This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

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REGISTER issue of each week.

Rules and Regulations Federal Register

31097

Vol. 63, No. 109

Monday, June 8, 1998

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

7 CFR Part 319

[Docket No. 97–060–2]

RIN 0579–AA88

Karnal Bunt Status of the Mexicali

Valley of Mexico

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Final rule.

SUMMARY: We are amending the wheat

diseases regulations by recognizing a

wheat-growing area within the Mexicali

Valley of Mexico as being free from the

wheat disease Karnal bunt. Surveys

conducted by Mexican plant health

authorities in that area of the Mexicali

Valley since 1990 have shown the area

to be free from Karnal bunt, and

Mexican authorities are enforcing

restrictions designed to protect the area

from the introduction of Karnal bunt.

This change will have the effect of

removing certain restrictions on the

importation into the United States of

wheat seed, straw, and other wheat

products from the Karnal bunt free area

of the Mexicali Valley.

EFFECTIVE DATE: June 8, 1998.

FOR FURTHER INFORMATION CONTACT: Mr.

Peter M. Grosser, Senior Import

Specialist, Phytosanitary Issues

Management Team, PPQ, APHIS, USDA,

4700 River Road Unit 140, Riverdale,

MD 20737–1236; (301) 734–6799; fax

(301) 734–5786; e-mail:

pgrosser@aphis.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

The regulations in ‘‘Subpart—Wheat

Diseases’’ (7 CFR 319.59 through

319.59–2, referred to below as the

regulations) restrict the importation into

the United States of certain seeds,

plants, and plant products from certain

countries or localities in order to

prevent the introduction of foreign

strains of flag smut and Karnal bunt,

two fungal diseases of wheat (Triticum

spp.). Specific provisions relating to

foreign strains of flag smut are located

in paragraph (a) of § 319.59–2 of the

regulations, and specific provisions

concerning Karnal bunt are found in

paragraph (b) of that section.

Under § 319.59–2(b) of the

regulations, wheat seeds, plants, straw

(except straw without heads that has

been processed or manufactured into

articles such as decorative wall

hangings, clothing, or toys), chaff, and

products of the milling process other

than flour (i.e., bran, thistle sharps, and

pollards) are designated as prohibited

articles if they are from Afghanistan,

India, Iraq, Mexico, or Pakistan, which

are countries in which Karnal bunt is

considered to exist. Prohibited articles

may be imported into the United States

only by the U.S. Department of

Agriculture for experimental or

scientific purposes in accordance with

§ 319.59–2(c).

On January 27, 1998, we published in

the Federal Register (63 FR 3844–3848,

Docket No. 97–060–1) a proposal to

amend the regulations to recognize a

wheat-growing area within the Mexicali

Valley of Mexico as being free from the

wheat disease Karnal bunt. We also

proposed to make several other changes

in the regulations for the sake of clarity

or accuracy.

We solicited comments concerning

our proposal rule for 60 days ending

March 30, 1998. We received 10

comments by that date. The comments

were from farmers, seed companies, a

State agriculture agency, and crop

improvement, grain promotion, and

grain export associations. Three of the

commenters supported the proposed

rule, while the remaining commenters

disagreed with the proposed rule or

aspects of its supporting economic

analyses. Their comments are discussed

below.

Comment: The proposed rule and its

establishment of a pest-free area for

Karnal bunt should not proceed on the

grounds that it perpetuates the idea that

Karnal bunt is a pest of quarantine

significance. The proposal is at odds

with the widening international

recognition that Karnal bunt should be

considered only as a wheat grading

factor and not a quarantine-significant

pest.

Response: The position that Karnal

bunt is a grading issue rather than a

quarantine issue is one that has been

discussed in international trade and

scientific circles. However, given the

present international perception of

Karnal bunt as a quarantine issue, we do

not believe that it would serve the

interests of American agriculture to

unilaterally remove our regulatory

restrictions through which we seek to

prevent the introduction and

dissemination of Karnal bunt. Therefore,

until such time as our trading partners

view the disease as a grading issue, we

believe that it will be necessary to

continue our Karnal bunt-related

regulatory activities and restrictions in

order to protect our international

agricultural standing.

With that in mind, APHIS and its

partners in the North American Plant

Protection Organization have asked the

United Nations Food and Agriculture

Organization (FAO) to coordinate the

establishment of guidelines for

addressing minor pests such as Karnal

bunt that can cause significant trade

disruptions due to their status as

regulated pests. The FAO has agreed to

assume that coordination role and plans

to assemble a panel of scientists to begin

work on those guidelines in June 1998.

Comment: APHIS cannot justify

declaring the Mexicali Valley free from

Karnal bunt as long as the Agency

continues to regulate adjacent areas of

Arizona and California for the same

disease. Given that Karnal bunt can

spread by natural, as well as artificial

means, one cannot expect that the

Mexicali Valley could escape

inoculation by the disease during the

period that contiguous areas became

infected.

Response: We believe that it is indeed

possible for the Mexicali Valley to be

declared free of Karnal bunt while a

regulatory program for the same disease

remains in place across the border in

Arizona and California. While natural

spread can certainly occur, it has been

shown that the greatest risk of spreading

Karnal bunt is through artificial means,

especially through the movement of

infected seed from one area to another.

If taking measures to prevent the

artificial spread of Karnal bunt was an

inadequate response to the disease, as
31098 Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 /Rules and Regulations

the commenter suggests, then it is

logical to assume that the disease would

have spread throughout all the

agricultural areas of California, Arizona,

New Mexico, and Texas and beyond,

and not just into the Mexicali Valley.

However, APHIS and its State

cooperators have been able to confine

Karnal bunt to limited pockets of the

wheat-producing areas of the

southwestern United States by

restricting the movement of seed, grain,

and regulated articles such as

cultivating equipment. Mexico protects

the Mexicali Valley’s Karnal bunt free

status by employing similar regulatory

strategies to prevent the artificial spread

of Karnal bunt. Additionally, the fact

that an international border lies between

the regulated areas in the United States

and the Mexicali Valley helped prevent

the spread of Karnal bunt into the

Mexicali Valley by eliminating the

influence of factors that played a role in

the spread of Karnal bunt through the

southwestern United States, such as the

unrestricted movement of seed, grain,

and cultivating and harvesting

equipment.

Comment: The proposed rule appears

to be supported by available data, but

we are concerned that APHIS would

grant Karnal bunt free status to the

Mexicali Valley while Mexico refuses to

apply the same standards and continues

to prohibit the importation of wheat

from areas of California that are outside

the Karnal bunt regulated areas in that

State.

Response: The proposed rule and this

final rule deal with the Karnal bunt

status of the Mexicali Valley. While we

acknowledge that the U.S. Department

of Agriculture is working with Mexican

plant health authorities to resolve their

remaining questions regarding the

Karnal bunt status of California, the

issue of U.S. wheat exports to Mexico is

outside the scope of this rulemaking. In

addition, to maintain restrictions in

light of the area’s demonstrated freedom

from Karnal bunt would run counter to

our obligations under international

trade agreements.

Comment: We are uncertain as to the

intensity of the surveys that were

conducted to establish the Mexicali

Valley’s Karnal bunt status. In addition,

Karnal bunt may spread into the

Mexicali Valley by natural means

despite the Mexican regulatory policies

designed to exclude the disease.

Therefore, to ensure the Mexicali Valley

remains free from Karnal bunt, there

should be continued testing and review

of the program.

Response: There will be continued

monitoring and review of the Karnal

bunt status of the Mexicali Valley as

called for by the commenter. The

Mexican plant health regulations

establishing the Mexicali Valley as a

Karnal bunt free area require the Statelevel plant protection organizations in

Baja California and Sonora (the States in

which the free area is located) to

cooperate with Mexican Federal plant

protection authorities to establish a

yearly sampling program. Samples must

be collected in the field during the

growing season, as well as at grain

elevators after harvest, and the samples

must be sent to an officially approved

laboratory to be examined for spores.

We believe that the required sampling

and testing program, along with the

restriction on the movement into the

free area of articles that present a risk of

disseminating Karnal bunt, will serve to

protect the Karnal bunt free status of the

Mexicali Valley. In the event that Karnal

bunt is detected in the free area, the

Mexican plant health regulations call for

the immediate application of

phytosanitary measures to respond to

the situation, at which point APHIS

would suspend imports of wheat from

the affected area until the extent of the

outbreak is delimited and a

determination is made regarding the

Karnal bunt status of the Mexicali

Valley.

Comment: The prohibition on the

importation of wheat grown in the

Mexicali Valley should remain in place

unless there is ‘‘a long term continuing

rigid inspection that could absolutely

guarantee’’ the wheat’s freedom from

Karnal bunt.

Response: As noted in the response to

the previous comment, there will be a

program of continued surveillance and

monitoring to ensure that the Mexicali

Valley remains free from Karnal bunt.

No inspection system, however well

designed and thorough, could ever

‘‘absolutely guarantee’’ that wheat or

any other commodity is free from a pest

or disease. To demand an absolute

guarantee from Mexico would be to set

a zero risk standard that cannot be

attained by Mexico, the United States,

or any other country that exports

agricultural products. If zero tolerance

for pest risk were the standard applied

to international trade in agricultural

commodities, it is quite likely that no

country would ever be able to export a

fresh agricultural commodity to any

other country. There will always be

some degree of pest risk associated with

the movement of agricultural products;

APHIS’ goal is to reduce that risk to an

insignificant level.

Comment: The economic analysis

presented in the proposed rule assumes

that the economic impact of the rule

would be spread among all the wheat

growers across the United States,

resulting in, at worst, a loss of about

$100 per farm. Because growers in the

Mexicali Valley will almost certainly

begin producing durum-variety wheat in

order to compete in the same markets as

growers in the southwestern United

States, it is much more likely that the

economic impact of the rule will be felt

almost exclusively in the southwestern

United States, and far more acutely than

predicted in the economic analysis.

Response: As the commenter has

noted, our examination of potential

economic impacts in the proposed rule’s

economic analysis did not focus on any

particular wheat-producing region in

the United States. Rather, our economic

analysis considered the potential effects

that the importation of wheat from the

Mexicali Valley could have on the

domestic wheat industry as a whole. We

took that broader approach because the

available U.S. and Mexicali Valley

wheat production data did not give us

any reason to believe that any particular

U.S. wheat-producing region would be

disproportionately affected by the

proposed entry of Mexicali Valley

wheat.

The commenter’s assertion that the

economic impact of the rule will be felt

almost exclusively in the southwestern

United States is based on the

presumption that growers in the

Mexicali Valley will almost certainly

begin producing durum-variety wheat in

order to compete in the same markets as

growers in the southwestern United

States. Durum wheat does indeed

account for a large share of wheat

production in the southwestern United

States—in 1996, approximately 42

percent of the wheat produced in

Arizona and California was durum

wheat, with winter wheat making up the

remaining 58 percent. As noted in the

proposed rule, the 1994 through 1996

averages for wheat class, production

share, and use distribution of Mexicali

Valley wheat indicate that durum

variety wheat accounted for an average

of only 2.23 percent of Mexicali Valley

wheat production. Although we

acknowledge the possibility that

growers in the Mexicali Valley may

decide to raise more durum wheat in

order to compete with growers in the

southwestern United States, we are

unaware of any market or other

incentives that would propel a largescale increase in durum production.

Therefore, we do not believe that

Mexicali Valley growers will increase

their durum production from its current

level of 2.23 percent to the levels

envisioned by the commenter. For that

reason, we continue to believe that the

economic analysis presented in the
Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 /Rules and Regulations 31099

proposed rule adequately met its stated

purpose of considering the potential

effects on the domestic wheat industry

of the importation of wheat from the

Mexicali Valley.

Comment: The economic analysis

presented in the proposed rule states

that the total economic cost of wheat

production in the United States averages

$155 per acre and compares that to an

average total economic cost of $227.60

to $247.50 in Mexico to reach a

conclusion that the costs of production

in the Mexicali Valley are much higher

than in the United States. The actual

cost of irrigated production in the

southwestern United States—the area

that will likely be impacted almost

exclusively by the rule—is

approximately $350 per acre, roughly

$100 higher than Mexicali Valley

production costs.

Response: As explained in the

response to the previous comment, our

economic analysis was based on

available data, and not on the

assumption that declaring the Mexicali

Valley to be free from Karnal bunt

would lead growers there to shift their

choice of wheat variety almost

exclusively to durum. Further, we could

not accurately assess the costs of U.S.

durum wheat production by looking

exclusively at the cost of irrigated

production in the southwestern United

States. To gain an appreciation for the

costs associated with the production of

durum variety wheat in the United

States, we need to consider the Northern

Plains region, where approximately

three quarters of U.S.-grown durum

wheat is produced, and on the Pacific

region, where the remaining quarter of

U.S.-grown durum wheat is produced.

The average costs of wheat production

in the United States were $154.52,

$170.03 and $180.48 per acre in 1994,

1995, and 1996, respectively, but, as the

commenter notes, wheat production

costs vary by region. The production

costs in the Northern Plains region,

which includes North Dakota, the

largest U.S. producer of durum wheat,

were $143.19 per acre/$4.44 per bushel

in 1994, $156.66 per acre/$5.74 per

bushel in 1995, and $168.37 per acre/

$6.26 per bushel in 1996. For those

same years, the production costs in the

Pacific region, which includes Arizona

and California, were $271.07 per acre/

$2.93 per bushel, $303.19 per acre/$3.31

per bushel, and $344.78 per acre/$3.65

per bushel, respectively. The production

costs cited for the Northern Plains and

Pacific regions are the full ownership

costs and include the costs of general

farm overhead, capital replacement, and

land, as well as the costs of variable

inputs such as seed, fertilizer, labor, etc.

The higher per-acre production costs

and lower per-bushel production costs

in the Pacific region are attributable in

large measure to the greater use of

irrigation, and the resulting higher

yields, in that region. For 1996, the

weighted production cost for all U.S.

durum-producing areas was about

$211.86 per acre/$4.86 per bushel.

The 1996 average variable input cost

for durum wheat production in the

United States ranged from $1.95 per

bushel in the Pacific region to $3.35 per

bushel in the Northern Plains region;

the weighted average cost for the two

regions was $3.00 per bushel, compared

to $2.47 to $3.54 per bushel in the

Mexicali Valley.

It is important to note that the

production costs cited for the Mexicali

Valley in the proposed rule were for

variable inputs only and did not include

general farm overhead, capital

replacement, and land costs, which we

were unable to obtain, so the full

average cost of production in the

Mexicali Valley is actually higher than

the figures cited. As a result, growers in

the Mexicali Valley would not enjoy the

$100 per acre production cost advantage

envisioned by the commenter. In the

unlikely event that the production share

of durum wheat in the Mexicali Valley

increased significantly from its current

average of 2.23 percent, we consider

that the economic impact of the entry of

Mexicali Valley growers into direct

competition with U.S. growers for the

domestic durum wheat market would be

minimal.

Therefore, based on the rationale set

forth in the proposed rule and in this

document, we are adopting the

provisions of the proposal as a final rule

without change.

Effective Date

This is a substantive rule that relieves

restrictions and, pursuant to the

provisions of 5 U.S.C. 553, may be made

effective less than 30 days after

publication in the Federal Register.

This rule recognizes a wheat-growing

area in the Mexicali Valley of Mexico as

being free from the wheat disease Karnal

bunt. This will eliminate certain

restrictions on the importation into the

United States of wheat seed, straw, and

other wheat products from the Karnal

bunt free area of the Mexicali Valley.

Therefore, the Administrator of the

Animal and Plant Health Inspection

Service has determined that this rule

should be effective upon publication in

the Federal Register.

Executive Order 12866 and Regulatory

Flexibility Act

This rule has been reviewed under

Executive Order 12866. The rule has

been determined to be significant for the

purposes of Executive Order 12866 and,

therefore, has been reviewed by the

Office of Management and Budget.

This rule amends the wheat diseases

regulations by recognizing a wheatgrowing area within the Mexicali Valley

of Mexico as being free from the wheat

disease Karnal bunt. This change is

based on surveys conducted by Mexican

plant health authorities in that area of

the Mexicali Valley since 1990 that have

shown the area to be free from Karnal

bunt, and on the enforcement by

Mexican authorities of restrictions

designed to protect the area from the

introduction of Karnal bunt. This

change in the regulations will remove

certain restrictions on the importation

into the United States of wheat seed,

straw, and other wheat products from

the Karnal bunt free area of the Mexicali

Valley.

This rule primarily affects wheat

growers in the United States. There

were 292,464 farms growing wheat in

the United States in 1992, and 96

percent of those farms would be

considered small entities. (According to

the standard set by the Small Business

Administration for agricultural

producers, a producer with less than

$0.5 million annually in sales qualifies

as a small entity.) We have, therefore,

examined the potential economic

impact of this rule on small entities, as

required by the Regulatory Flexibility

Act, and in doing so, have assessed the

anticipated costs and benefits of this

rule, as required by Executive Order

12866.

The United States produced an

average of 2,330 million bushels of

wheat per year between 1992 and 1996.

Of this amount, hard red winter wheat

(grown primarily in Kansas, Oklahoma,

and Texas) accounted for about 39

percent of production; hard red spring

wheat (grown primarily in North

Dakota, Minnesota, and Montana)

accounted for about 24 percent of

production; soft red winter wheat

(grown primarily in Missouri, Illinois,

and Ohio) accounted for about 19

percent of production; white wheat

(grown primarily in Washington and

Oregon) accounted for about 14 percent

of production; and durum wheat (grown

primarily in North Dakota, Arizona,

California, and Montana) accounted for

about 4 percent of production.

The United States is a net exporter of

wheat, accounting for about 11.4

percent of world wheat production and
31100 Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 /Rules and Regulations

approximately 32 percent of world

wheat exports. Of the average 2,330

million bushels of wheat produced per

year between 1992 and 1996, an average

of 51 percent of that wheat was exported

from the United States, while wheat

imports have accounted for less than 1

percent of the total U.S. wheat supply

in recent years.

Mexico produced an average of about

137 million bushels of wheat per year

between 1994 and 1996, most of which

was grown in the States of Baja

California, Guanajuato, Sinaloa, and

Sonora. Mexico is a net importer of

wheat, having imported in 1996 an

amount of wheat equal to about 53

percent of production while exporting

less than 4 percent of production;

imports made up about 35 percent of

Mexico’s total wheat supply in 1996.

The Mexicali Valley is located in two

of Mexico’s leading wheat-producing

States, Baja California and Sonora. The

Mexicali Valley produced 445,967

metric tons of wheat in 1995; about 53

percent (236,171 metric tons) of that

wheat was shipped to markets

elsewhere in Mexico. Nearly all of the

Mexicali Valley’s wheat is sown in

October and November and harvested

from late May to early July. Table 1

shows the classes of wheat grown in the

Mexicali Valley between 1994 and 1996

and the average production share and

use distribution of each class.

TABLE 1: WHEAT CLASS, PRODUCTION SHARE, AND USE DISTRIBUTION OF MEXICALI VALLEY WHEAT; 1994–1996

AVERAGES

Wheat class

Production

share

(percent)

Use distribution (percent)

Food Feed Seed Other

Hard Red Winter ................................................................................. 61.3 65 25 3.2 6.8

White ................................................................................................... 36.2 61.5 24.6 2.6 11.3

Durum ................................................................................................. 2.2 38.5 2.1 58.8 0.6

Soft Red Winter .................................................................................. 0.3 33.2 13.9 36 16.9

Between 1994 and 1997, producers in

the Mexicali Valley shipped an average

of 9 million bushels each year to other

markets in Mexico; we have used that

amount in Table 2, below, as an

estimate of the total amount of wheat

potentially available for export to U.S.

markets.

Table 2: POTENTIAL IMPACT IN THE UNITED STATES OF THE REDIRECTION OF MEXICALI VALLEY WHEAT TO U.S. MARKETS

(PRICE ELASTICITY IS ¥0.63).

Percentage of Mexicali Valley-origin wheat shipments diverted from other

(domestic or export) markets to the U.S. market

20 40 60 80 100

Imports (millions of bushels) ........................................................... 1.8 3.6 5.4 7.2 9

Percent change in price .................................................................. ¥0.09 ¥0.17 ¥0.27 ¥.036 ¥0.45

Percent change in quantity ............................................................. ¥0.04 ¥0.08 ¥0.13 ¥0.17 ¥0.22

Decrease in producer surplus (millions of dollars) ......................... (5.92) (11.83) (17.75) (23.66) (29.56)

Increase in consumer surplus (millions of dollars) ......................... 5.92 11.84 17.77 23.70 29.64

Total surplus (millions of dollars) .................................................... 0.003 0.0119 0.0268 0.0477 0.0745

Table 2 summarizes the estimated

economic impacts, based on a price

elasticity of ¥0.63, in the United States

of different levels of wheat exports from

the Mexicali Valley and of the estimated

producer losses and consumer gains that

would result. For example, a 20 percent

diversion of Mexicali Valley wheat

production from markets in other

countries or the domestic Mexican

market to the United States would be

expected to result in a price decrease of

0.09 percent in the United States. U.S.

producers would lose about $5.92

million (which, when distributed among

the 292,464 wheat farms noted above,

amounts to about $20.25 per farm),

while consumers would gain about the

same amount, for a net benefit in this

scenario of about $3,000. At the other

end of the spectrum, a 100 percent

diversion of Mexicali Valley wheat

production from other markets to the

United States would be expected to

result in a price decrease of 0.45 percent

in the United States. U.S. wheat

producers would lose about $29.56

million (or about $101.00 per farm),

while consumers would gain about

$29.64 million, for a net benefit in this

scenario of about $74,500. In all cases,

consumer gains slightly outweigh

producer losses.

How likely even a 20 percent

diversion of Mexicali Valley wheat to

the U.S. market will be, however, is

unclear. The production area of the

Mexicali Valley is closer to markets in

the United States than it is to markets

in central Mexico, which means that

lower transportation costs may

encourage Mexicali Valley producers to

ship their wheat to the United States.

However, the Mexican government is

considering a transportation subsidy for

growers in northwestern Mexico to

offset the transportation advantage that

growers in central Mexico have in

marketing their crops in Mexico City.

Such a subsidy may encourage Mexicali

Valley producers to sell their wheat in

Mexico.

Prices for Mexicali Valley wheat may

well prove to be a determining factor

with regard to the level of exports, as

the costs of production in the Mexicali

Valley are much higher than U.S.

production costs. The cost of Mexicali

Valley wheat averaged between $2.47

and $3.54 per bushel, with total

economic costs (which include

fertilizers, irrigation, harvest costs,

interest on credit, etc.) ranging between

$227.60 to $247.50 per acre. The cost of

wheat grown in the United States, on

the other hand, averaged $2.47 per

bushel, with total economic costs

averaging $155 per acre. With its higher

production costs and the added cost of

transportation across the border into the

United States, it may prove difficult for
Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 /Rules and Regulations 31101

Mexicali Valley wheat to compete in the

U.S. market.

The actual extent of any decrease in

wheat prices in the United States

resulting from this rule will depend to

a great degree upon the size of the price

elasticity of demand, the magnitude of

the change in supply, and the size of the

baseline price. For lower price

elasticities, both losses and gains will be

higher. We expect that the amount of

wheat exported from the Mexicali

Valley will not be large and will not,

therefore, change wheat production and

consumption patterns in the United

States. Further, the increase in wheat

supplies in the United States from an

increase in imports from Mexico will

likely be offset to some extent by an

increase in exports of wheat from the

United States to Mexico. Nevertheless,

allowing the importation of wheat from

the Mexicali Valley will likely have a

net positive impact on the overall

economy, since consumer benefits at

any level of imports will be slightly

higher than producer losses.

The only significant alternative to this

rule was to make no changes in the

wheat diseases regulations, i.e., to

continue to prohibit the importation of

wheat and wheat products from Mexico.

We rejected that alternative because we

believe that Mexico has demonstrated

that the wheat-growing areas of the

Mexicali Valley are free from Karnal

bunt, which means that there is no

longer any biological justification for

that area of Mexico to be listed with the

countries and localities considered to be

affected with Karnal bunt. Maintaining

a prohibition on the importation of

wheat and wheat products from the

Mexicali Valley in light of that area’s

demonstrated freedom from Karnal bunt

would run counter to the United States’

obligations under international trade

agreements and would likely be

challenged through the World Trade

Organization. Conversely, declaring the

wheat-growing areas of the Mexicali

Valley free from Karnal bunt will likely

have a beneficial effect on international

trade in general, and trade between the

United States and Mexico in particular,

by reaffirming the United States’

continuing commitment to using

scientifically valid principles as the

basis for regulation.

Under these circumstances, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that this action will not

have a significant economic impact on

a substantial number of small entities.

Executive Order 12988

This rule has been reviewed under

Executive Order 12988, Civil Justice

Reform. This rule: (1) Preempts all State

and local laws and regulations that are

inconsistent with this rule; (2) has no

retroactive effect; and (3) does not

require administrative proceedings

before parties may file suit in court

challenging this rule.

Paperwork Reduction Act

In accordance with section 3507(d) of

the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), the information

collection or recordkeeping

requirements included in this final rule

have been approved by the Office of

Management and Budget (OMB). The

assigned OMB control number is 0579–

0132.

List of Subjects in 7 CFR Part 319

Bees, Coffee, Cotton, Fruits, Honey,

Imports, Incorporation by reference,

Nursery Stock, Plant diseases and pests,

Quarantine, Reporting and

recordkeeping requirements, Rice,

Vegetables.

Accordingly, we are amending 7 CFR

part 319 as follows:

PART 319—FOREIGN QUARANTINE

NOTICES

1. The authority citation for part 319

continues to read as follows:

Authority: 7 U.S.C. 150dd, 150ee, 150ff,

151–167, 450, 2803, and 2809; 21 U.S.C. 136

and 136a; 7 CFR 2.22, 2.80, and 371.2(c).

§ 319.8–10 [Amended]

2. In Subpart—Foreign Cotton and

Covers, § 319.8–10(d) is amended by

removing the words ‘‘§ 319.59 (notice of

quarantine No. 59 relating to the flag

smut disease)’’ and adding the words

‘‘§ 319.59–2(a)(2) of this part’’ in their

place, and footnote 5 and its reference

in the text are removed.

§ 319.8–11 [Amended]

3. In Subpart—Foreign Cotton and

Covers, § 319.8–11(a), in the

introductory text of the paragraph,

footnote 6 and its reference in the text

are redesignated as footnote 5.

§ 319.8–17 [Amended]

4. In Subpart—Foreign Cotton and

Covers, § 319.8–17(d), footnote 7 and its

reference in the text are redesignated as

footnote 6.

5. The authority citation for

‘‘Subpart—Wheat Diseases’’ is removed.

§ 319.59 [Amended]

6. In Subpart—Wheat Diseases,

§ 319.59 is amended as follows:

a. In paragraph (a), in the first

sentence, the reference ‘‘§ 319.59–2(b)’’

is removed and the reference ‘‘§ 319.59–

2(c)’’ is added in its place.

b. In paragraph (a), in the last

sentence, the reference ‘‘§ 319.59–2(a)’’

is removed and the reference ‘‘§ 319.59–

2 (a) and (b)’’ is added in its place, and

the reference ‘‘§ 319.59–2(b)’’ is

removed and the reference ‘‘§ 319.59–

2(c)’’ is added in its place.

c. In paragraph (b), in the first

sentence, the words ‘‘abandoned by the

importer for destruction’’ are removed

and the words ‘‘destroyed as deemed

necessary by an inspector at the expense

of the importer’’ are added in their

place.

d. In paragraph (b), in the last

sentence, the words ‘‘abandoned for

destruction by’’ are removed and the

words ‘‘destroyed as deemed necessary

by an inspector at the expense of’’ are

added in their place.

7. In Subpart—Wheat Diseases,

§ 319.59–2 is amended as follows:

a. In the introductory text of

paragraph (a), the words ‘‘in paragraph

(b)’’ are removed and the words ‘‘in

paragraph (c)’’ added in their place.

b. In paragraph (a)(1)(i), the word

‘‘Triticums’’ is removed and the word

‘‘Triticum’’ added in its place.

c. Paragraph (a)(2) is revised to read

as set forth below.

d. In paragraph (b)(2), the words

‘‘(except for that portion of the Mexicali

Valley described in paragraph (b)(3) of

this section),’’ are added after the word

‘‘Mexico’’.

e. A new paragraph (b)(3) is added to

read as set forth below.

f. In paragraph (c)(2), the reference ‘‘7

CFR 319.37–14(b)’’ is removed and the

reference ‘‘§ 319.37–14(b) of this part’’

added in its place.

§ 319.59–2 Prohibited articles.

(a) * * *

(2) Afghanistan, Algeria, Armenia,

Australia, Azerbaijan, Bangladesh,

Belarus, Bulgaria, Chile, China, Cyprus,

Egypt, Estonia, Falkland Islands,

Georgia, Greece, Guatemala, Hungary,

India, Iran, Iraq, Israel, Italy, Japan,

Kazakstan, Kyrgyzstan, Latvia, Libya,

Lithuania, Moldova, Morocco, Nepal,

North Korea, Oman, Pakistan, Portugal,

Romania, Russia, Spain, Tajikistan,

Tanzania, Tunisia, Turkey,

Turkmenistan, South Africa, South

Korea, Ukraine, Uzbekistan, and

Venezuela.

(b) * * *

(3) The following area of the Mexicali

Valley in Mexico has been determined

to be free from Karnal bunt: Those

portions of the municipality of Mexicali,

in the State of Baja California, and the

municipality of San Luis Rio Colorado,

in the State of Sonora, that are included

in the Distrito de Desarrollo Rural (Rural

Development District) 002 Rio Colorado.
31102 Federal Register / Vol. 63, No. 109 / Monday, June 8, 1998 /Rules and Regulations

Except for wheat (Triticum spp.) plants,

which are prohibited importation under

§ 319.37–2(a) (see Poaceae) of this part,

any articles described in paragraph

(b)(1) of this section that are from that

designated area may be imported into

the United States subject to the

following conditions:

(i) The articles are offered for entry at

the port of Calexico, CA; and

(ii) The articles offered for entry are

made available for examination by an

inspector and remain at the port until

released, or authorized further

movement pending release, by an

inspector; and

(iii) The articles are accompanied by

a phytosanitary certificate issued by the

Mexican national plant protection

organization that certifies that the

articles are from the area of the Mexicali

Valley described in this paragraph and

remained within that area prior to and

during their movement to the United

States.

* * * * *

8. In Subpart—Packing Materials,

§ 319.69(b)(1) is revised to read as

follows:

319.69 Notice of quarantine.

* * * * *

(b) * * *

(1) Cereal straw, hulls, and chaff (such

as oats, barley, and rye) from all

countries, except rice straw, hulls, and

chaff, which are prohibited importation

from all countries by paragraph (a)(1) of

this section, and except wheat straw,

hulls, and chaff, which are restricted

importation by § 319.59 of this part from

any country or locality listed in

§ 319.59–2 of this part.

* * * * *

Done in Washington, DC, this 4th day of

June, 1998.

Charles P. Schwalbe,

Acting Administrator, Animal and Plant

Health Inspection Service.

[FR Doc. 98–15337 Filed 6–4–98; 3:22 pm]

BILLING CODE 3410–34–P

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1412

Amendment to the Production

Flexibility Contract Regulations

RIN 0560–AF25

AGENCY: Commodity Credit Corporation,

USDA.

ACTION: Final rule.

SUMMARY: The Commodity Credit

Corporation (CCC) is issuing its final

rule with respect to the amendments to

the production flexibility contract

regulations published as an interim final

rule in the Federal Register on October

23, 1997. After considering the

comments received from the public, this

rule adopts the interim rule as final with

changes as indicated. The rule also

incorporates a specific change required

by the Agriculture, Rural Development,

Food and Drug Administration, and

Related Agencies Appropriations Act,

1998, which provides that if wild rice is

planted on contract acreage, the contract

payment shall be reduced in an amount

reflecting each contract acre planted to

wild rice.

EFFECTIVE DATE: June 8, 1998.

FOR FURTHER INFORMATION CONTACT:

Lynn H. Tjeerdsma, Farm Service

Agency, United States Department of

Agriculture, STOP 0517, 1400

Independence Avenue, SW.,

Washington, DC 20250–0517, telephone

202–720–6602, Internet address:

ltjeerds@wdc.fsa.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

not significant and was not reviewed by

the Office of Management and Budget

(OMB).

Regulatory Flexibility Act

It has been determined that the

Regulatory Flexibility Act is not

applicable because CCC is not required

by 5 U.S.C. 553 or any other provision

of law to publish a notice of proposed

rulemaking with respect to the subject

matter of this rule.

Environmental Evaluation

An Environmental Evaluation with

respect to the proposed rule has been

completed. It has been determined that

this action will not have significant

adverse effects on environmental factors

such as wildlife habitat, water quality,

air quality, land use, or appearance.

Therefore, neither an Environmental

Assessment nor an Environmental

Impact Statement is needed.

Executive Order 12988

This rule has been reviewed in

accordance with Executive Order 12988.

The provisions of this proposed rule

preempt State laws to the extent such

laws are inconsistent with the

provisions of this rule. The provisions

of this rule are not retroactive. Before

any judicial action may be brought

concerning the provisions of this rule,

the administrative remedies must be

exhausted.

Executive Order 12372

This program/activity is not subject to

the provisions of Executive Order

12372, which requires

intergovernmental consultation with

State and local officials. See the Notice

related to 7 CFR part 3015, subpart V,

published at 48 FR 29115 (June 24,

1983).

Paperwork Reduction Act

The amendments to 7 CFR part 1412

set forth in this rule were previously

approved under OMB Control Number

0560–0092. An information collection

notice was published in the Federal

Register (62 FR 27216) on May 19, 1997.

No comments were received regarding

this notice. A revised information

collection package has been submitted

to OMB.

Executive Order 12612

It has been determined that this rule

does not have sufficient Federalism

implications to warrant the preparation

of a Federalism Assessment. The

provisions contained in this rule will

not have a substantial direct effect on

States or their political subdivisions or

on the distribution of power and

responsibilities among the various

levels of Government.

Unfunded Mandates Reform Act of

1995

This rule contains no Federal

mandates under the regulatory

provisions of Title II of the Unfunded

Mandates Reform Act of 1995 (UMBRA)

for State, local, and tribal governments

or the private sector. Therefore, this rule

is not subject to the requirements of

sections 202 and 205 of the UMBRA.

Background

On October 23, 1997, CCC published

an interim rule in the Federal Register

(62 FR 55150) to add a final date for

producers to designate payment shares

and provide supporting documentation

to be eligible to earn contract payments

in a fiscal year when payment shares

have not been designated in such fiscal

year; change the dates by which a

producer or owner must inform county

committee of changes in interest; add a

final date for producers to request

advance payments; clarify cash lease

provisions; change the provisions for

determining whether a lease is a cash

lease or a share lease with respect to

combination leases; and change the date

by which all landowners, tenants, and

sharecroppers failing to reach an

agreement regarding the division of

contract payments for a fiscal year must

execute a contract to be eligible to

receive the contract payment for that