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###### Department of Agriculture

###### Animal and Plant Health Inspection Service 

          - 7 CFR Part 301 
          - [Docket No. 96-016-33] 
          - RIN 0579-AA83 

# AGENCY:

Animal and Plant Health Inspection Service, USDA. 

# ACTION:

Proposed rule.

# SUMMARY:

We are proposing to amend the Karnal bunt regulations to provide compensation for certain growers, handlers, seed companies, owners of grain storage facilities, flour millers, and participants in the National Karnal Bunt Survey who incur losses and expenses because of Karnal bunt in the 1999-2000 crop season. The payment of compensation is necessary in order to reduce the economic effect of the Karnal bunt regulations on affected wheat growers and other individuals and to help obtain cooperation from affected individuals in efforts to contain and reduce the prevalence of Karnal bunt. 

# DATES:

We invite you to comment on this docket. We will consider all comments that we receive by March 19, 2001. 

# ADDRESSES:

Please send your comment and three copies to: 

Docket No. 96-016-33, Regulatory Analysis and Development, PPD, APHIS, Suite 3C03, 4700 River Road, Unit 118, Riverdale, MD 20737-1238 

Please state that your comment refers to Docket No. 96-016-33. 

You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 690-2817 before coming. 

                        APHIS documents published in the                         **Federal Register**                        , and related information, including the names of organizations and individuals who have commented on APHIS rules, are available on the Internet at http://www.aphis.usda.gov/​ppd/​rad/​webrepor.html.                     

# FOR FURTHER INFORMATION CONTACT:

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

# SUPPLEMENTARY INFORMATION:

## Background 

                    Karnal bunt is a fungal disease of wheat (                    *Triticum aestivum*), durum wheat (                    *Triticum durum*), and triticale (                    *Triticum aestivum*                    X                     *Secale cereale*), a hybrid of wheat and rye. Karnal bunt is caused by the smut fungus                     *Tilletia indica*                     (Mitra) Mundkur and is spread by spores, primarily through the movement of infected seed. In the absence of measures taken by the U.S. Department of Agriculture (USDA) to prevent its spread, the establishment of Karnal bunt in the United States could have significant consequences with regard to the export of wheat to international markets. The regulations regarding Karnal bunt are set forth in 7 CFR 301.89-1 through 301.89-16 (referred to below as the regulations). Among other things, the regulations define areas regulated for Karnal bunt and restrict the movement of certain regulated articles, including wheat seed and grain, from the regulated areas.                 

                    In a final rule published in the                     **Federal Register**                     and effective on June 25, 1999 (64 FR 34109-34113, Docket No. 96-016-35), the Animal and Plant Health Inspection Service (APHIS) amended the regulations by adding compensation provisions for 1997-1998 crop season wheat.[1]                                          That final rule made compensation available for certain growers, handlers, seed companies, owners of grain storage facilities, flour millers, and participants in the National Karnal Bunt Survey who incurred losses and expenses because of Karnal bunt in the 1997-1998 crop season. These provisions are in § 301.89-15, “Compensation for growers, handlers, and seed companies in the 1996-1997 and 1997-1998 crop seasons,” and § 301.89-16, “Compensation for grain storage facilities, flour millers, and National Survey participants for the 1996-1997 and 1997-1998 crop seasons.”                 

APHIS did not propose to provide compensation for the 1998-1999 crop season. Surveys conducted in 1999 determined that no Karnal bunt host crops harvested in 1999 in the regulated area were positive for Karnal bunt. Therefore, no growers, handlers, seed companies, owners of grain storage facilities, flour millers, or participants in the National Karnal Bunt Survey incurred losses or expenses because of Karnal bunt for the 1998-1999 crop season. We have no reason to believe the situation will be different for this crop season. However, we are proposing to establish compensation provisions for the 1999-2000 crop season so that, if Karnal bunt is detected, compensation may be provided in a timely manner to those who incur losses or expenses. 

In the future, for crop seasons beyond the 1999-2000 crop season, APHIS will not propose to provide compensation for growers, handlers, or seed companies in regulated areas. These persons know they are in an area regulated for Karnal bunt at the time planting and contracting decisions are made for future crop seasons. Understanding the restrictions, growers, handlers, and seed companies can choose to alter their planting or contract decisions to avoid experiencing losses due to Karnal bunt. However, APHIS may, for crop seasons beyond the 1999-2000 crop season, propose to provide compensation for National Karnal Bunt Survey participants whose wheat or grain storage facility tests positive for Karnal bunt. We expect, however, that the proposed compensation for these persons would be limited to one crop season. 

                    We expect that any costs to growers and other entities related to the Karnal bunt program in the 1999-2000 crop season would be similar to those incurred in the 1997-1998 crop season. Therefore, we are proposing to amend the regulations to provide the same compensation for the 1999-2000 crop season as was provided in the 1997-1998 crop season.                           ( print page 3506)    

## Compensation for Growers and Handlers 

Section 301.89-15 of the regulations provides compensation to growers and handlers for the loss in value of wheat seed and grain from the 1996-1997 and 1997-1998 crop seasons due to Karnal bunt. We are proposing to make these provisions apply also to growers, handlers, and seed companies in the 1999-2000 crop season.

The compensation in § 301.89-15 is for wheat grain, certified wheat seed, and wheat grown with the intention of producing certified wheat seed. The compensation calculation for certified wheat seed and wheat grown with the intention of producing certified wheat seed is the same as that offered for wheat grain. Requiring that wheat seed be certified or grown with the intention of producing certified wheat seed ensures that the compensation is limited to market-ready seed and will not be paid for seed in other stages of development. Further, the compensation in § 301.89-15 is only for wheat that was tested by APHIS and found positive for Karnal bunt. 

For the 1996-1997 and 1997-1998 crop seasons, § 301.89-15 provides two different levels of compensation for growers and handlers of positive wheat, depending on which of the following two sets of circumstances applies: (1) The wheat is from an area that became regulated for Karnal bunt after the 1996-1997 crop or 1997-1998 crop was planted, or for which an Emergency Action Notification (PPQ Form 523)(EAN) was issued after the 1996-1997 crop or 1997-1998 crop was planted, and that remained regulated or under an EAN at the time the wheat was sold; or (2) the wheat is from an area that became regulated for Karnal bunt before the 1996-1997 crop or 1997-1998 crop was planted, or for which an EAN was issued before the 1996-1997 crop or 1997-1998 crop was planted, and that remained regulated or under an EAN at the time the wheat was sold. These areas are called “areas under the first regulated crop season” and “previously regulated areas,” respectively. Growers, handlers, and seed companies in areas under the first regulated crop season would not have known that their area was to become regulated for Karnal bunt at the time they made their planting and many of their contracting decisions and would not have been prepared for the loss in value of their wheat due to Karnal bunt. Growers, handlers, and seed companies in previously regulated areas knew they were in an area regulated for Karnal bunt at the time planting and contracting decisions were made for the 1996-1997 or 1997-1998 crop season. Understanding the restrictions, growers, handlers, and seed companies could have chosen to alter their planting or contract decisions to avoid experiencing losses due to Karnal bunt. The 1999-2000 crop season is the fifth regulated crop season for most regulated areas. The compensation provisions for areas under the first regulated crop season are in § 301.89-15(a); the compensation provisions for previously regulated areas are in § 301.89-15(b). 

## First Regulated Crop Season 

At the present time, there are no areas that meet the first regulated crop season criteria for 1999-2000. We would consider all areas that are currently regulated to be previously regulated areas for the 1999-2000 crop season. APHIS is continuing to monitor for Karnal bunt throughout wheat producing areas in the United States. If Karnal bunt is found to exist in an area outside the currently regulated areas during the 1999-2000 crop season, APHIS will regulate that area, and if the area is under a declaration of extraordinary emergency, growers and handlers would be eligible for compensation for the loss in value of their wheat in accordance with the provisions for areas under the first regulated crop season. 

Under § 301.89-15(a), growers, handlers, and seed companies in areas under the first regulated crop season criteria are eligible for compensation for 1996-1997 crop season wheat or 1997-1998 crop season wheat (as appropriate) and for wheat inventories in their possession that were unsold at the time the area became regulated. For the 1999-2000 crop season, we would likewise state that growers, handlers, and seed companies in areas under the first regulated crop season criteria are eligible for compensation for 1999-2000 crop season wheat and for wheat inventories in their possession that were unsold at the time the area became regulated for Karnal bunt. 

Under § 301.89-15(a)(1), growers of wheat in an area under the first regulated crop season criteria who sell wheat that was tested by APHIS and found positive for Karnal bunt prior to sale, or that was tested by APHIS and found positive for Karnal bunt after sale and the price received by the grower is contingent on the test results, are eligible to receive compensation as follows: 
    - If the wheat was grown under contract and a price was determined in the contract before the area where the wheat was grown became regulated for Karnal bunt, compensation will equal the contract price minus the actual price received by the grower; or
    - If the wheat was not grown under contract or a price was determined in the contract after the area where the wheat was grown became regulated for Karnal bunt, compensation will equal the estimated market price for the relevant class of wheat (meaning type of wheat, such as durum or hard red winter) minus the actual price received by the grower.

For both situations described above, compensation for positive-testing wheat will not exceed $1.80 per bushel under any circumstances. 

Under § 301.89-15(a)(2), handlers and seed companies who sell wheat grown in an area under the first regulated crop season criteria are eligible to receive compensation only if the wheat was not tested by APHIS prior to purchase by the handler or seed company but was tested by APHIS and found positive for Karnal bunt after purchase by the handler or seed company, as long as the price to be paid is not contingent on the test results. Compensation will equal the estimated market price for the relevant class of wheat minus the actual price received by the handler or seed company. However, compensation for positive-testing wheat will not exceed $1.80 per bushel under any circumstances.

Estimated market prices used in the compensation calculations described above for growers and handlers are calculated by APHIS for each class of wheat, taking into account the prices offered by relevant terminal markets (animal feed, milling, or export) during the harvest months for the area, with adjustments for transportation and other handling costs. Separate estimated market prices are calculated for certified wheat seed and wheat grown with the intention of producing certified wheat seed and wheat grain. 

This proposal would make the provisions in § 301.89-15(a)(1) and (a)(2) apply to growers, handlers, and seed companies in the 1999-2000 crop season if they have wheat grown in areas under the first regulated crop season criteria. 

## Previously Regulated Areas 

As discussed previously in this document, all of the areas currently listed as regulated areas in the Karnal bunt regulations, and all the areas currently regulated for Karnal bunt under EAN's, would be considered to be previously regulated areas for the 1999-2000 crop season. 

                    Under § 301.89-15(b), growers, handlers, and seed companies in                           ( print page 3507)                        previously regulated areas are eligible for compensation only for 1996-1997 and 1997-1998 crop season wheat. We would amend § 301.89-15(b) to state that growers, handlers, and seed companies in previously regulated areas are eligible for compensation under paragraph (b) only for 1996-1997, 1997-1998, and 1999-2000 crop season wheat.                 

Under § 301.89-15(b), growers who sell wheat are eligible to receive compensation only if the wheat was tested by APHIS and found positive for Karnal bunt prior to sale, or was tested by APHIS and found positive for Karnal bunt after sale and the price received by the grower is contingent on the test results. Compensation will be at the rate of $.60 per bushel of positive testing wheat. Handlers and seed companies who sell wheat are eligible to receive compensation only if the wheat was not tested by APHIS prior to purchase but was tested by APHIS and found positive for Karnal bunt after purchase, as long as the price to be paid is not contingent on the test results. Compensation will be at the rate of $.60 per bushel of positive-testing wheat. This proposal would make this same compensation available to growers, handlers, and seed companies in the 1999-2000 crop season. 

## Growers, Handlers, and Seed Companies—To Claim Compensation 

In past crop seasons, the Farm Service Agency (FSA) of USDA has processed Karnal bunt compensation claims from growers, handlers, and seed companies for the loss in value of their wheat. Under this proposal, FSA would continue to process such claims in the 1999-2000 crop season. 

Under § 301.89-15(c), we require 1996-1997 and 1997-1998 crop season claimants to submit a number of documents in support of their claim. We would require the same documents to be submitted for 1999-2000 crop season compensation. The requirements in paragraph (c) are as follows: 

Growers, handlers, and seed companies who are eligible for compensation under either the provisions for the first regulated crop season or the provisions for previously regulated areas need to provide the same documents for claiming compensation, with a few exceptions. Growers, handlers, and seed companies must submit a Karnal Bunt Compensation Claim form, provided by FSA. If the wheat was grown in an area that is not a regulated area, but for which an EAN has been issued, the grower, handler, or seed company must submit a copy of the EAN. Growers, handlers, and seed companies must also submit a copy of the Karnal bunt certificate issued by APHIS that shows the Karnal bunt test results and verification as to the actual (not estimated) weight of the wheat that tested positive (such as a copy of a facility weigh ticket or other verification). For compensation claims for wheat seed, a grower or seed company must submit documentation showing that the wheat is either certified seed or was grown with the intention of producing certified seed. This documentation may include one or more of the following types of documents: an application to the State seed certification agency for field inspection; a bulk sale certificate; certification tags or labels issued by the State seed certification agency; or a document issued by the State seed certification agency verifying that the wheat is certified seed. 

In addition, growers must submit a copy of the receipt for the final sale of the wheat, showing the total bushels sold and the total price received by the grower. Growers compensated under the provisions for areas in the first regulated crop season must submit a copy of the contract the grower has for the wheat, if the wheat was under contract. Growers compensated under the provisions for previously regulated areas and who sold wheat that was not yet tested by APHIS must submit documentation showing that the price paid to the grower was contingent on test results (this information could appear on the receipt for the final sale of the wheat or on a contract the grower has for the wheat, if the wheat was under contract). 

In addition, handlers and seed companies must provide the FSA office with a copy of the receipt for the final sale of the wheat. The handler or seed company must submit documentation showing that the price paid or to be paid to the grower is not contingent on the test results (this documentation could appear on the receipt for the purchase of the wheat from the grower or on a contract for the purchase of the wheat, if the wheat was purchased under contract).

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

The June 1999 final rule (Docket No. 96-016-35) also amended § 301.89-16 of the regulations. This section sets forth compensation provisions for the decontamination of grain storage facilities, heat treatment of millfeed, and losses to National Karnal Bunt Survey participants whose wheat or grain storage facility tests positive for Karnal bunt in the 1996-1997 or 1997-1998 crop season. We are proposing to amend § 301.89-16 to make its provisions also apply to the 1999-2000 crop season. 

## Decontamination of Grain Storage Facilities 

As part of the Karnal bunt program, APHIS may require the decontamination of grain storage facilities that have been determined by APHIS to be contaminated with Karnal bunt. For the 1996-1997 and 1997-1998 crop seasons, § 301.89-16(a) provides that owners of grain storage facilities that are in States where the Secretary has declared an extraordinary emergency, and who have decontaminated their grain storage facilities pursuant to either an EAN issued by an inspector or a letter issued by an inspector ordering decontamination of the facilities, are eligible to be compensated, on a one-time-only basis for each facility for each covered crop year wheat, for up to 50 percent of the direct cost of decontamination. However, compensation will not exceed $20,000 per grain storage facility. General cleanup, repair, and refurbishment costs are excluded from compensation. Under this proposed rule, this same compensation would be available to owners of grain storage facilities in the 1999-2000 crop season. 

Paragraph (a) also states that compensation payments will be issued by APHIS and sets forth provisions for claiming compensation. To claim compensation, the owner of the grain storage facility must submit to an inspector records demonstrating that decontamination was performed on all structures, conveyances, or materials ordered by APHIS to be decontaminated. 

The records must include a copy of the EAN or the letter from an inspector ordering decontamination, contracts with individuals or companies hired to perform the decontamination, receipts for equipment and materials purchased to perform the decontamination, time sheets for employees of the grain storage facility who performed activities connected to the decontamination, and any other documentation that helps show the cost to the owner and that decontamination has been completed. These provisions would also apply to compensation claims in the 1999-2000 crop season. 

## Treatment of Millfeed 

                    In the 1996-1997 crop season, millfeed made from wheat produced in certain regulated areas was required to be heat treated in order to help prevent the spread of Karnal bunt, and we paid                           ( print page 3508)                        compensation to flour millers who incurred expenses for heat treatments. Under a final rule published in the                     **Federal Register**                     and effective on September 23, 1998 (63 FR 50747-50752), only millfeed resulting from the milling of wheat, durum wheat, or triticale that tested positive for Karnal bunt was required to be heat treated. However, we continued to provide compensation in the 1997-1998 crop season at the same rate. In § 301.89-16, paragraph (b) provides that flour millers who, in accordance with a compliance agreement with APHIS, heat treat millfeed that is required by APHIS to be heat treated are eligible to be compensated at the rate of $35.00 per short ton of millfeed. We would make this same rate of compensation available to flour millers in the 1999-2000 crop season.                 

Paragraph (b) provides for the 1996-1997 and 1997-1998 crop seasons that the amount of millfeed compensated will be calculated by multiplying the weight of wheat from the regulated area received by the miller by 25 percent (the average percent of millfeed derived from a short ton of grain). Compensation payments will be issued by APHIS. To claim compensation, the miller must submit to an inspector verification as to the actual (not estimated) weight of the wheat (such as a copy of a facility weigh ticket or a copy of the bill of lading for the wheat, if the actual weight appears on those documents, or other verification). Flour millers must also submit verification that the millfeed was heat treated (such as a copy of the limited permit under which the wheat was moved to a treatment facility and a copy of the bill of lading accompanying that movement; or a copy of PPQ Form 700 (which includes certification of processing) signed by the inspector who monitors the mill). This proposed rule would make these same provisions apply to compensation claims for heat treatment of millfeed in the 1999-2000 crop season. 

## National Karnal Bunt Survey Participants 

Each year since 1996, APHIS has conducted a National Karnal Bunt Survey to demonstrate to our trading partners that areas producing wheat for export are free of the disease. In past crop seasons, we offered compensation to participants in the Survey whose wheat or grain storage facility tested positive for Karnal bunt, if the participant is in a State in which the Secretary of Agriculture has declared an extraordinary emergency for Karnal bunt. For the 1996-1997 and 1997-1998 crop seasons, the provisions for this compensation are in § 301.89-16(c). We are proposing to make these provisions also apply to participants in the National Karnal Bunt Survey in the 1999-2000 crop season. 

For the 1996-1997 and 1997-1998 crop seasons, paragraph (c) provides that, if a grain storage facility participating in the National Karnal Bunt Survey tests positive for Karnal bunt, the facility will be regulated, and may be ordered decontaminated, pursuant to either an EAN issued by an inspector or a letter issued by an inspector ordering decontamination of the facility. If the Secretary has declared an extraordinary emergency in the State in which the grain storage facility is located, the owner will be eligible for compensation as follows: 
    - The owner of the grain storage facility will be compensated for the loss in value of positive wheat. Compensation will equal the estimated market price for the relevant class of wheat minus the actual price received for the wheat. The estimated market price will be calculated by APHIS for each class of wheat, taking into account the prices offered by relevant terminal markets (animal feed, milling, or export) during the relevant time period for that facility, with adjustments for transportation and other handling costs. However, compensation will not exceed $1.80 per bushel under any circumstances. Compensation payments for loss in value of wheat will be issued by the FSA. To claim compensation, the owner of the facility must submit to the local FSA office a Karnal Bunt Compensation Claim form, provided by FSA. The owner of the facility must also submit to FSA a copy of the EAN or letter from an inspector under which the facility is or was quarantined; verification as to the actual (not estimated) weight of the wheat (such as a copy of a facility weigh ticket or a copy of the bill of lading for the wheat, if the actual weight appears on those documents, or other verification); and a copy of the receipt for the final sale of the wheat, showing the total bushels sold and the total price received by the owner of the grain storage facility.
    - The owner of the facility will be compensated on a one-time-only basis for each grain storage facility for each covered crop year wheat for the direct costs of decontamination of the facility at the same rate described under § 301.89-16(a) (discussed earlier)(up to 50 percent of the direct costs of decontamination, not to exceed $20,000 per grain storage facility). Compensation payments for decontamination of grain storage facilities will be issued by APHIS, and claims for compensation must be submitted in accordance with the provisions in § 301.89-16(a).

Under this proposed rule, the compensation in  § 301.89-16(c) described above would also be available to National Karnal Bunt Survey participants in the 1999-2000 crop season. 

                    For the 1997-1998 crop season, claims for compensation under § § 301.89-15 and 301.89-16 had to be received by FSA or APHIS on or before October 25, 1999. This is 120 days after the date the June 1999 final rule was published in the                     **Federal Register**                    . For the 1999-2000 crop season, we would likewise require that claims for compensation be received by APHIS on or before October 25, 2000, or the date that is 120 days after a final rule for this proposal is published in the                     **Federal Register**                    , whichever is later. The Administrator may extend this deadline, upon written request in specific cases, when unusual and unforeseen circumstances occur that prevent or hinder a claimant from requesting compensation on or before that date.                 

## Executive Order 12866 and Regulatory Flexibility Act 

This proposed rule has been reviewed under Executive Order 12866. The rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget. 

This proposed rule would establish compensation provisions for certain growers, handlers, seed companies, owners of grain storage facilities, flour millers, and participants in the National Karnal Bunt Survey to mitigate losses and expenses incurred in the 1999-2000 crop season because of the Karnal bunt quarantine and emergency actions. 

                    In accordance with Executive Order 12866, this analysis examines the economic effects of providing such compensation. The wheat industry within the regulated area is largely composed of businesses that can be considered “small” according to guidelines established by the Small Business Administration. Therefore, this analysis also fulfills the requirements of the Regulatory Flexibility Act (5 U.S.C. 601*et seq.*), which requires agencies to consider the economic impact of rule changes on small entities.                 

                    Upon detection of Karnal bunt in Arizona in March 1996, the U.S. Department of Agriculture (USDA) imposed Federal quarantine and emergency actions to prevent the interstate spread of the disease to other wheat producing areas in the United States. The unexpected discovery of                           ( print page 3509)                        Karnal bunt and subsequent Federal emergency actions disrupted the production and marketing flows of wheat in the quarantined areas. It was estimated that the effect of Karnal bunt and subsequent Federal actions on the wheat industry totaled $44 million in the 1995-1996 crop season.                 

                    In order to alleviate some of the economic hardships and to ensure full and effective compliance with the quarantine program, USDA offered compensation to mitigate certain losses incurred by growers, handlers, seed companies, and other affected persons in the areas regulated for Karnal bunt in the 1995-1996, 1996-1997, and 1997-1998 crop seasons. The payment of compensation is in recognition of the fact that, while benefits from regulation accrue to a large portion of the wheat industry outside the regulated areas, the regulatory burden falls predominately on a small segment of the affected wheat industry within the regulated areas. A final rule promulgating compensation regulations for the 1997-1998 crop season was effective and published in the                     **Federal Register**                     on June 25, 1999 (64 FR 34109-34113, Docket No. 96-016-35). The compensation proposed in this document for the 1999-2000 crop season is the same as the compensation offered in the 1997-1998 crop season.                 

We are proposing that growers, handlers, and seed companies would be eligible for compensation for losses in the 1999-2000 crop season due to wheat grain or seed that tested positive for Karnal bunt. Only positive-testing wheat would be eligible for compensation because of the lack of restrictions on the movement of negative-testing wheat. As in the 1997-1998 crop season, we are proposing different levels of compensation depending on whether the wheat was grown in an area under the first regulated crop season or in a previously regulated area. An area in the first regulated crop season is an area that became regulated for Karnal bunt after the 1999-2000 crop was planted. A previously regulated area is an area that became regulated for Karnal bunt before the 1999-2000 crop was planted. Currently, there are no regulated areas in the first regulated crop season. 

For growers, handlers, and seed companies in previously regulated areas, the proposed compensation for positive grain or seed would be $.60 per bushel. Growers, handlers, and seed companies in the first regulated crop season would be eligible for compensation at a rate not to exceed $1.80 per bushel. These compensation rates would apply to both wheat grain and seed. The difference in compensation rates reflects the fact that affected entities in areas under the first regulated crop season would not have known that their area was to become regulated for Karnal bunt at the time that they made planting and contracting decisions and would not have been prepared for the loss in value of their wheat due to Karnal bunt. Growers and handlers in previously regulated areas knew they were in an area regulated for Karnal bunt at the time that they made planting and contracting decisions for the 1999-2000 crop season. Given the restrictions, growers and handlers could have chosen to alter planting or contract decisions to avoid experiencing potential losses due to Karnal bunt. The proposed compensation rates are the same as those offered in the 1997-1998 crop season. 

At this time, all areas that are regulated for Karnal bunt are previously regulated areas. We estimate that approximately 37,000 acres of wheat will be harvested in 2000 from the regulated areas. In the 1998-1999 crop season, no wheat grown in the regulated areas tested positive for Karnal bunt. However, if we assume that 1 percent of wheat harvested from the regulated areas will test positive for Karnal bunt in the 1999-2000 crop season, compensation for wheat grain and seed grown in currently regulated areas would total approximately $17,760 (1 percent of 37,000 acres equals 370 acres; using an estimate of 80 bushels per acre crop yield, 370 acres multiplied by 80 equals 29,600 bushels; 29,600 bushels multiplied by $.60 per bushel equals $17,760). The estimated total compensation of $17,760 would translate into a per grower average of $987, assuming that 18 growers, or 10 percent of the approximately 180 growers in the regulated area, produce wheat that tests positive for Karnal bunt. The positive-testing wheat would have a market value of approximately $133,200 in the absence of Karnal bunt. 

To compare, compensation for wheat grain and seed in the 1996-1997 crop season totaled about $149,000. Approximately 122,000 acres of wheat were harvested from regulated areas in the 1996-1997 crop season, with a Karnal bunt infection rate of 0.8 percent. Compensation for wheat grain and seed in the 1997-1998 crop season is estimated to total about $1.9 million. Approximately 181,540 acres of wheat were harvested from regulated areas in the 1997-1998 crop season, with an infection rate of 3.2 percent. The increase in the amount of compensation paid in the 1997-1998 crop season resulted from wetter weather conditions, which increased the infection rate, and the fact that positive wheat was commingled with negative wheat in grain storage facilities in the certification area in Arizona before it was known that the wheat was positive. 

We cannot determine at this time whether there will be areas eligible for compensation under the provisions for first regulated crop season areas in the 1999-2000 crop season. APHIS is in the process of conducting the 1999 National Karnal Bunt Survey in wheat producing areas throughout the United States. Any areas that become regulated in the 1999-2000 crop season as a result of the 1999 National Survey might be eligible for first regulated crop season compensation. During the 1998 National Survey for Karnal bunt, none of the wheat samples tested positive for Karnal bunt. 

This proposed rule would also provide compensation under specific criteria for the decontamination of grain storage facilities found with positive wheat, the treatment of millfeed, and participants in the National Karnal Bunt Survey whose wheat or grain storage facility is found to be positive for Karnal bunt. Compensation for decontamination of grain storage facilities will be on a one-time-only basis for up to 50 percent of the cost of decontamination, not to exceed $20,000. We cannot determine at this time how many, if any, grain storage facilities in currently regulated areas will store positive wheat in the 1999-2000 crop season or how many, if any, will be found to contain positive wheat during the 1999 National Survey for Karnal bunt. In the 1996-1997 crop season, compensation paid for the decontamination of grain storage facilities totaled approximately $120,000. In the 1997-1998 crop season, the compensation paid for the decontamination of grain storage facilities totaled approximately $10,700. 

We are also proposing compensation for the cost of heat treating millfeed that APHIS requires to be treated, at the rate of $35.00 per short ton of millfeed. No millfeed made from wheat grown in the regulated area was required to be heat treated in the 1998-1999 crop season. Under current regulations, APHIS requires heat treatment of millfeed made from wheat that tested positive for Karnal bunt. Since little or no positive wheat is expected to be used for milling in the 1999-2000 crop season, compensation for the heat treatment of millfeed in the 1999-2000 crop season would be minimal. 

                    The Regulatory Flexibility Act requires that agencies consider the economic effects of rules on small businesses, organizations, and governmental jurisdictions. Growers                           ( print page 3510)                        and handlers of wheat grain and seed, and wheat seed companies, would be those most affected by this proposed rule. In the 1999-2000 crop season, we estimate that there are a total of 180 wheat growers in the regulated areas: 58 in Arizona, 23 in California, 27 in New Mexico, and 72 in Texas. Most of these entities have total annual sales of less than $0.5 million, the Small Business Administration's threshold for classifying wheat producers as small entities. Accordingly, the economic effects of this proposed rule would largely be on small entities.                 

This proposed rule is expected to have a positive economic effect on all affected entities, large and small, but few entities are likely to be affected. As indicated above, we estimate that only about 18 growers in regulated areas would produce wheat that tests positive for Karnal bunt in the 1999-2000 crop season. Compensation for the loss in value of wheat that tests positive for Karnal bunt serves to encourage compliance with testing requirements within the regulated area, thereby aiding in the preservation of an important wheat growing region in the United States. It also serves to encourage participation in the National Karnal Bunt Survey. 

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities. 

### Executive Order 12372

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

### Executive Order 12988

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

### Paperwork Reduction Act 

                    In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501*et seq.*), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. 96-016-33. Please send a copy of your comments to: (1) Docket No. 96-016-33, Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this proposed rule.                 

This proposed rule would require that growers, handlers, and seed companies provide certain records and documents to a local Farm Service Agency (FSA) office in order to claim compensation. Growers, handlers, and seed companies would also have to sign a Karnal Bunt Compensation Claim form (completed by an employee of FSA using the information provided by the claimant) to attest that the information on the form is accurate and to demonstrate acceptance of the compensation. This proposal would also require that owners of grain storage facilities and flour millers provide certain records and documents to an APHIS inspector in order to claim compensation. This information collection is necessary in order to verify a claimant's eligibility for compensation and to provide documentation of compensation claims and payments. 

We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us: 

(1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility; 

(2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used; 

(3) Enhance the quality, utility, and clarity of the information to be collected; and

                    (4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology;                     *e.g.,*                     permitting electronic submission responses).                 

*Estimate of burden:*                     Public reporting burden for this collection of information is estimated to average .4938 hours per response.                 

*Respondents:*                     Wheat growers, handlers, seed companies, owners of grain storage facilities, flour millers, FSA personnel.                 

*Estimated annual number of respondents:*                     18.                 

*Estimated annual number of responses per respondent:*                     4.5.                 

*Estimated annual number of responses:*                     81.                 

*Estimated total annual burden on respondents:*                     40 hours.                 

Copies of this information collection can be obtained from: Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. 

# List of Subjects in 7 CFR Part 301

      - Agricultural commodities
      - Plant diseases and pests
      - Quarantine
      - Reporting and recordkeeping requirements
      - Transportation

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

# PART 301—DOMESTIC QUARANTINE NOTICES 

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

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

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

§ 301.89-15 

Growers, handlers, and seed companies are eligible to receive compensation from the United States Department of Agriculture (USDA) for the 1996-1997, 1997-1998, and 1999-2000 crop seasons to mitigate losses or expenses incurred because of the Karnal bunt regulations and emergency actions, as follows: 

                            (a)                             *Growers, handlers, and seed companies in areas under first regulated crop season.*                             Growers, handlers, and seed companies are eligible to receive compensation for the loss in value of their wheat in accordance with paragraphs (a)(1) and (a)(2) of this section if: the wheat was grown in a State where the Secretary has declared an extraordinary emergency; and the                                   ( print page 3511)                                wheat was grown in an area of that State that became regulated for Karnal bunt after the crop was planted, or for which an Emergency Action Notification (PPQ Form 523) was issued after the crop was planted; and the wheat was grown in an area that remained regulated or under Emergency Action Notification at the time the wheat was sold. Growers, handlers, and seed companies in areas under the first regulated crop season are eligible for compensation for 1996-1997 crop season wheat, 1997-1998 crop season wheat, or 1999-2000 crop season wheat (as appropriate) and for wheat inventories in their possession that were unsold at the time the area became regulated. The compensation provided in this section is for wheat grain, certified wheat seed, and wheat grown with the intention of producing certified wheat seed.                         

* * * * *

                            (b)                             *Growers, handlers, and seed companies in previously regulated areas.*                             Growers, handlers, and seed companies are eligible to receive compensation for the loss in value of their wheat in accordance with paragraphs (b)(1) and (b)(2) of this section if: the wheat was grown in a State where the Secretary has declared an extraordinary emergency; and the wheat was grown in an area of that State that became regulated for Karnal bunt before the crop was planted, or for which an Emergency Action Notification (PPQ Form 523) was issued before the crop was planted; and the wheat was grown in an area that remained regulated or under Emergency Action Notification at the time the wheat was sold. Growers, handlers, and seed companies in previously regulated areas are eligible for compensation only for 1996-1997, 1997-1998, or 1999-2000 crop season wheat. The compensation provided in this section is for wheat grain, certified wheat seed, and wheat grown with the intention of producing certified wheat seed.                         

                            (1)                             *Growers.*                             Growers of wheat in a previously regulated area who sell wheat that was tested by APHIS and found positive for Karnal bunt prior to sale, or that was tested by APHIS and found positive for Karnal bunt after sale and the price received by the grower is contingent on the test results, are eligible to receive compensation at the rate of $.60 per bushel of positive testing wheat.                         

                            (2)                             *Handlers and seed companies.*                             Handlers and seed companies who sell wheat grown in a previously regulated area are eligible to receive compensation only if the wheat was not tested by APHIS prior to purchase by the handler, but was tested by APHIS and found positive for Karnal bunt after purchase by the handler or seed company, as long as the price to be paid by the handler or seed company is not contingent on the test results. Compensation will be at the rate of $.60 per bushel of positive testing wheat.                         

                            (c)                             *To claim compensation.*                             Compensation payments to growers, handlers, and seed companies under paragraphs (a) and (b) of this section will be issued by the Farm Service Agency (FSA). Claims for compensation for the 1996-1997 crop season had to be received by FSA on or before October 8, 1998. Claims for compensation for the 1997-1998 crop season had to be received by FSA on or before October 25, 1999. Claims for compensation for the 1999-2000 crop season must be received by FSA on or before October 25, 2000, or [                            *the date 120 days after the final rule is published in the***Federal Register**                            ], whichever is later. The Administrator may extend the deadline, upon request in specific cases, when unusual and unforeseen circumstances occur that prevent or hinder a claimant from requesting compensation on or before these dates. To claim compensation, a grower, handler, or seed company must complete and submit to the local FSA county office the following documents:                         

* * * * *

§ 301.89-16 

3. Section 301.89-16 would be amended as follows:

a. In the heading, by removing the words “1996-1997 and 1997-1998 crop seasons” and adding the words “1996-1997, 1997-1998, and 1999-2000 crop seasons” in their place.

b. In the introductory text, by removing the words “ 1996-1997 and 1997-1998 crop seasons” and adding the words “1996-1997, 1997-1998, and 1999-2000 crop seasons” in their place.

                            c. In paragraphs (a), (b), (c)(1), and (c)(2), by removing the last two sentences in each paragraph and by adding three sentences in their place to read as follows: “Claims for compensation for the 1997-1998 crop season had to be received by APHIS on or before October 25, 1999. Claims for compensation for the 1999-2000 crop season must be received by APHIS on or before October 25, 2000, or [                            *the date 120 days after the final rule is published in the Federal Register*], whichever is later. The Administrator may extend these deadlines upon written request in specific cases, when unusual and unforeseen circumstances occur that prevent or hinder a claimant from requesting compensation on or before these dates.”                         

Done in Washington, DC, this 9th day of January 2001. 

Bobby R. Acord, 

Acting Administrator, Animal and Plant Health Inspection Service. 

# Footnotes

1.                             The 1997-1998 crop season is that season in which wheat was harvested in 1998. The 1999-2000 crop season is that season in which wheat is harvested in 2000.                    
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[FR Doc. 01-1198 Filed 1-12-01; 8:45 am] 

BILLING CODE 3410-34-P