21120 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

Individual Retirement Record (IRR) and

forward it to OPM within the time

standards prescribed by OPM. However,

if an employee transfers to another

position covered under FERS—

(1) Within the same agency, and

(2) To a position serviced by another

payroll office, the agency may, in lieu of

forwarding an IRR to OPM at the time

of the intra-agency transfer, record the

transfer for future IRR certification in an

internal automated system of records.

* * * * *

[FR Doc. 00–9853 Filed 4–19–00; 8:45 am]

BILLING CODE 6325–01–P

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

7 CFR Part 319

[Docket No. 96–031–2]

RIN 0579–AA82

Importation of Wood Chips From Chile

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Final rule.

SUMMARY: We are adopting as a final

rule, with changes, a proposed rule to

allow the importation of Pinus radiata

wood chips from Chile if the surfaces of

the wood chips are treated with a

specified pesticide mixture. This change

to the regulations for importing logs,

lumber, and other unmanufactured

wood articles will provide another

alternative for persons interested in

importing wood chips from Chile while

continuing to protect against the

introduction of dangerous plant pests.

EFFECTIVE DATE: May 22, 2000.

FOR FURTHER INFORMATION CONTACT:

Donna L. West, Import Specialist,

Phytosanitary Issues Management Team,

PPQ, APHIS, 4700 River Road Unit 140,

Riverdale, MD 20737–1236; (301) 734–

6799.

SUPPLEMENTARY INFORMATION:

Background

Logs, lumber, and other

unmanufactured wood articles imported

into the United States could pose a

significant hazard of introducing plant

pests and pathogens detrimental to

agriculture and to natural, cultivated,

and urban forest resources. The

regulations in 7 CFR 319.40–1 through

319.40–11 (referred to below as the

regulations) contain provisions to

eliminate any significant plant pest risk

presented by the importation of logs,

lumber, and other unmanufactured

wood articles.

On July 28, 1998, the Animal and

Plant Health Inspection Service (APHIS)

published in the Federal Register (63

FR 40193–40200, Docket No. 96–031–1)

a proposed rule to amend the

regulations to allow the importation of

Pinus radiata wood chips from Chile if

the surfaces of the wood chips are

treated with a specified pesticide

mixture.

We solicited comments concerning

our proposed rule for 60 days ending

September 28, 1998. We received 10

comments by that date. The comments

were from four environmental groups

(with overlapping management), three

State governments, two corporations,

and the Government of Chile. Seven of

the commenters supported the proposed

rule, although several stated that there

were deficiencies in the rule that should

be corrected before the rule could win

their full support. The remaining

commenters disagreed with the

proposed rule or suggested alternatives

to it. All of the issues raised by the

commenters are discussed below.

Comment—Control of Stain Fungi:

Several commenters questioned whether

the surface pesticide treatment or other

requirements of the rule would prevent

the introduction of stain fungi,

particularly of the genus Ophiostoma,

that may be associated with wood chips

from Chile.

Response: The surface pesticide

treatment contained in the rule has been

proven effective against stain fungi,

including stain fungi of the genus

Ophiostoma. Research demonstrating

this effectiveness has been published

(see, for example, Morrell, Freitag, and

Silva, ‘‘Protection of Freshly Cut Radiata

Pine Chips From Fungal Attack,’’ Forest

Prod. J. 48(2):57–59).

Comment—Heat Treatment Should

Be Required: Several commenters stated

that the position of most experts, State

regulators, and members of the public is

that heat treatment of imported wood

articles capable of bearing pests is the

only safe and acceptable method of

importation. They stated that fumigation

or surface pesticide treatment are not

economically feasible or effective

alternatives.

Response: ‘‘Safe’’ and ‘‘acceptable’’

are terms whose meanings vary greatly

depending on individual values. We are

assuming that the comments refer to

safety and acceptability in terms of the

effectiveness of systems in preventing

the introduction and dissemination in

the United States of dangerous plant

pests. No commenter submitted data

proving that a heat treatment system is

‘‘safer’’ than the proposed surface

pesticide treatment system. The new

surface pesticide treatment would

reduce the risk associated with any

plant pest introduction to a negligible

level.

Regarding the practicality of heat

treating wood chips, heat treated wood

chips are less useful than wood chips

that have undergone less destructive

treatments. Heat treatment decreases the

quality of wood chips and renders them

useless for many specific manufacturing

purposes. Regarding the economic

feasibility of the proposed surface

pesticide treatment and fumigation,

wood product companies have

requested that they be able to utilize the

surface pesticide alternative and,

therefore, presumably find it

economically feasible. Under normal

business practices, it is not

economically feasible for methyl

bromide to effectively penetrate wood

chips to more than 120 cubic feet. When

penetration is inadequate, the

requirements of the regulations are not

met, and the wood chips cannot be

imported under the fumigation

treatment option. In theory, it is

possible to effectively penetrate large

piles of wood chips by using a

specialized technique to distribute the

fumigant (e.g., a vacuum chamber or

submerged gas tubes); however, the cost

of utilizing such a technique is so

exorbitant that it becomes economically

infeasible. Consequently, no one has

imported large shipments of wood

chips, fumigated as a whole, under the

fumigation treatment option.

Fumigation remains in the regulations

as a treatment option for wood chips

because it is used for small shipments.

One reason for developing the surface

pesticide treatment in the proposal was

to compensate for the unavailability of

fumigation as a treatment method for

large shipments of wood chips.

Comment—Pesticide Application

Protocol and Quality Control: One

commenter cited research by Dr. Jeffrey

J. Morell of Oregon State University that

was used to support the treatment in the

proposed rule. The commenter noted

that the only pathogens tracked for

efficacy in the research were

Trichoderma species and that there was

no efficacy evaluation for insects. The

commenter stated that Morell concluded

the following modifications of the

surface pesticide treatment system may

be needed: An increase in biocide

concentration; improved uniformity of

the spray system; routine assessment of

chip treatment quality; and a system for

regular microbiological assessment of

organisms present in imported wood

chips.

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21121

Response: Trichoderma species were

not the only pathogens tracked in the

research. Treated and untreated wood

chips were placed in plastic bags and

incubated for 16 weeks. The bag

interiors were sprayed with suspensions

of spores and hyphal fragments of

Alternaria alternata, Ophiostoma

piceae, Phialophora spp., and

Aspergillus niger. The wood chips were

then regularly visually assessed for

growth of the inoculum or other species.

Various Trichoderma species caused the

highest degree of wood chip

discoloration in the tests, but they were

not the sole organisms tracked.

The research cited did not evaluate

efficacy against insects because it was

not practical to do so in an experimental

protocol addressing fungicidal efficacy.

The report did note that while insect

infestation of wood is always a risk, it

is sharply reduced in wood chip

shipments due to the fragmented nature

of the wood and the near absence of

bark. The report also noted that the

presence of low levels of an insecticide

such as chlorpyrifos should provide

added insurance against incidental

oviposition. The proposed treatment

included, along with fungicides, an

insecticide containing 44.9 percent of

the active ingredient chlorpyrifos

phosphorothioate. This, along with the

regulatory requirement that the wood

chips be produced from debarked,

plantation-grown trees, should reduce

the risk of introduction of dangerous

insects with wood chips imported under

the regulations to a negligible level.

The highest concentration of the

proposed fungicide tested in the

research was a 400:1 dilution. The

research found that while this dilution

achieved acceptable results in

preventing fungal growth for 4 weeks

after treatment, the growth levels

increased during the period from 4

weeks to 16 weeks after treatment. The

research suggested that for long-term

protection, dilution levels around 200:1

would be more appropriate. When

diluted in accordance with the label

instructions, as proposed, the treatment

solution would in fact be stronger than

a 200:1 dilution. Since this standard

exceeds that recommended by the

researcher, we are making no change

based on this comment.

Regarding the comment that the

researcher recommended improvement

to the uniformity of the spray system,

the researcher specifically

recommended improvement of the

current spray system to increase the

uniformity of treatment to at least 70 to

80 percent average coverage of the wood

chips. The proposed rule actually

required that the wood chips be sprayed

so that all the chips are exposed to the

chemical on all sides. This standard

exceeds that recommended by the

researcher; therefore, we are making no

change based on this comment. We do

not believe it is necessary to specify

detailed engineering standards for how

chip producers must achieve this degree

of coverage (placement and number of

spray nozzles, conveyer belt speed and

configuration, etc.) because this would

limit the producers’ options for

developing their own cost-effective

solutions to the problem.

As noted by the commenter, the

researcher also recommended

establishment of two quality control and

monitoring systems to check whether

chips are being properly treated and to

check whether dangerous fungi are

present on wood chips imported under

this system. Specifically, the researcher

recommended routine assessment of

chip treatment quality through dye tests

and image analysis of chip samples and

regular microbiological assessment of

organisms present on wood chip

shipments entering the United States.

These activities fall under the category

of monitoring and enforcement

activities that APHIS may employ to

ensure that regulated parties are

complying with the regulations. Since

these are internal agency activities that

do not impose any requirement for

action by an outside party, it is not

necessary to include standards for these

activities in the regulations. However,

APHIS will monitor treatments to

ensure that wood chips imported under

the regulations have been properly

treated and do not present a risk of

introducing dangerous plant pests.

Comment—Time Periods Allowed

Between Harvesting of Trees and

Treatment of Wood Chips; Time Period

Allowed Between Arrival in United

States and Processing of Wood Chips:

One commenter objected that the

proposal would allow wood chips that

were treated immediately after a tree

was felled and chipped to sit for 45 days

before export from Chile to the United

States, and that the research on the

treatment showed its efficacy declined

after 4 weeks. Two commenters objected

to allowing storage of wood chips from

Chile for up to 60 days after arrival at

a facility operating under a compliance

agreement and prior to processing. They

noted that even the 30-day limit in the

current regulations allows too much

time for potential pests to escape from

stored wood chips.

Response: We are making two changes

in response to these comments. The rule

still will require that no more than 45

days may elapse between the time the

trees used to make the wood chips were

felled and the time the wood chips are

exported; however, the wood chips

must be treated with the surface

pesticide treatment within 24 hours

after the log is chipped, and they must

be retreated with the surface pesticide

treatment if more than 30 days elapses

between the date of the first treatment

and the date of export. We are also

changing the requirement for when

wood chips imported from Chile under

the regulations must be processed by

reducing the time from 60 days after

arrival at the processing facility to 45

days. We believe this is a safe time

frame, given the requirements of the

regulations for safeguards during

movement and storage of the wood

chips in the United States.

Comment—Adequacy of

Environmental Assessment: Several

commenters questioned whether the

environmental assessment adequately

dealt with human health and ecological

risks that may be posed by pesticide

residues on wood chips imported under

the regulations. Specific concerns were

raised about ammonium chloride,

carbamate, and chloropyrifos residues,

including carcinogenic effects and these

substances’ propensity for leaching into

groundwater.

Response: The environmental

assessment (EA) was revised in May

1999, and a finding of no significant

impact (FONSI) has been signed. The

revised EA provides information on the

toxicity of the pesticides and the

protective measures that reduce the

potential for human and nontarget

wildlife exposure to those pesticides.

Copies of the EA and FONSI are

available from the person identified

under FOR FURTHER INFORMATION

CONTACT, and will also be available at

the following Internet address until at

least March 1, 2000: http://

www.aphis.usda.gov/ppd/eachips.pdf.

The main pesticides planned for

treating wood chips are a fungicide with

the active ingredients 64.8 percent

didecyl dimethyl ammonium chloride

(DDAC) and 7.6 percent 3-iodo-2-

propynyl butylcarbamate (IPBC) and an

insecticide with the active ingredient

44.9 percent chlorpyrifos

phosphorothioate. The U.S.

Environmental Protection Agency (EPA)

approved these pesticides for specific

uses on wood articles. The current label

instructions call for these pesticides,

when used as a spray treatment, to be

diluted before use in the ratios of one

gallon fungicide to 25–50 gallons of

water for the fungicide, and one gallon

of the insecticide to 50 gallons of water.

When mixed together, the amounts of

fungicide, insecticide, and water must

be calculated so that each of the

21122 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

fungicide and insecticide achieve a

dilution within the range specified on

its respective label. When diluted to a

1:50 ratio, the fungicide-insecticide

mixture contains no more than 1.3

percent DDAC, 0.15 percent IPBC, and

0.9 percent chlorpyrifos

phosphorothioate. The label for each

pesticide carries exact information with

detailed directions, including any

restrictions for use or special

precautions, and specifies any special

equipment that must be used when

applying these chemicals. The label also

gives special disposal instructions for

pesticide waste and containers. All

pesticides used to treat wood chips for

export from Chile to the United States

are required to be applied according to

the EPA-approved pesticide label.

The pesticides do leave residues,

which would maintain the pest-free

status of the wood chips while they are

in transit to the United States. Although

the degradation of IPBC and its primary

degradation products is rapid (half lives

of less than a week) (Troy Corporation,

1999), the caustic nature of the

ammonium chloride on the wood chips

prevents any potential for fungal

reinfestation. The ammonium chloride

in the pesticide is relatively volatile,

and residues would mostly dissipate

before arrival in the United States. The

chlorpyrifos residues are more

persistent and would continue to

eliminate insect pest risks during

transit.

The physical and toxicological

properties of the pesticides determine

the potential for nontarget hazards. The

caustic nature of ammonium chloride

can be highly irritating to eyes, skin,

and the respiratory system. Unlike most

carbamates, IPBC has not been shown to

inhibit plasma and red blood cell

acetylcholinesterase in vitro at

concentrations as high as 1×10¥4 molar

(Troy Corporation, 1999). As a result,

the acute toxicity of IPBC is low by all

routes of exposure. However, IPBC can

be an eye and skin irritant. Chronic

dietary studies of IPBC have not found

any evidence of carcinogenicity in

either rats or mice (Troy Corporation,

1999) and have found adverse effects

only at high exposures (40 milligram

IPBC per kilogram body weight per day

or greater). IPBC is of slight acute

toxicity to birds but is highly to very

highly toxic to fish and other aquatic

organisms. Chlorpyrifos

phosphorothioate is an

organophosphate insecticide that is

moderately toxic to mammals (Smith,

1987). The toxicity occurs primarily

through inhibition of

acetylcholinesterase activity (Klaassen

et al., 1986). The studies of chlorpyrifos

phosphorothioate have not found any

evidence of carcinogenic effects.

Chlorpyrifos phosphorothioate is

moderately to severely toxic to birds

and very highly toxic to fish and other

aquatic invertebrates (Smith, 1987;

Mayer and Ellersieck, 1986).

The potential for human exposure to

pesticides used in treatment of the wood

chips is minimized by adherence to

label requirements for proper

application and to provisions in the rule

regarding handling of the wood chips.

The required adherence to the pesticide

label prevents excessive exposure to

applicators. The EPA has determined

that the potential for adverse effects on

human health is minimal when

pesticides are applied according to label

instructions. The rapid degradation of

the pesticides results in steadily

decreasing residues during transit. A

covered conveyor belt moves the wood

chips during unloading to expedite the

process and minimize potential human

exposure. Workers associated with the

unloading activity are required to wear

protective clothing and safety glasses.

The covered conveyor belt is designed

to prevent wood chips from spilling,

falling, or being blown from the means

of conveyance.

Although the wood chips may still

have some residual pesticide residues

before processing, the heat treatment

and bleaching associated with the pulp

and paper process would eliminate any

remaining residues. Therefore, the

potential for exposure to pesticide

residues is limited to the personnel

involved in treating the wood chips in

Chile and to the personnel involved in

moving the treated wood chips. The

required safety precautions, protective

clothing, and safety glasses preclude

unacceptable pesticide exposures.

Exposure of nontarget species to

residues from treated wood chips is

minimal. The treatment and transport

procedures preclude the presence of

nontarget wildlife. Although wood

chips that have been unloaded may be

stored on a paved surface for up to 45

days, the remaining residues would be

low. Birds and other terrestrial

nontarget wildlife are unlikely to bother

the wood chips with the frequent

human activity on the property. The

remaining residues (primarily

chlorpyrifos) strongly adsorb to the

organic matter in the wood chips, and

this adsorption minimizes movement of

residues in runoff following

precipitation. In addition, water runoff

is collected from the paved pads where

the wood chips would be stored and is

treated to prevent any environmental

contamination of surrounding water

bodies. This prevents any potential

exposure to aquatic organisms.

Comment—Fumigated Wood Chips

From Brazil Allowed Importation Into

Louisiana. One commenter stated that

wood chips from Brazil are currently

being imported through Mobile, AL,

into Louisiana subject only to

fumigation in the ship’s hold. The

commenter asked whether such

importation is safe without the surface

pesticide treatment in the proposed rule

and, if so, why the surface pesticide

treatment, instead of fumigation, would

be needed for wood chips from Chile.

Response: Based on the permit issued

for this importation and records

obtained from the State Plant Health

Director in Louisiana, we have

determined that two shipments of

Caribbean pine chips from Brazil were

imported into Mobile, AL, in 1997, and

were then trucked to a paper mill in

Bogaloosa, LA, where the chips were

processed. The wood chips were

derived from live, healthy, tropical

species of plantation-grown trees grown

in tropical areas, and, therefore, were

not required by APHIS to be fumigated,

in accordance with § 319.40–6(c)(1)(i) of

the regulations. The shipments also met

all of the other requirements of

§ 319.40–6(c) (e.g., no other regulated

articles in the holds; movement to the

paper mill under a compliance

agreement designed to prevent spread of

plant pests during and after movement

to the mill; processed within 30 days

after arrival at the mill). The wood chips

moved in sealed trucks from the port of

entry to the destination paper mill

where they were processed into

manufactured goods. This importation

was therefore in compliance with the

regulations. As discussed in the

proposed rule, the surface pesticide

treatment was proposed as another

alternative for importing wood chips

from Chile, not a replacement for the

current requirements contained in

§ 319.40–6(c) for importing wood chips

from all sources. Therefore, this

importation does not affect the basis for

the proposed rule for importing wood

chips from Chile subject to a surface

pesticide spray and other requirements.

Therefore, for the reasons given in the

proposed rule and in this document, we

are adopting the proposed rule as a final

rule with the changes discussed in this

document.

Executive Order 12866

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.

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21123

1Robert Flynn, private wood industry consultant,

personal communication, drawing in part on

information from ‘‘Southern Pulpwood Production,

1996,’’ by Tony Johnson, USDA Forest Service,

Southern Research Station, Resource Bulletin SRS–

21.

2Richard Haynes, USDA Forest Service, personal

communication.

3Chris Twarok, Department of Commerce,

personal communication. Landscaping is a

secondary use.

4 J.S. Morrell, Department of Forest Products,

Oregon State University, personal communication.

5The pulp fiber industry has traditionally been a

softwood chip market, but this has been changing

in recent years in the eastern United States. Pulp

mills in the southeastern United States are relying

increasingly on hardwood chips, where only

softwood chips were once used. Long-term rising

demand for wood chips is also reflected in an

increasing number of ‘‘chipping’’ mills producing

only wood chips; at least 100 of more than 140

wood chip mills in the southeastern United States

have been constructed within the past decade.

(Dennis Haldeman and Doug Sloane, personal

communications).

6U.S. wood chip import and export statistics

from Department of Commerce, Bureau of the

Census.

7FAS Global Agricultural Trade System, using

data from the United Nations Statistical Office.

8Richard Haynes, USDA Forest Service, personal

communication. Domestic prices based on export

prices for the Columbia-Snake Customs District,

adjusted to ‘‘green’’ metric tons. Without

consideration of transportation costs, these quoted

prices may overestimate the price realized at a

Pacific Northwest pulp mill for U.S. chips and

underestimate the price realized for Chilean chips.

Moreover, average yearly prices conceal seasonal

variations.

9 GAS Global Agricultural Trade System, using

data from the United Nations Statistical Office.

10Robert Rummel, American Pulpwood

Association, Robert Flynn, Robert Flynn and

Associates, personal communications.

Set forth below are the economic

analysis and cost-benefit analysis

prepared for this rule in accordance

with Executive Order 12866, as well as

the final regulatory flexibility analysis

regarding the economic effects of this

rule on small entities, prepared in

accordance with 5 U.S.C. 604.

Discussion

Under the Federal Plant Pest Act (7

U.S.C. 150aa–150jj), the Secretary of

Agriculture is authorized to promulgate

regulations requiring inspection of

products and articles as a condition of

their movement into or through the

United States and imposing other

conditions upon such movement, in

order to prevent the dissemination of

plant pests into the United States.

This rule amends the regulations for

importing wood chips to allow the

importation of Pinus radiata wood chips

from Chile if the surfaces of the wood

chips are treated with a pesticide

approved by the Administrator for use

on wood chips from Chile. Allowing the

use of a surface pesticide treatment will

make it possible to effectively treat large

shipments of wood chips. Wood chips

are used for making pulp used in the

production of paper. U.S. pulp

producers want to import Pinus radiata

wood chips from Chile because these

wood chips produce a high quality

pulp. However, there is no treatment in

the regulations that is both practical and

effective in treating large shipments of

these wood chips.

APHIS regulations in place until now

have called for, along with other

requirements, heat treatment or

fumigation of imported wood materials.

While these safeguards are appropriate

for most wood materials, they are less

useful for wood chips. Heating of wood

chips is time consuming and decreases

the quality of the chips. Fumigation of

large shipments of wood chips is not

economically practicable. Therefore,

importation of Pinus radiata wood chips

from Chile will be allowed following

their surface treatment with a specified

pesticide mixture. As discussed below,

the efficacy of this treatment is

demonstrated by 16 trial shipments of

surface-treated Pinus radiata wood

chips from Chile that have arrived

without pests since February 1995.

Approximately $40 million worth of

wood chips is imported into the United

States each year for use in making pulp

for paper production. Coniferous wood

chip imports by the United States

comprise less than one percent of

domestic production.1 About 30 percent

of U.S. wood chip production takes

place in the Pacific Northwest.2 Wood

chip imports to the United States have

been mainly to the Pacific Northwest,

although there have been recent

shipments of Caribbean pine from Brazil

that have entered through the port at

Mobile, AL.

Wood chips are used mainly in the

manufacture of pulp that is then used to

make paper and panel products.3 Test

shipments of Pinus radiata wood chips

from Chile during the last 3 years have

been so utilized, and it is expected that

future shipments facilitated by the

surface pesticide treatment in this rule

will also be used to make pulp.4

The demand for wood chips used by

pulp mills is a derived demand,

depending on the market for pulp. 5

While the long-term demand for pulp in

the United States and internationally is

expected to continue to expand (with

increasing reliance on wood from

plantation forests), pulp and wood chip

prices can be volatile in the short term,

causing relatively abrupt market

changes. The variable demand for wood

chips during the few years the Chilean

test shipments have taken place

illustrates how rapidly market

conditions can change. Coniferous wood

chip imports in 1995 by the United

States nearly tripled those of 1994, with

imports from Canada rising more than

threefold, and test shipments from Chile

doubling and displacing 1994 imports

from Mexico.6 The increase in demand

was reflected in a 60 percent increase in

the price paid in the United States for

Chilean wood chips, from $42 per ton

in 1994, to $67 per ton in 1995.7

Comparable U.S. prices for domestically

produced wood chips in these 2 years

were $56 per ton in 1994 and $72 per

ton in 1995.8 Since then, prices have

receded due to the current abundant

supply of wood chips.

Chile’s coniferous wood chip exports

to the United States, 1994–1996, and

Chile’s share of coniferous wood chip

imports by the United States are as

follows: 9

Metric tons Percent of

imports

1994 .................. 00.05 168

1995 .................. 48.29 339,665

1996 .................. 44.06 329,387

In 1994, 57 percent of coniferous

wood chip imports by the United States

were from Mexico and 43 percent were

from Canada. In 1995, pulp prices

reached record levels, with U.S.

coniferous wood chip imports more

than doubling from the year before, to

703,000 metric tons from 331,000 metric

tons. That year, no coniferous wood

chips were imported from Mexico, 48

percent of imports came from Chile, 49

percent came from Canada, and 3

percent came from Brazil. In 1996,

Canada’s share of U.S. coniferous wood

chip imports increased to 56 percent, 44

percent came from Chile, and none was

received from Brazil.

Production of Pinus radiata wood

chips in the United States is essentially

nil, due to the relatively small region in

which it grows well, about 6 miles

inland along the coastal fog belt of

central California (hence its common

name, the Monterey pine). There may be

some production from sawmill residues,

but the quantity, if any, is negligible. No

pulp mills are currently using

domestically produced Pinus radiata

wood chips.10

Economic effects on the U.S. wood

chip industry of potential Chilean

imports, therefore, depend on the

substitutability of Pinus radiata wood

chips for other softwood or for

hardwood chips. Instances in which

Pinus radiata and hardwood chips

21124 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

11Chris Twarok, Department of Commerce,

personal communication.

12 Information on Chile’s wood chip production

and exports taken from Wood Products:

International Trade and Foreign Markets, FAS

Circular Series WP 3–97, August 1997, Table 15.

13 Information on Chile’s Pinus radiata wood chip

exports from APHIS, IS.

14 ‘‘Forest Products, Annual Report,’’ Office of

Agricultural Affairs, American Embassy, Santiago,

AGR Number CI7033, 1997.

15Fernando Hartwig, Inversiones Forestales

C.C.A., personal communication.

16The United States is a net exporter of

coniferous and nonconiferous wood chips.

Compared to coniferous wood chip imports of 0.75

million tons in 1996, the United States exporter

1.78 million tons. Nonconiferous wood chip

imports and exports by the United States exhibit an

even larger difference, with 1996 imports totaling

about 55,000 tons and exports at 4.29 million tons.

(Department of Commerce, Bureau of the Census).

might substitute for each other are

relatively few. However, Pinus radiata

wood chips can generally be used in

place of other coniferous chips such as

lodgepole pine and ponderosa pine,

although milling adjustments may be

required—and costs incurred—due to

differences in resin content.11

The test shipments of Chilean wood

chips were received by pulp mills in the

Pacific Northwest. This region is

expected to continue to be the

destination of future shipments, given

the additional transportation costs that

would be incurred by pulp mills in the

eastern and southeastern United States.

With sales regionally concentrated, little

economic effect from this rule is

expected outside the Pacific Northwest.

In sum, the test shipments from Chile

have shown the value to Pacific

Northwest pulp mills of Chilean wood

chips in supplementing domestic and

Canadian wood chip supplies when the

price of pulp makes such shipments

economically feasible. Pulp mills able to

adjust milling processes to utilize Pinus

radiata wood chips can benefit by

making profitable use of Chilean

imports when other sources are

insufficient or more costly. As now

described, Chile has the production

capacity to be a reliable source of Pinus

radiata wood chips to the United States.

Chile’s wood chip industry grew

significantly during the 1980s, with

production increasing more than

tenfold, from 0.44 million tons in 1984,

to 5.03 million tons in 1990.12 Chile’s

wood chip exports during this period

rose from none in 1984, to 2.23 million

tons (44 percent of production) in 1990.

During the first half of the 1990s, both

production and export levels fluctuated,

but without the dramatic increases of

the 1980s. Annual production between

1990 and 1995 averaged about 5.80

million tons, and exports averaged

about 3.05 million tons (about 53

percent of production).

Pinus radiata wood chips comprise a

minor share of Chile’s wood chip

exports.13 Of the approximately 3

million tons of wood chips exported

annually between 1990 and 1996, Pinus

radiata’s share averaged 12 percent.

Between January and August, 1997, 10

percent of Chile’s wood chip exports

were Pinus radiata.

Japan was, by far, the principal

importer of Chilean wood chips from

1990 to 1996. (Country destinations by

species are not known for these years.)

From 1990 to 1994, an average of 96

percent of Chile’s wood chip exports

were received by Japan. With the test

shipments of Pinus radiata to the

United States in 1995 and 1996, Japan’s

share of Chile’s wood chip exports fell

to 87 percent and 83 percent,

respectively; and the U.S. share for

these 2 years was 9 percent and 11

percent.

From January to August, 1997, Japan’s

share of Chile’s wood chip exports was

89 percent. The United States and Japan

each received about one-half of Chile’s

Pinus radiata wood chip exports during

this 8-month period.

Chile’s development of its forest

products sector rests to a large degree on

the success of Pinus radiata; its share of

Chile’s wood chip exports is expected to

increase. By 1996 there were

approximately 1,387,000 hectares

planted in Pinus radiata, representing

75 percent of plantation plantings and

15 percent of Chile’s forest resources

including native forest.14 This pine

species matures at 20 to 24 years in

Chile (thinnings are available for use

after 15 years), compared to 30 years in

New Zealand and Australia, and 40 to

60 years in North America and Europe.

Production and exports are expected to

peak during the coming decade, when

trees on most of the Pinus radiata

plantations will be ready to be

harvested.

One set of projections describing the

volume of Pinus radiata wood chips

that could be exported to the United

States over the coming 4 years,

assuming favorable prices, is as

follows: 15

POTENTIAL Pinus radiata WOOD CHIP

EXPORTS

[in million tons]

Year From Chile to the United States

1999 .... 0.60 to 1.00.

2000 .... 1.00 to 1.20.

2001 .... 0.90 to 1.00.

2002 .... 0.85 to 0.90.

Realization of these export levels will

depend on the demand for Pinus radiata

wood chips by U.S. pulp mills. As has

been described, international short-term

demand for pulp fibers can be volatile.

When prices fell between 1995 and

1996, Chile’s forestry sector exports

declined by 24 percent, mainly because

of reduced sales to Japan.

Chile’s stock of Pinus radiata

available for harvest will enable Pacific

Northwest importers to take advantage

of a ready source as wood chip prices

rebound. In 1996, all coniferous wood

chip imports by the United States

totaled about 0.75 million tons, of

which 0.33 million tons were imported

from Chile.16 Projected export levels

shown above would increase U.S. wood

chip imports above current levels and

establish Chile as a major foreign

supplier. Wood chip prices in the

United States will determine whether

these projections are overly optimistic.

Summary

Benefits from allowing Pinus radiata

wood chips to be imported from Chile

include lower priced wood chips for

pulp mills in the Pacific Northwest and

lower priced products to consumers if

lower input prices are reflected in lower

retail prices. Greater choice among

species for wood chip raw material is

another benefit. Costs associated with

risks of introducing pests are negligible

because the procedures required to

import Chilean wood chips under this

rule are designed to keep the risk of

importing pests to a negligible level.

Since imports will be concentrated in

the Pacific Northwest, economic effects

will be felt mainly by wood chip

producers and purchasers in the region.

Wood chip producers may bear revenue

losses if they are unable to compete

with lower cost imports or adjust their

product mix.

Test shipments of Pinus radiata wood

chips from Chile to the Pacific

Northwest during recent years have

demonstrated the effectiveness of

phytosanitary safeguards in this rule, as

well as the economic feasibility of chip

imports from Chile for the region’s pulp

mills. Chile’s large and expanding

forestry plantations are expected to

provide a reliable source for future

wood chip imports when there is

sufficient demand. At present, the

abundant supply of wood chips in the

Pacific Northwest precludes imports, a

market situation that differs

dramatically from that of 4 years ago

when wood chip prices reached an alltime high. Pacific Northwest pulp mills

depend primarily on domestic wood

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21125

17Richard Haynes, USDA Forest Service,

personal communication.

18This is the latest year for which data is

available from the ‘‘SBA Office of Advocacy,

Statistics on Small Business’’ Web home page.

19Richard Haynes, USDA Forest Service,

personal communication.

20Byron Lundi, Georgia-Pacific, personal

communication.

chip suppliers but turn to overseas

sources when domestic wood chip

prices are high. Chilean imports can be

expected to be competitively marketed

when the domestic wood chip supply is

low, since Pinus radiata wood chips can

substitute for most other softwood

chips. Some domestic wood chip

producers may be adversely affected by

Chilean imports, but the effect is not

likely to be widespread; most domestic

wood chip producers who cannot

compete may adjust their product mix

away from wood chips to other mill

products.

Regulatory Flexibility Act

In accordance with 5 U.S.C. 603, we

performed an initial regulatory

flexibility analysis, which was included

in the proposed rule and which invited

submission of comments and data to

assist in a comprehensive analysis of the

effects of this rule on small entities. We

received one comment addressing the

initial regulatory flexibility analysis.

This comment stressed that the

economics of domestic industries that

might import wood chips are dynamic

and change almost monthly; and,

therefore, any prediction of import

volume would be solely a guess. The

comment also stated that if Chilean

wood chips cost more than domestic

supplies, they will be sought only if

domestic supplies diminish below the

amount required, and that at that point

the owners of pulp mills (the major user

of wood chips) will make a financial

decision whether to pay higher prices

for imported supplies or close mills.

The comment also suggested that only a

few wood chip consuming businesses

located near seaports will be likely to

import wood chips from Chile, but that

some of these businesses do require the

option of importing Chilean wood chips

to stay in business.

We largely agree that these points

correctly describe the current economic

situation regarding importation of

Chilean wood chips, and have taken the

comment into account in the final

regulatory flexibility analysis set out

below. However, we note that if for any

reason there is a significant decrease in

domestic wood chip production, or a

significant increase in their price, many

more wood chip consumers, regardless

of whether they are located near

seaports, may decide to import wood

chips from Chile.

The Regulatory Flexibility Act

requires consideration of the potential

economic effects of rules on small

businesses, organizations, and

governmental jurisdictions. In this

instance, small entities directly affected

will be U.S. wood chip producers and

pulp mills in the Pacific Northwest.

Wood chip production is included in

the SIC category for firms operating

sawmills and planing mills. In most

cases, wood chips are a byproduct of

lumber production. A mill will vary its

level of wood chip production

(compared to other products) based on

whether wood chip prices are high or

low at a particular point in time. In the

Pacific Northwest, about 150 mills

produce wood chips (90 in Oregon and

60 in Washington), but more than one

may be owned by the same firm.17 Data

on the exact number of firms is not

available. Sawmills and planing mills

that employ 500 people or fewer are

designated by the Small Business

Administration as ‘‘small.’’ In 1994,

there were 5,241 firms operating

sawmills and planing mills in the

United States, of which 5,149 (more

than 98 percent) were small.18

Estimated annual receipts of these 5,149

‘‘small’’ firms totaled about $14.88

billion, which was 62 percent of total

annual receipts of about $23.93 billion

earned by all sawmills and planing

mills. In the absence of information on

mill firm sizes specific to Oregon and

Washington, it is assumed that most

sawmills in the Pacific Northwest are

also small entities.

Adverse economic effects on most

‘‘small’’ U.S. wood chip producers due

to this rule will be minor. The Chilean

imports are expected to be sold in the

Pacific Northwest, thereby affecting a

geographical subset of all wood chip

producers. Adverse economic effects on

Pacific Northwest wood chip producers

will depend on the ability of such

producers to find lower priced raw

materials to produce wood chips or

otherwise reduce cost, and the extent of

their reliance on wood chips for their

net revenues. Producers of those wood

chips that are substitutes for Pinus

radiata chips will find their net returns

reduced when import prices are low. As

raw materials used for wood chip

production grow increasingly scarce and

expensive in the Pacific Northwest,

those wood chip producers that

compete with lower priced imports will

face adjustment pressures. However,

U.S. wood chip producers already feel

competition from other international

sources.

It is estimated that less than 5 percent

of wood chip producers in the Pacific

Northwest are ‘‘chipping’’ mills devoted

solely to wood chip production.19

However, during periods of high wood

chip demand, such as 4 years ago, many

sawmills may be converted largely to

wood chip production.

Turning to the pulp mills, themselves,

there were 37 firms operating pulp mills

in the United States in 1994. Often more

than one pulp mill is owned by a single

firm. Pulp mill firms employing 750

people or fewer are designated by the

Small Business Administration as

‘‘small.’’ In 1994, between 20 and 25 of

the 37 firms were small, that is, between

54 and 68 percent of the total number

of firms. Estimated annual receipts of

these 20 to 25 ‘‘small’’ firms totaled

between about $383 million and about

$1.12 billion, which represented

between 7 percent and 21 percent of

total annual receipts by all pulp mills of

about $5.30 billion. About 10 percent of

U.S. pulp mills are in the Pacific

Northwest.

Due to resin-content differences, pulp

mills cannot use various species of

wood chips indiscriminately. Pulp mills

designed to process wood chips of Pinus

radiata or similar species should,

therefore, be the only ones directly

affected by this rule. It is estimated that

less than one-half of U.S. pulp mills

could use Pinus radiata wood chips.20

Assuming an equal distribution of these

pulp mills among all pulp mills, sizewise, ‘‘small’’ pulp mill firms directly

affected would then number between 10

and 13, based on 1994 data. These

numbers are likely to be an

overestimation, since not all of the

‘‘small’’ firms that could utilize Pinus

radiata wood chips are necessarily

located in the Pacific Northwest.

Regardless of the number of affected

‘‘small’’ pulp mill firms, having Chile as

a source of Pinus radiata wood chips

should be beneficial to pulp mills and

their customers, to the extent lower chip

prices are reflected in lower product

prices.

Test shipments of Pinus radiata wood

chips from Chile have been successfully

imported by pulp mills in the Pacific

Northwest. This rule will enable such

shipments, using a surface pesticide

treatment, to continue to take place

when economically feasible. Although

Pinus radiata wood chip production in

the United States is negligible, this

species can substitute for other species

as a pulp fiber, given certain milling

adjustments. Off-shore wood chip

sources to supplement domestic supply

are advantageous to pulp mills, given

21126 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

21 ‘‘Importation of Logs, Lumber, and Other

Unmanufactured Wood Articles: Final

Supplemental to the Environmental Impact

Statement, May 1988,’’ USDA APHIS.

22FAS Global Agricultural Trade System, using

data from the United Nations Statistical Office.

23FAS Global Trade System, using data from the

United Nations Statistical Office.

the volatility of pulp prices. Chile’s

wood products industry has a large

export component and is expected to be

a reliable source when pulp prices

prompt wood chip exports to the United

States. Adverse economic effects for

wood chip producers in the Pacific

Northwest will be felt by those

producers who are unable to reduce

costs to meet import competition and

who rely heavily on revenues from

wood chips.

No figures are available concerning

potential costs of pest introductions

through importation of Pinus radiata

wood chips from Chile. A pest risk

assessment for the importation of Pinus

radiata logs from Chile (‘‘Pest Risk

Assessment of the Importation of Pinus

radiata, Nothofagus dombeyi, and

Laurelia philippiana Logs from Chile,’’

USDA Forest Service, Miscellaneous

Publication No. 1517, September 1993)

provides the phytosanitary basis for

allowing the wood chips to be imported

if they are treated as prescribed. The

pest risk assessment supports our

determination that Pinus radiata wood

chips may be imported from Chile with

negligible risk.

The pest risk assessment reported that

in sharp contrast to native forests in

Chile, that country’s Pinus radiata

plantations are relatively free of major

insect and disease problems. Exceptions

include the recently introduced

European pine shoot moth (Rhyaccionia

buoliana), Hylurgus ligniperda and two

other species of European bark beetles,

several needle disease fungi

(Dothistroma pini and Lophodermium

spp., among others), diplodia shoot

blight (Sphaeropsis sapinea), and two

species of blue stain fungi (Ophiostoma

picea and O. piliferum). The wood wasp

Sirex noctilio (considered to be the most

important pest on Pinus radiata logs

exported from New Zealand) and pine

wood nematodes (Bursaphelenchus

spp.) have yet to be found in Chile.

Among the insect pests of Pinus

radiata analyzed in detail in the pest

risk assessment, only the bark beetle

Hylurgus ligniperda was considered to

have a high pest risk potential.

Moderate pest risk potentials were

assigned to Rhyephenes spp., Ernobius

mollis, Urocerus gigas gigas, Neotermes

chilensis, Porotermes quadricollis,

Colobura alboplagiata, and Buprestis

novemmaculata. Among the pathogens,

the stain fungi (Ophiostoma spp.) were

found to merit a moderate to high pest

risk potential, whereas the complex of

needle diseases (Dothistroma pini and

other species) and diplodia shoot blight

(Sphaeropsis sapinea) were rated as

moderate risks. Other pathogens were

considered to be of low risk. One weed

of concern (Imperata condensata,

considered a variety of I. cylindrica or

cogongrass) was identified.

Pests potentially affecting untreated

Pinus radiata wood chips are a subset

of those identified in the pest risk

assessment, since wood chip production

will physically remove or destroy most

pests that could be present in the logs.

Treatment with the surface pesticide

required by this rule should prevent

entry into the United States of any

harmful insects or fungi that might

remain.

The Pacific Northwest’s coastal ranges

and Cascade Mountains have some of

the highest quality natural and planted

conifer forests in the world, producing

commodities ranging from pulp and

paper, to lumber for construction, to

ornamentals and Christmas trees.

Introduced pests such as those

described could affect forestry

industries directly by causing damage or

indirectly by curtailing commerce

through quarantines.

Some potential costs of foreign timber

pests have been estimated in other

instances. For example, a pest risk

assessment concerning Siberian timber

imports estimated that the introduction

of a single pest, larch canker, could

cause direct timber losses of $129

million annually. The same study

estimated that a worst-case scenario

involving heavy establishment of exotic

defoliators in the United States could

cost $58 billion.21

Concerning consumer and producer

effects of allowing Pinus radiata wood

chips to be imported from Chile, data

are insufficient to permit confident

estimation of welfare changes. Timeseries data for the estimation of

elasticities of supply and demand are

not available. Circumstantial evidence,

however, suggests that pulp producers

and pulp product consumers benefit

from Pinus radiata wood chip imports

from Chile, when their relative price is

low compared to that of other wood

chip species or sources. The test

shipments from Chile resulted in U.S.

wood chip imports worth $22.8 million

and $19.3 million in 1995 and 1996,

respectively. These shipments

represented over 48 and 44 percent of

all U.S. coniferous wood chip imports

in those 2 years.22

The continuing reduction in timber

sources in the Pacific Northwest will

encourage more wood imports in the

future, and Chile’s expanded

commercial forestry plantings promise a

prominent role for that country as a

wood products exporter. Effects on

prices, if any, from imports for U.S.

wood chip producers should be very

small, since coniferous wood chip

imports are less than one percent of U.S.

production.

Moreover, trade statistics indicate that

U.S. coniferous wood chip producers

are finding overseas markets as

profitable as their Chilean counterparts.

U.S. coniferous wood chip exports in

1995 were valued at more than $222

million, and in 1996, at more than $181

million. As is true for Chile, the

principal overseas coniferous wood chip

market for the United States is Japan.23

This rule includes a reporting and

recordkeeping requirement that wood

chips imported from Chile must be

accompanied by a certificate issued by

the Government of Chile, stating that all

the applicable requirements of the

regulations have been met.

We considered taking no action as an

alternative to this rule. The no action

alternative was rejected because we

believe that the provisions of this rule

will provide more supply alternatives

for wood chip consumers, and make

compliance easier for regulated

individuals, without increasing the risk

of introducing a plant pest into the

United States.

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.

National Environmental Policy Act

An environmental assessment and

finding of no significant impact have

been prepared for this rule. The

assessment provides a basis for the

conclusion that the importation of Pinus

radiata wood chips from Chile under

the conditions specified in this rule will

not present a risk of introducing or

disseminating plant pests and will not

have a significant impact on the quality

of the human environment. Based on

the finding of no significant impact, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that an environmental

impact statement need not be prepared.

The environmental assessment and

finding of no significant impact were

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations 21127

prepared in accordance with: (1) The

National Environmental Policy Act of

1969, as amended (NEPA) (42 U.S.C.

4321 et seq.), (2) regulations of the

Council on Environmental Quality for

implementing the procedural provisions

of NEPA (40 CFR parts 1500–1508), (3)

USDA regulations implementing NEPA

(7 CFR part 1b), and (4) APHIS’ NEPA

Implementing Procedures (7 CFR part

372).

Copies of the environmental

assessment and finding of no significant

impact are available for public

inspection 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 copies are requested

to call ahead on (202) 690–2817 to

facilitate entry into the reading room. In

addition, copies may be obtained by

writing to the individual listed under

FOR FURTHER INFORMATION CONTACT.

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–

0135.

List of Subjects in 7 CFR Part 319

Bees, Coffee, Cotton, Fruits, Honey,

Imports, Logs, 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).

2. In § 319.40–1, a definition of the

word fines is added in alphabetical

order to read as follows:

§ 319.40–1 Definitions.

* * * * *

Fines. Small particles or fragments of

wood, slightly larger than sawdust, that

result from chipping, sawing, or

processing wood.

* * * * *

3. In § 319.40–6, paragraph (c) is

revised to read as follows:

§ 319.40–6 Universal importation options.

* * * * *

(c) Wood chips and bark chips. (1)

From Chile. Wood chips from Chile that

are derived from Monterey or Radiata

pine (Pinus radiata) logs may be

imported in accordance with § 319.40–

6(c)(2) or in accordance with the

following requirements:

(i) The wood chips must be

accompanied by a certificate stating that

the wood chips meet the requirements

in paragraphs (c)(1)(i)(A) through

(c)(1)(i)(C) of this section.

(A) The wood chips were treated with

a surface pesticide treatment in

accordance with § 319.40–7(e) within 24

hours after the log was chipped and

were retreated with a surface pesticide

treatment in accordance with § 319.40–

7(e) if more than 30 days elapsed

between the date of the first treatment

and the date of export to the United

States.

(B) The wood chips were derived

from logs from live, healthy, plantationgrown trees that were apparently free of

plant pests, plant pest damage, and

decay organisms, and the logs used to

make the wood chips were debarked in

accordance with § 319.40–7(b) before

being chipped.

(C) No more than 45 days elapsed

from the time the trees used to make the

wood chips were felled to the time the

wood chips were exported.

(ii) During shipment to the United

States, no other regulated articles (other

than solid wood packing materials) are

permitted in the holds or sealed

containers carrying the wood chips.

Wood chips on the vessel’s deck must

be in a sealed container.

(iii) The wood chips must be

consigned to a facility in the United

States that operates under a compliance

agreement in accordance with § 319.40–

8. The following requirements apply

upon arrival of the wood chips in the

United States:

(A) Upon arrival in the United States,

the wood chips must be unloaded by a

conveyor that is covered to prevent the

chips from being blown by the wind and

from accidental spillage. The facility

receiving the wood chips must have a

procedure in place to retrieve any chips

that fall during unloading.

(B) If the wood chips must be

transported after arrival, the chips must

be covered or safeguarded in a manner

that prevents the chips from spilling or

falling off the means of conveyance or

from being blown off the means of

conveyance by wind.

(C) The wood chips must be stored at

the facility on a paved surface and must

be kept segregated from other regulated

articles from the time of discharge from

the means of conveyance until the chips

are processed. The storage area must not

be adjacent to wooded areas.

(D) The wood chips must be

processed within 45 days of arrival at

the facility. Any fines or unusable wood

chips must be disposed of by burning

within 45 days of arrival at the facility.

(2) From locations other than certain

places in Asia. Wood chips and bark

chips from any place except places in

Asia that are east of 60° east longitude

and north of the Tropic of Cancer may

be imported in accordance with this

paragraph.

(i) The wood chips or bark chips must

be accompanied by an importer

document stating that the wood chips or

bark chips were either:

(A) Derived from live, healthy,

tropical species of plantation-grown

trees grown in tropical areas; or

(B) Fumigated with methyl bromide

in accordance with § 319.40–7(f)(3), heat

treated in accordance with § 319.40–

7(c), or heat treated with moisture

reduction in accordance with § 319.40–

7(d).

(ii) During shipment to the United

States, no other regulated articles (other

than solid wood packing materials) are

permitted in the holds or sealed

containers carrying the wood chips or

bark chips. Wood chips or bark chips on

the vessel’s deck must be in a sealed

container; Except that: If the wood chips

or bark chips are derived from live,

healthy, plantation-grown trees in

tropical areas, they may be shipped on

deck if no other regulated articles are

present on the vessel and the wood

chips or bark chips are completely

covered by a tarpaulin during the entire

journey directly to the United States.

(iii) The wood chips or bark chips

must be free from rot at the time of

importation, unless accompanied by an

importer document stating that the

entire lot was fumigated with methyl

bromide in accordance with § 319.40–

7(f)(3), heat treated in accordance with

§ 319.40–7(c), or heat treated with

moisture reduction in accordance with

§ 319.40–7(d).

(iv) Wood chips or bark chips

imported in accordance with this

paragraph must be consigned to a

facility operating under a compliance

agreement in accordance with § 319.40–

8. The wood chips or bark chips must

be burned, heat treated in accordance

with § 319.40–7(c), heat treated with

moisture reduction in accordance with

§ 319.40–7(d), or otherwise processed in

a manner that will destroy any plant

pests associated with the wood chips or

bark chips within 30 days of arrival at

the facility. If the wood chips or bark

chips are to be used for mulching or

21128 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Rules and Regulations

1 Independent Bankers Association of America v.

Farm Credit Administration, 164 F.3d 661 (D.C. Cir.

1999).

composting, they must first be

fumigated in accordance with § 319.40–

7(f)(3), heat treated in accordance with

§ 319.40–7(c), or heat treated with

moisture reduction in accordance with

§ 319.40–7(d).

* * * * *

4. In § 319.40–7, paragraph (e) is

revised to read as follows.

§ 319.40–7 Treatments and safeguards.

* * * * *

(e) Surface pesticide treatments. All

United States Environmental Protection

Agency registered surface pesticide

treatments are authorized for regulated

articles imported in accordance with

this subpart, except that Pinus radiata

wood chips from Chile must be treated

in accordance with § 319.40–7(e)(2).

Surface pesticide treatments must be

conducted in accordance with label

directions approved by the United

States Environmental Protection

Agency. Under the following

circumstances, surface pesticide

treatments must also be conducted as

follows:

(1) Heat treated logs. When used on

heat treated logs, a surface pesticide

treatment must be first applied within

48 hours following heat treatment. The

surface pesticide treatment must be

repeated at least every 30 days during

storage of the regulated article, with the

final treatment occurring no more than

30 days prior to departure of the means

of conveyance that carries the regulated

articles to the United States.

(2) Pinus radiata wood chips from

Chile. When used on Pinus radiata

wood chips from Chile, a surface

pesticide consisting of the following

must be used: A mixture of a fungicide

containing 64.8percent of the active

ingredient didecyl dimethyl ammonium

chloride and 7.6 percent of the active

ingredient 3-iodo-2-propynl

butylcarbamate and an insecticide

containing 44.9percent of the active

ingredient chlorpyrifos

phosphorothioate. The wood chips must

be sprayed with the pesticide so that all

the chips are exposed to the chemical

on all sides. During the entire interval

between treatment and export, the wood

chips must be stored, handled, or

safeguarded in a manner that prevents

any infestation of the wood chips by

plant pests.

* * * * *

Done in Washington, DC, this 17th day of

April 2000.

Bobby R. Acord,

Acting Administrator, Animal and Plant

Health Inspection Service.

[FR Doc. 00–9937 Filed 4–19–00; 8:45 am]

BILLING CODE 3410–34–P

FARM CREDIT ADMINISTRATION

12 CFR Chapter VI

RIN 3052–AB97

Regulatory Burden

AGENCY: Farm Credit Administration

(FCA).

ACTION: Statement on regulatory burden.

SUMMARY: This is the second phase of

our recent initiative to reduce regulatory

burden on the Farm Credit System (FCS

or System). Many System institutions

responded to our August 1998 request

for comments by identifying regulations

that they considered burdensome. We

deleted several unnecessary or obsolete

regulations in the first phase of this

project. This document informs the

public of those regulations that we will

retain without amendment because they

either: Implement or interpret the Farm

Credit Act of 1971, as amended (Act); or

protect the safety and soundness of the

System. We also identify pending or

future actions that will respond to

remaining regulatory burden issues.

FOR FURTHER INFORMATION CONTACT:

Alan Markowitz, Senior Policy Analyst,

Office of Policy and Analysis, Farm

Credit Administration, McLean, VA

22102–5090, (703) 883–4479;

or

Richard A. Katz, Senior Attorney, or

Beth Salyer, Attorney-Advisor, Office

of General Counsel, Farm Credit

Administration, McLean, VA 22102–

5090, (703) 883–4020, TDD (703) 883–

4444.

SUPPLEMENTARY INFORMATION:

I. Background

On August 18, 1998, we published a

document in the Federal Register

inviting you to identify existing

regulations and policies that impose

unnecessary burdens on the FCS. See 63

FR 44176. On November 18, 1998, we

extended the comment period to

January 19, 1999. See 63 FR 64013. We

specifically asked you to focus on those

regulations and policies that are

ineffective, duplicate other

governmental requirements, or impose

burdens that are greater than the

benefits received. We took this action in

our continuing effort to improve the

regulatory environment so System

institutions can more effectively serve

farmers, ranchers, aquatic producers,

their cooperatives, and other rural

residents.

In the first phase of our effort to

reduce regulatory burden on the FCS,

we repealed or revised 16 regulations.

See 64 FR 43046, Aug. 9, 1999.

The purpose of this document is to

inform you of those regulations that we

will retain without amendment. In most

cases, these regulations are either

required by statute or are necessary to

ensure the safety and soundness of

System institutions. For these reasons,

the FCA will not make the suggested

changes to the following regulations:

§§ 613.3020; 613.3030; 613.3300;

614.4200(b)(1); 614.4335(c)(1)(i);

614.4359; and 614.4920. The next

section explains our reasons for

retaining these regulations.

II. Regulations that We Will Retain

Without Revision

A. Farm-related Businesses

Seven commenters asked us to amend

§ 613.3020 so the FCS can finance farmrelated businesses that supply only

goods to farmers and ranchers. Sections

1.11(c)(1) and 2.4(a)(3) of the Act limit

eligibility to businesses that furnish

farm-related services to farmers and

ranchers. Businesses that sell only farmrelated goods to agricultural producers

do not qualify for FCS financing under

these provisions of the Act. Therefore,

we cannot grant this request.

Two Farm Credit banks and one

association asked us to amend

§ 613.3020(b)(2) to allow businesses that

derive less than 50 percent of their

income from farm-related services to

obtain System financing for all of their

credit needs. The FCA updated this

regulation in 1997 to expand financing

opportunities for farm-related

businesses that offer both goods and

services. At that time, the FCA Board

determined that a 50-percent threshold

gave appropriate effect to the Act. See

62 FR 4429, Jan. 30, 1997. This standard

ensures that only businesses that

primarily provide farm-related services

receive full financing from System

lenders. The United States Court of

Appeals recently upheld the provisions

in § 613.3020(b) that limit System

financing to eligible businesses that

derive less than 50 percent of their

income from furnishing farm-related

services to farmers and ranchers.1 We

continue to believe that the current

regulation strikes the best balance for

securing the credit needs of farm-related

business within the limitations of the

Act.

B. Rural Housing

Many System institutions assert that

§ 613.3030 unnecessarily restricts the

System’s ability to finance housing for

rural residents who are not farmers,