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.

Proposed Rules Federal Register

4198

Vol. 63, No. 18

Wednesday, January 28, 1998

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

7 CFR Parts 301 and 319

[Docket No. 96–016–22]

RIN 0579–AA83

Karnal Bunt; Movement From

Regulated Areas

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Proposed rule.

SUMMARY: We are proposing to amend

the Karnal bunt regulations to allow,

under certain conditions, commercial

lots of seed to move from restricted

areas for seed. We also propose to

amend the testing requirements for

regulated articles other than seed,

remove certain articles from the list of

articles regulated because of Karnal

bunt, clarify the terms ‘‘used

mechanized harvesting equipment’’ and

‘‘used seed conditioning equipment,’’

and clarify requirements for soil

movement with vegetables. These

changes would relieve restrictions on

the movement of articles from areas

regulated because of Karnal bunt. We

also propose to amend the requirements

for treating millfeed and soil, and

remove the methyl bromide treatment

alternative for decorative articles. These

changes appear necessary to help

prevent the spread of Karnal bunt. We

also propose to amend the definition of

surveillance areas to more clearly

distinguish between surveillance areas

and restricted areas. In addition, we are

proposing to amend the regulations

governing the importation of wheat into

the United States to make the definition

of the term ‘‘Karnal bunt’’ consistent

with the definition of that term in the

Karnal bunt regulations.

DATES: Consideration will be given only

to comments received on or before

March 30, 1998.

ADDRESSES: Please send an original and

three copies of your comments to

Docket No. 96–016–22, 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. 96–016–22. Comments

received may be inspected at USDA,

room 1141, South Building, 14th Street

and Independence Avenue SW.,

Washington, DC, between 8 a.m. and

4:30 p.m., Monday through Friday,

except holidays. Persons wishing to

inspect comments are requested to call

ahead on (202) 690–2817 to facilitate

entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr.

Mike Stefan, Operations Officer,

Domestic and Emergency Operations,

PPQ, APHIS, 4700 River Road Unit 134,

Riverdale, MD 20737–1236, (301) 734–

8247.

SUPPLEMENTARY INFORMATION:

Background

Karnal bunt is a fungal disease of

wheat (Triticum aestivum), durum

wheat (Triticum durum), and triticale

(Triticum aestivum X Secale cereale), a

hybrid of wheat and rye. 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 in the United

States are set forth in 7 CFR 301.89–1

through 301.89–14.

We are proposing to amend the Karnal

bunt regulations to allow, under certain

conditions, commercial lots of seed to

move from restricted areas for seed;

amend the testing requirements for

regulated articles other than seed;

remove certain articles from the list of

articles regulated because of Karnal

bunt; clarify the terms ‘‘used

mechanized harvesting equipment’’ and

‘‘used seed conditioning equipment’’;

clarify requirements for soil movement

with vegetables; amend the

requirements for treating millfeed and

soil; remove the methyl bromide

treatment alternative for decorative

articles; and amend the definition of

surveillance areas.

Movement of Seed From Restricted

Areas for Seed

Under the current Karnal bunt

regulations, areas regulated because of

Karnal bunt are divided into three

categories: restricted areas for regulated

articles other than seed, surveillance

areas, and restricted areas for seed.

Restricted areas for regulated articles

other than seed are individual fields

that were (1) found during survey to

contain a bunted wheat kernel, (2)

planted with seed from a lot that was

found to contain a bunted wheat kernel,

or (3) found during survey to contain

spores consistent with Karal bunt and

determined to be associated with grain

at a handling facility containing a

bunted wheat kernal. No field currently

identified as a restricted area for

regulated articles other than seed are

currently planted with Karnal bunt host

crops (wheat, durum wheat, and

triticale), and no host crops may be

planted in these fields. Surrounding

these fields are the surveillance areas.

The restricted areas for seed encompass

the largest area, covering and extending

beyond the other two categories of

regulated areas.

The movement of commercial lots of

seed from a restricted area for seed is

prohibited; seed in smaller lots for

germplasm or research purposes may be

moved from a restricted area for seed if

treated in accordance with the

regulations at § 301.89–13(e).

Those portions of a restricted area for

seed that extend beyond the

surveillance areas do not contain any

fields where a bunted wheat kernal has

been found or any fields found to

contain spores consistent with Karnal

bunt and associated with grain at a

handling facility containing a bunted

wheat kernal. We propose to allow

commercial lots of seed to move from a

restricted area for seed if: (1) The field

or fields where the seed was grown are

not part of a restricted area for regulated

articles other than seed or a surveillance

area; (2) the seed tests negative for

Karnal bunt (spores and bunted

kernels); (3) the most recent previous

Karnal bunt host crop grown in the field

or fields where the seed intended for

movement was grown also tested

negative for Karnal bunt (spores and

bunted kernels); and (4) the seed

intended for movement is treated in

accordance with § 301.89–13(e),

currently designated as the treatment for
Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules 4199

seed used as germplasm or for research

purposes.

We would not allow seed to move

from a restricted area for seed if the field

where the seed was grown is also a part

of a restricted area for articles other than

seed or a surveillance area because of

the higher risk of the presence of Karnal

bunt in such areas. As noted above, the

regulations do not allow for the planting

of host crops in a restricted area for

regulated articles other than seed.

Therefore, seed cannot be grown in

those areas. However, it is possible that

a bunted kernel may be detected in a

field that is not currently designated a

restricted area for regulated articles

other than seed while that field is

planted with a Karnal bunt host crop. In

that case, when the bunted kernel is

detected, the field would immediately

be designated a restricted area for

regulated articles other than seed, and

the crop would not be eligible for

certified movement as a commercial lot

of seed. Unlike restricted areas for

regulated articles other than seed,

surveillance areas may be planted with

host crops, in accordance with § 301.89–

4, and, therefore, seed could be grown

in surveillance areas. Yet because of a

surveillance area’s proximity to a

restricted area for regulated articles

other than seed (i.e., a field associated

with bunted kernels), we would not

allow commercial lots of seed from

surveillance areas to move out of the

regulated area.

We would require that, prior to

movement from the restricted area for

seed, the seed test negative for Karnal

bunt (spores and bunted kernels) to help

reduce the risk of the spread of the

disease to noninfected areas of the

United States. Because of its intended

use as seed for planting, seed presents

a higher risk than grain of spreading

Karnal bunt. Therefore, in accordance

with § 301.89–4(b), we would require

that seed test negative for both spores

and bunted kernels before moving from

the restricted area for seed.

Also, the most recent previous Karnal

bunt host crop grown in the field or

fields where the seed intended for

movement was grown must have tested

negative for Karnal bunt (spores and

bunted kernels). This requirement

would help verify the production area’s

long-term freedom from Karnal bunt.

Because crops are rotated, a field will

likely not be planted with Karnal bunt

host crops in consecutive years.

Negative test results for fields surveyed

for Karnal bunt during the 1995–1996

and the 1996–1997 growing seasons

would allow the next applicable Karnal

bunt host crop planted in those fields to

meet this eligibility requirement. If a

field has not yet been surveyed, that

field would have to be surveyed while

planted with a host crop and found free

of Karnal bunt (spores and bunted

kernels) in order for a subsequent seed

crop, during a future growing season, to

meet this eligibility requirement. During

each crop season, we would survey

fields in the restricted area for seed that

are planted with Karnal bunt host crops

intended for use as seed and survey

additional fields in the area. The data

that we collect in these surveys will

provide information over a period of

years and through a variety of

environmental conditions to confirm an

area’s continued freedom from the

disease.

Lastly, we would require that, prior to

movement from the restricted area for

seed, the seed be treated in accordance

with the treatment currently authorized

for seed for use as germplasm or for

research purposes (see § 301.89–13(e)).

This requirement would help reduce the

risk of the spread of Karnal bunt to

noninfected areas of the United States.

Testing Requirements for Regulated

Articles Other Than Seed

Currently, to be eligible for certified

movement, regulated articles other than

seed must be tested for both Karnal bunt

spores and bunted kernels prior to

movement from the regulated area (see

§ 301.89–6(b) and (d)). However,

because of its intended uses (for

example, processing for millfeed or

animal feed), grain presents a much

lower risk of spreading Karnal bunt than

seed. We therefore propose to allow the

certified movement of grain other than

for seed if the grain is tested prior to

movement from the field or before being

commingled with other grains and

found free of bunted kernels only, rather

than Karnal bunt spores and bunted

kernels. We believe that this testing of

grain for bunted kernels provides an

appropriate level of protection against

the spread of Karnal bunt by grain.

Removal of Regulated Articles

Certain articles present a significant

risk of spreading Karnal bunt if the

articles are moved from regulated areas

without restriction. We call these

articles ‘‘regulated articles.’’ When

Karnal bunt was first detected in the

United States, we established an

extensive list of regulated articles. Based

on our experience with the control of

other plant diseases, we included, as a

precautionary measure, many articles on

the list of regulated articles that we

believed could present a significant risk

of spreading Karnal bunt.

Subsequently, a further assessment of

the risk involved in moving regulated

articles was performed. This assessment

considered factors such as additional

information about Karnal bunt and the

way in which it spreads, the size of

regulated areas, the movement of

regulated articles within and outside of

regulated areas, and the normal business

practices involved in the handling of

regulated articles. As a result of this

assessment, we are proposing to amend

the list of regulated articles by removing

used bags, sacks, and containers; used

farm tools; used mechanized cultivating

equipment; and used soil moving

equipment from the list of regulated

articles because these items present a

negligible risk of spreading Karnal bunt.

Accordingly, as these articles would no

longer be regulated, we are also

proposing to revise paragraph (a) of

§ 301.89–12 to remove the requirement

that these articles be treated in

accordance with § 301.89–13; to revise

paragraph (a) of § 301.89–13, which

describes treatments for mechanized

farm equipment (which includes

mechanized cultivating equipment),

farm tools, and soil moving equipment;

and to remove paragraph (f) of § 301.89–

13, which describes treatments for bags,

sacks, and containers. As a result of

these changes to the regulations, used

bags, sacks, containers, and used farm

tools, mechanized cultivating

equipment, and soil moving equipment

would no longer have to be treated

before being moved from a regulated

area. These actions would relieve an

unnecessary regulatory burden on the

wheat industry in areas regulated

because of Karnal bunt while continuing

to protect against the spread of Karnal

bunt to noninfected areas of the United

States.

Used Mechanized Harvesting

Equipment and Used Seed Conditioning

Equipment

When we first established the

regulations to prevent the spread of

Karnal bunt in the United States, we

listed as regulated articles ‘‘used

mechanized harvesting equipment’’ and

‘‘used seed conditioning equipment’’

because, when this type of equipment is

used in a regulated area in the

production of Karnal bunt host crops,

the equipment presents a risk of

spreading Karnal bunt if moved outside

the regulated area without restriction.

However, in the regulations, we did not

specify what was meant by the word

‘‘used.’’ Therefore, any mechanized

harvesting equipment or seed

conditioning equipment used in the area

regulated for Karnal bunt, whether or

not that equipment was used in

association with Karnal bunt host crops,

was subject to the requirements of the
4200 Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules

regulations, including the treatment

requirements in § 301.89–13.

Within the areas regulated because of

Karnal bunt, there is no reason to

regulate mechanized harvesting

equipment and seed conditioning

equipment if the equipment is not used

in the production of Karnal bunt host

grains. Therefore, we are proposing to

amend § 301.89–2 (l) and (m) to clarify

that only mechanized harvesting

equipment and seed conditioning

equipment that were used in the

production of wheat, durum wheat, or

triticale are considered regulated

articles. Accordingly, we would also

revise paragraph (a) of § 301.89–12 to

clarify that only mechanized harvesting

equipment and seed conditioning

equipment that were used in the

production of wheat, durum wheat, or

triticale are required to be treated in

accordance with § 301.89–13 prior to

movement from the regulated area. (A

regulated area includes all restricted

areas for seed and all restricted and

surveillance areas for regulated articles

other than seed.) This action would

relieve an unnecessary regulatory

burden on producers in Karnal bunt

regulated areas.

Soil Movement

We are also proposing to clarify the

requirements for soil movement with

vegetables, located at § 301.89–12(b),

because there has been confusion

concerning the requirements for soil

attached to root crops and other

commodities moving from areas

regulated because of Karnal bunt. We

have stated in previous documents that

we believe that there is a risk of

spreading Karnal bunt through the

movement of soil. However, we

recognize this risk in most cases is

negligible based on (1) survey data, (2)

intended use of the produce for

consumption, and (3) the cleaning and

handling of root crops and other

commodities in normal business

practice. Consequently, in this proposed

rule, we propose to specify that soil

attached to root crops and other

commodities must be removed only if

the crops or commodities were grown in

fields that are in restricted areas for

regulated articles other than seed

because these are the fields that have

been determined to be directly

associated with bunted kernels. We

believe that these fields are high risk for

spreading Karnal bunt and warrant the

soil removal restrictions. We believe

that root crops and commodities from

fields in proximity (i.e., restricted areas

for seed) are lower risk, and that the

intended use of the products

(consumption) and normal business

practices (cleaning and grading of the

crops) are sufficient to mitigate the risk

of spreading Karnal bunt to other areas

of the United States. This action would

relieve an unnecessary regulatory

burden on growers of vegetables and

fruits within regulated areas.

Millfeed Treatment

We are proposing to amend the

requirements for treatment of millfeed.

In the October 4, 1996, final rule, we

established special requirements for the

treatment and handling of millfeed.

Specifically, we required that millfeed

be treated with a moist heat treatment

of 170 °F for at least 1 minute if the

millfeed resulted from the milling of

grain from either: (1) Fields in which

preharvest samples test positive for

Karnal bunt during the 1996–1997 crop

season; or (2) fields located in a

restricted area. During the 1996 harvest

season, we allowed a destination State

willing to accept appropriate monitoring

responsibilities to determine the

appropriate treatment and handling of

millfeed based on the intended use of

the millfeed within the destination

State.

Because of changes to the description

of ‘‘restricted area’’ made in the May 1,

1997, interim rule, millfeed must only

be treated if it is produced from grain

grown in a restricted area. However,

under the May 1, 1997, interim rule,

individual fields that are in restricted

areas may not be planted with wheat,

durum wheat, or triticale. Therefore, no

millfeed is produced from grain grown

in fields in restricted areas, and

consequently, no millfeed currently

requires treatment under the

regulations. However, we believe that

millfeed, if it results from the milling of

grain that tests positive for Karnal bunt,

carries a risk of spreading Karnal bunt.

Therefore, we are proposing to amend

§ 301.89–13(c) to require that millfeed

produced from grain that tests positive

for Karnal bunt be treated with a moist

heat treatment of 170 °F for at least 1

minute. This action will help prevent

the spread of Karnal bunt into

noninfected areas of the United States.

Methyl Bromide Treatment

The regulations at § 301.89–13(b)

allow, among other things, straw/stalks/

seed heads for decorative purposes to

move from a regulated area if they are

treated with methyl bromide. Straw/

stalks/seed heads may move without

treatment if they have been processed or

manufactured prior to movement and

are for use indoors. We are proposing to

remove the methyl bromide treatment

for straw/stalks/seed heads for

decorative purposes. Results of recently

conducted research indicate that methyl

bromide is not effective in devitalizing

teliospores of Tilletia indica under dry

conditions. Wetting the straw/stalks/

seed heads is not practical because the

articles would be damaged. Straw/

stalks/seed heads for decorative

purposes would still be eligible for

movement, if processed or

manufactured prior to movement and

intended for use indoors, or if moved

under limited permit for specified

handling, utilization, or processing,

under the provisions of § 301.89–6. This

action would remove an ineffectual

treatment method from the regulations.

Section 301.89–13(b) also provides

that soil may be moved from a regulated

area after treatment with methyl

bromide. Because we have established

that methyl bromide does not deactivate

teliospores of Tilletia indica under dry

conditions, we are proposing to add a

moisture condition to the treatment of

soil. Based on research, we are

proposing to require that soil be wetted

with water, to a depth of 1 inch, just

prior to methyl bromide treatment. The

water may be added by irrigation or

rain. This action would help prevent the

spread of Karnal bunt into noninfected

areas of the United States.

Definition of Surveillance Areas

We are proposing to amend the

description of surveillance area at

§ 301.89–3(e)(4) to clarify that a

surveillance area is an area where

Karnal bunt is not known to occur but

where, for various reasons, intensive

surveys are necessary. This action

would help differentiate between the

status of a restricted area for regulated

articles other than seed and the status of

a surveillance area.

Definition of Karnal Bunt

The regulations at 7 CFR 319.59

through 319.59–2 govern the

importation of wheat into the United

States to prevent the introduction of

foreign wheat diseases, such as flag

smut and Karnal bunt. We are proposing

to revise the definition of ‘‘Karnal bunt’’

at § 319.59–1 to make it consistent with

the definition of Karnal bunt in

§ 301.89–1. The new definition of

Karnal bunt at § 319.59–1 would read

‘‘A plant disease caused by the fungus

Tilletia indica (Mitra) Mundkur.’’

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
Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules 4201

reviewed by the Office of Management

and Budget.

The Karnal bunt regulations were

established under the Plant Quarantine

Act (7 U.S.C. 151–165 and 167) and the

Federal Plant Pest Act (7 U.S.C. 150aa–

150jj), which authorize the Secretary of

Agriculture to take measures necessary

to prevent the spread of plant pests,

including diseases, that are new to, or

not widely prevalent in, the United

States.

We are proposing to amend the Karnal

bunt regulations to allow, under certain

conditions, commercial lots of seed to

move out of a restricted area for seed

and to amend the testing requirements

for regulated articles other than seed.

We also propose to remove certain

articles from the list of articles regulated

because of Karnal bunt, clarify the terms

‘‘used mechanized harvesting

equipment’’ and ‘‘used seed

conditioning equipment,’’ and clarify

requirements for soil movement with

vegetables. These changes would relieve

restrictions on the movement of articles

from areas regulated because of Karnal

bunt. We also propose to amend the

requirements for treating millfeed and

soil, and remove the methyl bromide

treatment alternative for decorative

articles.

The proposed change to allow, under

certain conditions, commercial lots of

seed to move out of a restricted area for

seed would benefit regulated growers of

wheat seed and other affected entities.

For the first time since the regulated

area was established, commercial lots of

wheat seed would be eligible to move

out of the regulated area, if, among other

things, the seed was grown in a

restricted area for seed that is not also

part of a restricted area for regulated

articles other than seed or a surveillance

area. Those regulated areas that are

restricted areas for seed, but that are not

also part of a restricted area for

regulated articles other than seed or a

surveillance area, amount to an

estimated 727,335 acres of regulated

land in four States (Arizona, California,

New Mexico, and Texas). These 727,335

acres represent 75 percent of the

combined regulated area in those four

States. The proposed change would,

therefore, open up a substantial volume

of regulated acreage to export sales of

wheat seed. The estimated current

regulated acreage, by State and

regulatory designation, is as follows:

Arizona California New Mexico Texas Total

Restricted area for seed ........................................................................... 797,000 100,000 58,650 1 20,469 976,119

Restricted area for regulated articles other than seed ............................. 6,162 3,113 3,990 1,519 14,784

Surveillance area ...................................................................................... 135,000 84,000 0 15,000 234,000

Portion of restricted area for seed that would be eligible to grow wheat

seed for movement in commercial lots from the regulated area .......... 655,838 12,887 54,660 3,950 727,335

1For El Paso, restricted area for seed includes only acreage for the plowdown fields.

The opportunity for export sales of

seed should have a positive impact on

seed planting in the regulated area. The

magnitude of that impact is difficult to

measure, however, because year-to-year

changes in seed planting is a function of

many factors, including factors not

related to the regulatory environment

(e.g., prices). The impact of this

proposal would likely be most

noticeable 1 to 2 years after the effective

date of the rule; by that time, growers

would have had the chance to adjust

planting schedules to take advantage of

the amended restrictions and would

have had the opportunity to satisfy

another of the proposal’s requirements,

that is, that the most recent previous

Karnal bunt host crop grown in the field

must have tested negative for Karnal

bunt (spores and bunted kernels).

Another of the proposal’s

requirements, that seed be treated prior

to movement, may limit the amount of

seed that can be moved in the short term

and may also discourage some growers

from planting seed. Under the proposal,

in addition to fungicide treatments,

commercial lots of seed would have to

be treated with sodium hyperchloride

(chlorine) as currently designated for

the treatment of seed used for

germplasm or for research purposes.

Because of the corrosive nature of

chlorine, stainless steel vats or

containers may need to be installed for

treating the seed. Thus, in addition to

expenditures for chemicals, some

producers may incur costs for special

equipment in order to comply with the

conditions of the proposal. However,

the proposed treatment for commercial

seed is necessary to reduce the risk of

the spread of Karnal bunt to noninfected

areas of the United States.

Notwithstanding these requirements,

the positive potential of the proposed

changes on seed plantings could be

considerable. As indicated above, an

estimated 727,335 acres of regulated

land would be eligible to grow wheat

seed that could, under certain

conditions, move in commercial lots

outside of the regulated area. It is

estimated that only about 15 percent of

those 727,335 acres are currently

planted with wheat, leaving the

remaining 85 percent (approximately

618,235 acres) potentially available for

wheat seed planting in the future. Even

if only 5 percent of the 618,235 acres

were planted with seed as a result of the

proposed changes, an additional 30,912

acres in the regulated area would be

planted with seed. By comparison,

118,087 acres of wheat were planted in

the entire regulated area in the 1996–97

growing season.

We are also proposing to amend the

testing requirements for grain used other

than for seed. Under the proposal, such

grain would have to be tested and found

free of bunted kernels, rather than

spores and bunted kernels, prior to

movement from the regulated area.

Growers and handlers of grain would

benefit from this change in the testing

requirements.

As much as 90 percent of the acreage

of surveillance areas that is planted with

wheat is devoted to the production of

grain. This rule change, therefore, has

the potential to affect most of the wheat

grown in surveillance areas. Because

grain intended for movement from the

regulated area would be surveyed for

bunted kernels only, and because those

surveys would be conducted at the field

rather than at the conveyance, we

expect that the new testing procedures

would save time for grain handlers. In

addition, because laboratory analyses

for spores would no longer be required,

USDA would save money as a result of

the new testing procedures. However, it

is difficult to predict the savings in time

or money, or if there would be an

increase in the number of shipments

that would move from the regulated

area, before the new testing procedures

are in place. Nevertheless, this proposed

change would likely have a positive

impact on the movement of grain and

other regulated articles other than seed

from the regulated area.

For both of these proposed changes

(i.e., to allow, under certain conditions,

the movement of commercial lots of

seed from restricted areas for seed and

to amend the testing requirements for

regulated articles other than seed), the
4202 Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules

2This additional cost of $20 per acre is for added

labor and equipment that would be incurred by

vegetable growers in adhering to APHIS’ cleaning

protocols.

entities that would likely be most

affected by the changes would be wheat

producers. It is estimated that there are

currently a total of 354 wheat growers

in the regulated areas: 248 in Arizona,

21 in California, 23 in New Mexico, and

62 in Texas. Of those, the number of

wheat growers in surveillance areas is

estimated to be 84, with 21 in Arizona,

18 in California, and 45 in Texas, and

the number of wheat growers in the

restricted area for seed (not including

restricted areas for regulated articles

other than seed or surveillance areas) is

estimated to be 270, with 227 in

Arizona, 3 in California, 23 in New

Mexico and 17 in Texas. Most of these

wheat growers are assumed to have

gross annual receipts of less than $0.5

million, the U.S. Small Business

Administration’s threshold for

classifying wheat producers as small

entities. Accordingly, these proposed

changes would positively impact

primarily small entities. Growers would

benefit from fewer restrictions on the

movement of regulated articles, which

would enable growers to reach new

markets for their products. In addition,

wheat seed dealers, harvesters,

transporters, and processors may also

benefit from the proposed changes to

the regulations, but the magnitude of the

impact on these entities cannot be

determined.

Regarding the remainder of the

proposed actions in this document,

three main parties would be affected by

these amendments: vegetable growers,

millers, and decorative wheat product

makers.

It is estimated that there are nearly 50

vegetable growers within the regulated

areas. However, vegetables are expected

to be grown on only about one-quarter

of the total restricted acreage in the

regulated area. Those who do grow

vegetables in this area are believed to

already sufficiently clean their root crop

produce so that few, if any, will be

affected by APHIS cleaning protocol.

There are fewer than 30 millers who

would potentially be affected by the

proposed changes. The exact number of

millers who elect to mill wheat that has

tested positive for Karnal bunt is

unknown at this time. However, data

show that for the four States in the

original regulated area, the number of

wheat millers are: California (12, with 1

processing durum); Arizona (2, with 1

processing durum); New Mexico (1);

and Texas (7, with 1 processing rye). In

1996–97, there were 24 wheat millers in

and around the regulated area that

entered into limited permits with

APHIS: 2 in Arizona, 1 in New Mexico,

and 21 in California. Data from limited

permits issued in the regulated areas

indicate that millers in the following

States were also affected: Minnesota,

Oregon, Virginia, Missouri, and

Wisconsin. However, it is anticipated

that very little wheat that tests positive

for Karnal bunt will be present and thus

available for milling. Also, it is likely

that any wheat that tests positive for

Karnal bunt will be channeled into

animal feed uses.

No information is available on the

number and size of affected firms that

deal in decorative wheat products. Any

data on the number and size of these

entities are welcomed from the public.

Virtually all of the industries affected

are likely to be composed of producers

and firms that can be categorized as

small according to the Small Business

Administration (SBA) size

classification. Economic impacts

resulting from this rule would therefore

largely affect small entities. The analysis

of economic impacts discussed below

would thus fulfill the requirement of a

cost-benefit analysis under E.O. 12866,

as well as the analysis of impacts of

small entities as required by the

Regulatory Flexibility Act. Unless

otherwise noted, the SBA’s

characterization of a small business for

the categories of interest in this analysis

is a firm that employs at most 500

employees, or has sales of $5 million or

less.

It is expected that these proposed

regulatory changes would provide some

positive economic relief to entities in

the regulated area. This is especially

true for businesses that produce

decorative wheat products and ship

outside the regulated area and for

vegetable growers on non-restricted

acres because these persons are

effectively deregulated. Cleaning of

vegetables and treatment of millfeed

could increase costs to some affected

firms. However, cleaning of vegetables,

according to APHIS protocol, is not

expected to differ greatly from normal

business practices, so additional costs

should be minimal. Also, it is expected

that little of the wheat that tests positive

for Karnal bunt in surveillance areas

will be milled for flour.

In terms of the vegetable cleaning

protocol, it is expected that, at most,

one-quarter of the restricted acres, or

3,356 acres, comes into vegetable

production in 1997. Assuming a

cleaning cost of $20 per acre, this

cleaning requirement would create an

economic cost of $67,115 (or 3,356 acres

at $20 per acre).2 This total cost is not

expected to significantly increase the

cost of production on individual

operations. An additional $1,345 would

be incurred in cleaning vegetables on a

typical farm ($67,115 divided by 50

entities). Any additional information

concerning the impact on vegetable

growers is welcomed from the public.

In terms of millfeed treatment,

assuming a 15-percent infection rate on

the 1,072,800 bushels expected to be

produced in the surveillance areas in

the regulated area in 1997, only 160,920

bushels of wheat that tests positive for

Karnal bunt is expected. If 50 percent of

this quantity were to remain in the

regulated area and be milled into flour,

604 tons of millfeed would be produced.

In the worst case scenario, if all

production were to test positive for

Karnal bunt and remain in the regulated

area for milling, 8,046 tons of millfeed

would be produced. It is expected that

most millers who must handle millfeed

produced from wheat that tests positive

for Karnal bunt have the facilities or

access to facilities to treat it at this time.

Cost estimates on a per establishment

basis are not available because the

Karnal bunt contamination rate and the

amount of wheat that tests positive for

Karnal bunt to be milled is not known.

Additionally, compensation for millfeed

treatment produced from wheat grown

in a regulated area that tests positive for

Karnal bunt has been proposed and

published in the Federal Register on

July 11, 1997. The level of

compensation proposed is $35 per ton.

At this level of cost offset, and assuming

that the initial purchase of treatment

facilities has been made, the proposed

compensation level is expected to cover

almost all the costs of treatment. Thus,

the amount of compensation requested

on all of this millfeed ($21,121 of

compensation in the first scenario

discussed above and $281,610 in the

worst case scenario) is expected to offset

all of the economic costs incurred by

millers in following APHIS millfeed

protocol requirements.

In terms of methyl bromide treatment

for producers of decorative wheat

products, this proposed rule change

would, effectively, relax current

regulations and, therefore, is expected to

result in lower production costs for

firms using decorative wheat products.

No estimate of this relief is possible

given the data available. Similarly, the

additional cost associated with the

moisture requirement for the methyl

bromide treatment of soil is also

unknown but is expected to be small.

Any additional information from the

public concerning these impacts is

welcomed.
Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules 4203

These rule changes are being

proposed as a result of new evidence

that indicates that no additional risk of

Karnal bunt spread is likely if they are

adopted. For example, the articles

released from regulation have been

determined to pose minimal risk of

Karnal bunt spread to non-infected

areas. Millfeed treatment has been

relaxed on flour produced from wheat

production on fields that test negative

for Karnal bunt, but treatment is still

required for wheat that tests positive for

Karnal bunt. Decorative wheat products

which are likely to come into contact

with soil in and outside the regulated

area pose little if any risk of disease

spread. These proposed regulatory

changes are the result of continuous

research and practical industry

experience in dealing with Karnal bunt.

We also propose to amend the

definition of surveillance areas to more

clearly distinguish between surveillance

areas and restricted areas. In addition,

we propose to amend the regulations

governing the importation of wheat into

the United States to make the definition

of the term ‘‘Karnal bunt’’ consistent

with the definition of that term in the

Karnal bunt regulations. We do not

anticipate that these changes would

have any economic impact.

The proposed changes to the

regulations would not result in any new

information collection or recordkeeping

requirements.

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

This proposed rule contains no new

information collection or recordkeeping

requirements under the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

List of Subjects

7 CFR Part 301

Agricultural commodities,

Incorporation by reference, Plant

diseases and pests, Quarantine,

Reporting and recordkeeping

requirements, Transportation.

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, 7 CFR parts 301 and 319

are proposed to be amended as follows:

PART 301—DOMESTIC QUARANTINE

NOTICES

1. The authority citation for part 301

would continue to read as follows:

Authority: 7 U.S.C. 147a, 150bb, 150dd,

150ee, 150ff, 161, 162, and 164–167; 7 CFR

2.22, 2.80, and 371.2(c).

2. Section 301.89–2 would be

amended as follows:

a. By removing paragraphs (i), (j), (k),

and (n).

b. By redesignating paragraphs (l),

(m), and (o) as paragraphs (i), (j), and

(k), respectively.

c. By revising newly designated

paragraphs (i) and (j) to read as set forth

below:

§ 301.89–2 Regulated articles.

* * * * *

(i) Mechanized harvesting equipment

that has been used in the production of

wheat, durum wheat, and triticale;

(j) Seed conditioning equipment that

has been used in the production of

wheat, durum wheat, and triticale; and

* * * * *

3. Section 301.89–3 would be

amended by revising paragraph (e)(3) to

read as follows:

§ 301.89–3 Regulated areas.

* * * * *

(e) * * *

(3) Surveillance areas. A surveillance

area is a distinct definable area where

Karnal bunt is not known to exist but,

because of its proximity to a field found

during survey to contain a bunted

kernel or because of its association with

grain at a handling facility containing a

bunted kernel, where intensive surveys

are required.

* * * * *

4. In § 301.89–5, the period at the end

of paragraph (a)(3) would be removed

and a semicolon added in its place and

a new paragraph (a)(4) would be added

to read as follows:

§ 301.89–5 Movement of regulated articles

from regulated areas.

(a) * * *

(4) Without a certificate or limited

permit, provided the regulated article is

straw/stalks/seed heads for decorative

purposes that have been processed or

manufactured prior to movement and

are intended for use indoors.

* * * * *

5. Section 301.89–6 would be

amended as follows:

a. By revising paragraph (b) to read as

set forth below.

b. By adding a new paragraph (d) to

read as set forth below.

§ 301.89–6 Issuance of a certificate or

limited permit.

* * * * *

(b) To be eligible for movement under

a certificate, grain from a field within a

surveillance area must be tested prior to

its movement from the field or before it

is commingled with other grains and

must be found free from bunted kernels.

If bunted kernels are found, the grain

will be eligible for movement only

under a limited permit issued in

accordance with paragraph (c) of this

section.

* * * * *

(d) To be eligible for movement as

seed under certificate, commercial lots

of seed grown in a restricted area for

seed must:

(1) Originate from a field or fields that

are not part of a restricted area for

regulated articles other than seed or a

surveillance area;

(2) Originate from a field or fields

where the most recent previous Karnal

bunt host crop tested negative for Karnal

bunt;

(3) Test negative for Karnal bunt; and

(4) Be treated in accordance with

§ 301.89–13(e).

* * * * *

6. Section 301.89–12 would be

revised to read as follows:

§ 301.89–12 Cleaning and disinfection.

(a) Mechanized harvesting equipment

and seed conditioning equipment that

have been used in the production of

Karnal bunt host crops must be cleaned

and disinfected in accordance with

§ 301.89–13 prior to movement from a

regulated area.

(b) Prior to movement from a

regulated area, vegetable crops grown in

fields that are in restricted areas for

regulated articles other than seed must

be cleaned of all soil and plant debris

or be moved under limited permit in

accordance with § 301.89–6.

7. Section 301.89–13 would be

amended as follows:
4204 Federal Register / Vol. 63, No. 18 /Wednesday, January 28, 1998 / Proposed Rules

a. By revising paragraph (a)

introductory text to read as set forth

below.

b. By revising paragraphs (b) and (c)

to read as set forth below.

c. By revising paragraph (e)

introductory text to read as set forth

below.

d. By removing paragraph (f).

§ 301.89–13 Treatments.

(a) All conveyances, mechanized

harvesting equipment, seed

conditioning equipment, grain elevators,

and structures used for storing and

handling wheat, durum wheat, or

triticale required to be cleaned and

disinfected under this subpart must be

cleaned by removing all soil and plant

debris and disinfected by one of the

methods specified in paragraphs (a)(1)

through (a)(4) of this section, unless a

particular treatment is designated by an

inspector. The treatment used must be

that specified by an inspector if that

treatment is deemed most effective in a

given situation:

* * * * *

(b) Soil must be wet to a depth of 1

inch by water (irrigation or rain) just

prior to treatment and must be treated

by fumigation with methyl bromide at

the dosage of 15 pounds/1000 cubic feet

for 96 hours.

(c) Millfeed must be treated with a

moist heat treatment of 170 °F for at

least 1 minute if the millfeed resulted

from the milling of wheat, durum

wheat, or triticale that tested positive for

Karnal bunt.

* * * * *

(e) Commercial lots of seed

originating from an eligible restricted

area for seed, as described in § 301.89–

6(d)(1), or seed originating from a

restricted area for seed that will be used

for germplasm or for research purposes,

must be treated with a 1.5 percent

aqueous solution of sodium

hypochlorite (=30 percent household

bleach) containing 2 mL of Tween 20TM

per liter agitated for 10 minutes at room

temperature followed by a 15-minute

rinse with clean, running water and

then by drying, and either:

* * * * *

PART 319—FOREIGN QUARANTINE

NOTICES

8. The authority citation for part 319

would continue 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).

9. In § 319.59–1, the definition of

‘‘Karnal bunt’’ would be revised to read

as follows:

§ 319.59–1 Definitions.

* * * * *

Karnal bunt. A plant disease caused

by the fungus Tilletia indica (Mitra)

Mundkur.

* * * * *

Done in Washington, DC, this 20th day of

January 1998.

Terry L. Medley,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 98–1776 Filed 1–27–98; 8:45 am]

BILLING CODE 3410–34–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–120882–97]

RIN 1545–AV81

Continuity of Interest

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking

by cross-reference to temporary

regulations and notice of public hearing.

SUMMARY: The IRS is issuing temporary

regulations published elsewhere in this

issue of the Federal Register providing

guidance regarding satisfaction of the

continuity of interest requirement for

corporate reorganizations. The

temporary regulations affect

corporations and their shareholders.

The text of those temporary regulations

also serves as the text of these proposed

regulations. In addition, this document

provides notice of a public hearing on

these proposed regulations.

DATES: Written comments and outlines

of topics to be discussed at the hearing

scheduled for Tuesday, May 26, 1998,

must be received by Tuesday, May 5,

1998.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (REG–120882–97),

room 5226, Internal Revenue Service,

POB 7604, Ben Franklin Station,

Washington, DC 20044. Submissions

may be hand delivered between the

hours of 8 a.m. and 5 p.m. to

CC:DOM:CORP:R (REG–120882–97),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue NW.,

Washington, DC. Alternatively,

taxpayers may submit comments

electronically via the Internet by

selecting the ‘‘Tax Regs’’ option on the

IRS Home Page, or by submitting

comments directly to the IRS Internet

site at http://www.irs.ustreas.gov/prod/

taxlregs/comments.html. The public

hearing will be held in room 2615,

Internal Revenue Building, 1111

Constitution Avenue NW., Washington,

DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Phoebe

Bennett, (202) 622–7750; concerning

submissions and the hearing, LaNita

Van Dyke, (202) 622–7190 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations published

elsewhere in this issue of the Federal

Register amend the Income Tax

Regulations (26 CFR part 1) under

section 368. The temporary regulations

provide that in determining whether the

continuity of interest requirement for

corporate reorganizations is satisfied

with respect to a potential

reorganization, a proprietary interest in

the target corporation is not preserved

if, in connection with a potential

reorganization, it is redeemed or

acquired by a person related to the

target corporation, or to the extent that,

prior to and in connection with a

potential reorganization, an

extraordinary distribution is made with

respect to it.

The text of the temporary regulations

also serves as the text of these proposed

regulations. The preamble to the

temporary regulations describes the

temporary regulations.

The temporary regulations do not

provide guidance on the determination

of whether a distribution will be treated

as an extraordinary distribution, except

that the rules of section 1059 do not

apply for this purpose. The IRS and

Treasury Department invite comments

on whether the regulations should

provide more specific guidance in this

area.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It also has

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) does not apply to these

regulations, and because the regulation

does not impose a collection of

information on small entities, the

Regulatory Flexibility Act (5 U.S.C.

chapter 6) does not apply. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.