Karnal bunt. However, if we assume that 1 percent of wheat 
harvested from the regulated areas will test positive for Karnal bunt 
in the 1999-2000 crop season, compensation for wheat grain and seed 
grown in currently regulated areas would total approximately $17,760 (1 
percent of 37,000 acres equals 370 acres; using an estimate of 80 
bushels per acre crop yield, 370 acres multiplied by 80 equals 29,600 
bushels; 29,600 bushels multiplied by $.60 per bushel equals $17,760). 
The estimated total compensation of $17,760 would translate into a per 
grower average of $987, assuming that 18 growers, or 10 percent of the 
approximately 180 growers in the regulated area, produce wheat that 
tests positive for Karnal bunt. The positive-testing wheat would have a 
market value of approximately $133,200 in the absence of Karnal bunt.
    To compare, compensation for wheat grain and seed in the 1996-1997 
crop season totaled 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. Compensation for 
wheat grain and seed in the 1997-1998 crop season is estimated to total 
about $1.9 million. Approximately 181,540 acres of wheat were harvested 
from regulated areas in the 1997-1998 crop season, with an infection 
rate of 3.2 percent. The increase in the amount of compensation paid in 
the 1997-1998 crop season resulted from wetter weather conditions, 
which increased the infection rate, and the fact that positive wheat 
was commingled with negative wheat in grain storage facilities in the 
certification area in Arizona before it was known that the wheat was 
positive.
    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 1999-2000 crop season. APHIS is in the process of 
conducting the 1999 National Karnal Bunt Survey in wheat producing 
areas throughout the United States. Any areas that become regulated in 
the 1999-2000 crop season as a result of the 1999 National Survey might 
be eligible for first regulated crop season compensation. During the 
1998 National Survey for Karnal bunt, none of the wheat samples tested 
positive for Karnal bunt.
    This proposed rule would also provide compensation under specific 
criteria 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 1999-2000 crop season or how many, if any, will be found to contain 
positive wheat during the 1999 National Survey for Karnal bunt. In the 
1996-1997 crop season, compensation paid for the decontamination of 
grain storage facilities totaled approximately $120,000. In the 1997-
1998 crop season, the compensation paid for the decontamination of 
grain storage facilities totaled approximately $10,700.
    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 1998-1999 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 
1999-2000 crop season, compensation for the heat treatment of millfeed 
in the 1999-2000 crop season would be minimal.
    The Regulatory Flexibility Act requires that agencies consider the 
economic effects of rules on small businesses, organizations, and 
governmental jurisdictions. Growers

[[Page 3510]]

and handlers of wheat grain and seed, and wheat seed companies, would 
be those most affected by this proposed rule. In the 1999-2000 crop 
season, we estimate that there are a total of 180 wheat growers in the 
regulated areas: 58 in Arizona, 23 in California, 27 in New Mexico, and 
72 in Texas. Most of these entities have total annual sales of less 
than $0.5 million, the Small Business Administration's threshold for 
classifying wheat producers as small entities. Accordingly, the 
economic effects of this proposed rule would largely be on small 
entities.
    This proposed rule is expected to have a positive economic effect 
on all affected entities, large and small, but few entities are likely 
to be affected. As indicated above, we estimate that only about 18 
growers in regulated areas would produce wheat that tests positive for 
Karnal bunt in the 1999-2000 crop season. 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 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-
33. Please send a copy of your comments to: (1) Docket No. 96-016-33, 
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. These comments will 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 .4938 hours per response.
    Respondents: Wheat growers, handlers, seed companies, owners of 
grain storage facilities, flour millers, FSA personnel.
    Estimated annual number of respondents: 18.
    Estimated annual number of responses per respondent: 4.5.
    Estimated annual number of responses: 81.
    Estimated total annual burden on respondents: 40 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, 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), and the introductory text to paragraph 
(c), to read as follows:


Sec. 301.89-15  Compensation for growers, handlers, and seed companies 
in the 1996-1997, 1997-1998, and 1999-2000 crop seasons.

    Growers, handlers, and seed companies are eligible to receive 
compensation from the United States Department of Agriculture (USDA) 
for the 1996-1997, 1997-1998, and 1999-2000 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

[[Page 3511]]

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, 1997-1998 crop season wheat, or 1999-2000 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 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, 1997-1998, or 1999-2000 
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 had to be received by FSA on 
or before October 8, 1998. Claims for compensation for the 1997-1998 
crop season had to be received by FSA on or before October 25, 1999. 
Claims for compensation for the 1999-2000 crop season must be received 
by FSA on or before October 25, 2000, or [the date 120 days after the 
final rule is published in the Federal Register], whichever is later. 
The Administrator may extend the deadline, upon request in specific 
cases, when unusual and unforeseen circumstances occur that 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:
* * * * *


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 and 1997-1998 
crop seasons'' and adding the words ``1996-1997, 1997-1998, and 1999-
2000 crop seasons'' in their place.
    b. In the introductory text, by removing the words `` 1996-1997 and 
1997-1998 crop seasons'' and adding the words ``1996-1997, 1997-1998, 
and 1999-2000 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 1997-1998 
crop season had to be received by APHIS on or before October 25, 1999. 
Claims for compensation for the 1999-2000 crop season must be received 
by APHIS on or before October 25, 2000, or [the date 120 days after the 
final rule is published in the Federal Register], whichever is later. 
The Administrator may extend these deadlines upon written request in 
specific cases, when unusual and unforeseen circumstances occur that 
prevent or hinder a claimant from requesting compensation on or before 
these dates.''

    Done in Washington, DC, this 9th day of January 2001.
Bobby R. Acord,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 01-1198 Filed 1-12-01; 8:45 am]
BILLING CODE 3410-34-P