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[Federal Register Volume 61, Number 130 (Friday, July 5, 1996)]
[Rules and Regulations]
[Pages 35102-35107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16999]

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 301

[Docket No. 96-016-7]

Karnal Bunt; Compensation

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Interim rule and request for comments.

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SUMMARY: We are amending the regulations to provide compensation for 
certain growers and handlers, owners of grain storage facilities, and 
flour millers in order to mitigate losses and expenses incurred because 
of Karnal bunt. The payment of compensation is necessary in order to 
reduce the economic impact of the Karnal bunt quarantine on affected 
wheat growers and other individuals, and to help obtain cooperation 
from affected individuals in Karnal bunt eradication efforts.

DATES: Interim rule effective June 27, 1996. Consideration will be 
given only to comments received on or before September 3, 1996.

ADDRESSES: Please send an original and three copies of your comments to 
Docket No. 96-016-7, Regulatory Analysis and Development, PPD, APHIS, 
suite 3C03, 4700 River Road

[[Page 35103]]

Unit 118, Riverdale, MD 20737-1238. Please state that your comments 
refer to Docket No. 96-016-7. Comments received may be inspected at 
USDA, room 1141, South Building, 14th Street and Independence Avenue 
SW., Washington, DC, between 8 a.m. and 4:30 p.m., Monday through 
Friday, except holidays. Persons wishing to inspect comments are 
requested to call ahead on (202) 690-2817 to facilitate entry into the 
comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr. Mike Stefan, Operations Officer, 
Domestic and Emergency Operations, PPQ, APHIS, 4700 River Road Unit 
134, Riverdale, MD 20737-1236, (301) 734-8247.

SUPPLEMENTARY INFORMATION:

Background

    Karnal bunt is a serious 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. The spores can be carried on a variety of surfaces, 
including plants and plant parts, seeds, soil, elevators, buildings, 
farm equipment, tools, and even vehicles. Spores and the sporidia they 
produce also can be windborne. Although the sporidia are fragile and 
may be able to move only short distances, Teliospores are thought to 
move longer distances.
    Karnal bunt is a serious disease that can affect both yield and 
grain quality when present at levels over 3 to 5 percent. It adversely 
affects the color, odor, and palatability of flour and other foodstuffs 
made from heavily infested wheat. Wheat containing a significant amount 
of bunted kernels is reduced in quality. Karnal bunt does not present a 
risk to human or animal health.
    On March 8, 1996, Karnal bunt was detected in Arizona during a seed 
certification inspection done by the Arizona Department of Agriculture. 
On March 20, 1996, the Secretary of Agriculture signed a ``Declaration 
of Extraordinary Emergency'' authorizing the Secretary to take 
emergency action under 7 U.S.C. 150dd with regard to Karnal bunt within 
the States of Arizona, New Mexico, and Texas. In an interim rule 
effective on March 25, 1996, and published in the Federal Register on 
March 28, 1996 (61 FR 13649-13655, Docket No. 96-016-3), the Animal and 
Plant Health Inspection Service (APHIS) established the Karnal bunt 
regulations (7 CFR 301.89-1 through 301.89-11), and quarantined all of 
Arizona and portions of New Mexico and Texas because of Karnal bunt. 
The regulations define regulated articles and restrict the interstate 
movement of these regulated articles from the quarantined areas.
    After the establishment of the regulations, Karnal bunt was 
detected in lots of seed that were either planted or stored in certain 
areas in California. On April 12, 1996, the Secretary of Agriculture 
signed a ``Declaration of Extraordinary Emergency'' authorizing the 
Secretary to take emergency action under 7 U.S.C. 150dd with regard to 
Karnal bunt within California. In an interim rule effective on April 
19, 1996, and published in the Federal Register on April 25, 1996, 
APHIS also quarantined portions of California because of Karnal bunt 
(61 FR 18233-18235, Docket No. 96-016-5).
    Under an extraordinary emergency, the Secretary is authorized, but 
not obligated, to compensate growers and other persons for economic 
losses incurred by them as a result of the quarantine or emergency 
action. This interim rule amends the Karnal bunt regulations to provide 
compensation for certain growers and handlers, owners of grain storage 
facilities, and flour millers in order to mitigate losses and expenses 
incurred because of actions taken by the Department regarding Karnal 
bunt. We are adding a new Sec. 301.89-12 that lists classes of 
individuals who are eligible to receive compensation for actions taken 
or losses experienced because of actions taken by the Department 
regarding Karnal bunt. This section also sets forth the rates of 
compensation and explains how to make a claim for compensation, 
including what forms need to be filed and what documents need to be 
provided by the claimant to the United States Department of Agriculture 
(USDA).

Compensation for Destroyed Crops in New Mexico and Texas

    Approximately 4,000 acres of planted wheat in New Mexico and Texas 
were traced back to seed produced in Arizona and known to be 
contaminated with Karnal bunt. Under an extraordinary emergency, the 
Secretary of Agriculture has the authority to order the destruction of 
crops (see 7 U.S.C. 150dd(b)). On April 1, 1996, the Secretary signed a 
memorandum authorizing APHIS to issue orders for the destruction by 
plowing of all wheat crops in New Mexico and Texas that were planted 
with seed known to be contaminated with Karnal bunt. Destruction of 
these crops was determined to be beneficial in preventing the spread of 
Karnal bunt because the crops in New Mexico and Texas were at an early 
stage of growth, before Karnal bunt infection of the current crop could 
occur.
    The vehicle for issuing destruction orders is an Emergency Action 
Notification (PPQ Form 523) given by an APHIS inspector to the owner of 
the wheat crop that is to be destroyed. Pursuant to the Secretary's 
authorization, APHIS began issuing Emergency Action Notifications for 
the destruction of contaminated wheat fields in New Mexico and Texas on 
April 1, 1996.
    Consequently, we are listing as eligible for compensation growers 
in New Mexico and Texas who have destroyed crops of wheat pursuant to 
an Emergency Action Notification (PPQ Form 523) issued by an inspector. 
Compensation for these individuals has been set at the rate of $300 per 
acre of destroyed crop. The rate of $300 per acre includes a payment of 
$275 per acre compensation for expenses incurred by the owner of the 
wheat crop in planting and cultivating the contaminated wheat (this is 
based on the average cost of expenses such as seed, fertilizer, 
irrigation, and employee expenses) plus $25 per acre to pay for crop 
destruction and soil preparation for replanting the plowed acres with a 
new crop.
    To receive compensation, the growers must complete and submit to an 
inspector whichever of the following three forms are applicable, as 
determined by the inspector: ASCS Form 574, ASCS Form 578, and FCI Form 
73. The forms will be furnished by USDA. ASCS Form 574 is a form used 
to request acreage or disaster credit, and will document a record of 
management practices for the crop and the reason for its destruction. 
ASCS Form 578 is a form used to document a farmer's total acreage and 
how the farmer uses that acreage. Most affected farmers will already 
have a copy of ASCS Form 578 on file with the USDA in connection with 
their enrollment in federal crop insurance or other USDA programs, but 
will have to revise this form to reflect that the crop on some or all 
of the acreage listed on the form has been ordered destroyed by an 
inspector because of Karnal bunt. FCI Form 73 will be used to certify 
the number of destroyed acres of wheat and the reason for their 
destruction.

Compensation for Lost Value of Wheat in the Quarantined Area

    Most other wheat grown in the quarantined areas, especially in the 
quarantined areas outside of New Mexico and Texas, was past the early 
stage of growth at which plowing the

[[Page 35104]]

crop under would prevent infection of the current crop with Karnal 
bunt. Much of the wheat grown in the quarantined area is under contract 
with millers or grain handlers for processing or for use as seed. Under 
the Karnal bunt regulations, growers and handlers in the quarantined 
area are restricted from selling wheat for propagative purposes (seed) 
and from moving wheat outside of the quarantined area. This means that, 
in most cases, growers and handlers in the quarantined area cannot move 
their wheat to the market for which it was contracted.
    Growers and handlers may export their wheat to another country or 
may market the wheat within the quarantined area, where it will most 
likely be processed as animal feed. The value for wheat to be used as 
animal feed is typically lower than the value for wheat used for 
propagative purposes or for use in products for human consumption. 
Further, many growers and handlers are finding it difficult to market 
wheat from the quarantined area, whether or not it has tested positive 
for Karnal bunt infection, because wheat from the quarantined area may 
incur additional costs for handling and treatment. This may force some 
growers and handlers to accept a lower price for their wheat than they 
would have received if the area had not been quarantined for Karnal 
bunt.
    Therefore, we are listing as eligible for compensation growers and 
handlers of wheat grown in the quarantined area for the loss in value 
of their wheat due to the quarantine for Karnal bunt. We will 
compensate for the loss in value of wheat testing negative and wheat 
testing positive from the quarantined area. Compensation calculations 
will be different depending on the purpose for which the wheat was 
grown and the purpose for which the wheat is eventually sold. 
Compensation calculations will also be different for growers and for 
handlers.
    This rule only includes calculations for compensation of wheat 
grown for nonpropagative purposes (meaning it was not grown for use as 
seed). We do intend to compensate seed producers for the loss in value 
of their seed. However, we are still developing protocols for seed 
movement and disposition, and those protocols will affect how that 
compensation will be calculated. A rule providing for compensation for 
seed producers will be published at a later date. The calculations for 
nonpropagative wheat compensation are discussed below.

Growers of Nonpropagative Wheat

    For growers of wheat grown under contract for nonpropagative 
purposes in the quarantined area, the amount of compensation will be 
based on the difference between the contracted price and the salvage 
value (described below). Salvage value for wheat grown under contract 
will be as follows:
    If the contracted wheat is tested by APHIS and found positive for 
Karnal bunt, and the positive wheat is sold for use as animal feed, 
salvage value equals $6 per hundred weight or $3.60 per bushel for all 
classes of wheat. This value is based on the feeding value of wheat 
relative to other feed grains, in addition to considering the costs of 
required treatment of positive wheat for use in livestock feed and the 
costs of transporting wheat to processing centers and to feeding 
locations. If the positive wheat is sold for uses other than animal 
feed (e.g., milling or export), salvage value equals whichever price is 
higher of the following: the average price paid in the region of the 
quarantined area where the wheat is sold for the relevant class of 
wheat for the period between May 1 and June 30, 1996; or, $3.60 per 
bushel. (Relevant class of wheat means the type of wheat, for example, 
Durum or Hard red winter wheat. Because these classes of wheat are 
suitable for different products, they command different market prices.) 
If contracted wheat is tested by APHIS and found negative for Karnal 
bunt, regardless of the eventual use of the wheat, salvage value equals 
the same as for positive contracted wheat sold for uses other than 
animal feed.
    For growers of nonpropagative wheat not grown under contract, 
compensation will be based on the difference between the estimated 
market price for the relevant class of wheat and the salvage value. 
Salvage values will be the same as described above for contracted 
wheat. The estimated market price is intended to represent what the 
market price would have been if there were no quarantine for Karnal 
bunt, and 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) for the period between May 1 and June 30, 
1996, with adjustments for transportation and other handling costs.
    For nonpropagative wheat, whether grown under contract or not, 
whether positive or negative, compensation will not exceed $2.50 per 
bushel.
    To receive compensation, the grower must complete and submit to an 
inspector whichever of the following three forms are applicable, as 
determined by the inspector: ASCS Form 574, ASCS Form 578, and FCI Form 
73. These are the same forms described above for claims for destroyed 
crops, and will be furnished by USDA. In addition, the grower must 
submit a copy of the contract the grower has for the wheat, if the 
wheat was under contract, and a copy of the receipt for the final sale 
of the wheat, showing the intended use for which the wheat was sold.

Handlers of Nonpropagative Wheat

    There are two circumstances under which handlers will be eligible 
for compensation: (1) Handlers who honor contracts by paying the grower 
full contract price on wheat grown for nonpropagative purposes in the 
quarantined area that was tested by APHIS and found positive for Karnal 
bunt; and (2) handlers who purchase contracted or noncontracted wheat 
grown for nonpropagative purposes in the quarantined area that was 
tested by APHIS and found negative for Karnal bunt prior to purchase, 
but which is tested by APHIS and found positive for Karnal bunt after 
purchase. The amount of compensation for both these circumstances will 
be based on the difference between the estimated market price (as 
described previously in this document) and the salvage value. Salvage 
value will be the same as for grower compensation (described previously 
in this document). However, compensation will not exceed $2.50 per 
bushel under any circumstances.
    The calculations described above do not provide for compensation 
for handlers who purchase positive wheat not grown under contract, or 
who purchase negative wheat that does not later test positive. Handlers 
who purchase positive wheat not grown under contract, or for less than 
contract price, will likely pay a very low price for the wheat, so that 
compensation for loss in value will not be necessary. Handlers who 
purchase negative wheat that continues to test negative after purchase 
will likewise not experience a loss in value for the wheat compared to 
the price they paid for it. Handlers who purchase negative wheat that 
later tests positive would, however, experience a loss in expected 
value because positive wheat is worth less than negative wheat.
    To receive compensation, the handler must complete and submit to an 
inspector whichever of the following three forms are applicable, as 
determined by the inspector: ASCS Form 574, ASCS Form 578, and FCI Form 
73. The forms will be furnished by USDA. In addition, the handler must 
submit a copy of the contract the

[[Page 35105]]

handler had with the grower for the wheat, if the wheat was under 
contract, to verify that the contract was honored. If the wheat was not 
purchased under contract, the handler must submit a copy of the receipt 
for the final sale of the wheat, showing the intended use for which the 
wheat was sold.
    If a grower or handler of nonpropagative wheat in the quarantined 
area is not able to or elects not to sell their wheat, they will be 
eligible to receive compensation at the rate of $2.50 per bushel. 
However, compensation will only be paid if the grower or handler has 
destroyed the wheat by burying it in a sanitary landfill. To receive 
compensation, the grower or handler must complete and submit to an 
inspector whichever of the following three forms are applicable, as 
determined by an inspector: ASCS Form 574, ASCS Form 578, and FCI Form 
73. The forms will be furnished by USDA. The grower or handler must 
also submit a receipt from a sanitary landfill verifying how much wheat 
was buried.

Compensation for Decontamination of Grain Storage Facilities

    Owners of grain storage facilities that have been decontaminated 
pursuant to an Emergency Action Notification (PPQ Form 523) issued by 
an inspector are eligible for compensation. These grain storage 
facilities have been determined by APHIS to be contaminated with Karnal 
bunt. We estimate that the cost of decontamination, which consists of 
treatment with a chlorine solution and water, detergent and water, 
steam, or fumigation with methyl bromide in accordance with 
Sec. 301.89-11 of the regulations, can range between $30,000 to $50,000 
per facility.
    We will compensate owners of contaminated grain storage facilities 
on a one time only basis for up to 50 percent of the cost of 
decontamination. However, compensation will not exceed $20,000 per 
premise. We will add a definition for ``premise'' to Sec. 301.89-1 to 
mean ``all structures, conveyances, or materials associated with a 
grain storage facility at a single location.'' Compensation is limited 
to the direct costs of decontaminating facilities. General clean-up, 
repair, and refurbishment costs are excluded from compensation.
    To receive compensation, owners of grain storage facilities must 
submit to the inspector records demonstrating that decontamination was 
performed on all structures, conveyances, or materials ordered to be 
decontaminated by the Emergency Action Notification on the facility 
premise. The records must include a copy of the Emergency Action 
Notification, 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 perform actions related to the decontamination, 
and any other documentation that helps show decontamination has been 
completed and its cost.

Compensation for Treating Millfeed

    In accordance with compliance agreements established between APHIS 
and flour millers located in high-risk areas (areas where there is a 
high risk of spreading Karnal bunt into surrounding areas), millfeed (a 
byproduct of milling wheat into flour) produced from wheat from the 
quarantined area must be treated using a heat process. This treatment 
adds approximately $35 per short ton to the cost of producing millfeed 
products, such as animal feed. It is unlikely that millers would 
purchase wheat from the quarantined area without compensation for the 
cost of millfeed treatment. Loss of these markets would further lower 
the value of wheat in the quarantined area.
    Flour millers who heat-treat millfeed made from wheat produced in 
the quarantined area are eligible to receive compensation at the rate 
of $35.00 per short ton of millfeed. The amount of millfeed compensated 
will be calculated by multiplying the weight of wheat that is milled 
from the quarantined area by 25 percent (the average percent of 
millfeed derived from a short ton of grain). We will calculate the 
amount of millfeed to be compensated in this manner because many 
millers routinely mix together different types of wheat from different 
areas. The resulting millfeed would be a product of wheat from 
quarantined and nonquarantined areas. However, we will only compensate 
for the cost of treating millfeed made from wheat produced in the 
quarantined area. Therefore, the amount compensated cannot be 
determined by simply weighing the total amount of millfeed at the end 
of the milling process.
    To claim compensation, flour millers must submit to an inspector a 
copy of the limited permit under which the wheat was moved to the mill, 
in order to show that the wheat was produced in a quarantined area, and 
a copy of the bill of lading for the wheat, showing the weight of the 
wheat in short tons. Flour millers must also submit verification that 
the millfeed produced from wheat from the quarantined area was properly 
heat treated.
    We believe the compensations described above will help ensure 
cooperation from affected individuals in APHIS' efforts to eliminate 
the spread of Karnal bunt and will help mitigate the economic impact of 
the Karnal bunt quarantine and emergency actions on affected wheat 
growers and others within the industry.

Miscellaneous

    We are also making a miscellaneous change to the Karnal bunt 
regulations. Section 301.89-2(d) lists plants and plant parts of the 
species Triticum aestivum X Seale cereals as regulated articles. 
However, the correct scientific name for this species is Triticum 
aestivum X Secale cereale. We are amending Sec. 301.89-2(d) to correct 
this error.

Emergency Action

    In accordance with 7 U.S.C. 150dd(b)(2), the amount of 
compensation, if any, which the Secretary determines may be paid to 
individuals for economic losses incurred because of the declaration of 
an extraordinary emergency shall be final.
    The Administrator of the Animal and Plant Health Inspection Service 
has determined that an emergency exists that warrants publication of 
this interim rule without prior opportunity for public comment. 
Immediate action is necessary to provide compensation for those persons 
who were and are required to take emergency actions to eliminate the 
spread of Karnal bunt or who experience economic losses because of the 
quarantine for Karnal bunt.
    Because prior notice and other public procedures with respect to 
this action are impracticable and contrary to the public interest under 
these conditions, we find good cause under 5 U.S.C. 553 to make it 
effective upon signature. We will consider comments that are received 
within 60 days of publication of this rule in the Federal Register. 
After the comment period closes, we will publish another document in 
the Federal Register. It will include a discussion of any comments we 
receive and any amendments we are making to the rule as a result of the 
comments.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. For this 
action, the Office of Management and Budget has waived its review 
process required by Executive Order 12866.
    This action amends the regulations to provide compensation for 
certain

[[Page 35106]]

growers and handlers, owners of grain storage facilities, and flour 
millers in order to mitigate losses and expenses incurred because of 
the Karnal bunt quarantine and emergency actions. This emergency 
situation makes compliance with section 603 and timely compliance with 
section 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604) 
impracticable. This rule may have a significant economic impact on a 
substantial number of small entities. If we determine this is so, then 
we will discuss the issues raised by section 604 of the Regulatory 
Flexibility Act in our Final Regulatory Flexibility Analysis.

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 12778

    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws and 
regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection or 
recordkeeping requirements included in this interim rule have been 
approved by the Office of Management and Budget (OMB). The assigned OMB 
control numbers are as follows: for PPQ Form 523 the number is 0579-
0121; for ASCS Form 574 the number is 0563-0003; for ASCS Form 578 the 
number is 0560-0004; and for FCI Form 73 the number is 0563-0033.

List of Subjects in 7 CFR Part 301

    Agricultural commodities, Plant diseases and pests, Quarantine, 
Reporting and recordkeeping requirements, Transportation.

    Accordingly, 7 CFR part 301 is amended as follows:

PART 301--DOMESTIC QUARANTINE NOTICES

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

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

Sec. 301.89-2  [Amended]

    2. In Sec. 301.89-1, a definition for Premise is added in 
alphabetical order to read as follows:

Sec. 301.89-1  Definitions.

* * * * *
    Premise. All structures, conveyances, or materials associated with 
a grain storage facility at a single location.
* * * * *
    3. In Sec. 301.89-2, in paragraph (d), the entry for Triticale is 
amended by removing the words ``Seale cereals'' and adding the words 
``Secale cereale'' in their place.
    4. A new Sec. 301.89-12 is added to read as follows:

Sec. 301.89-12  Compensation.

    The following individuals are eligible to receive compensation from 
the United States Department of Agriculture (USDA) for losses or 
expenses incurred because of the Karnal bunt quarantine and emergency 
actions, as follows:
    (a) Growers who have destroyed crops. Growers in New Mexico and 
Texas who have destroyed crops of wheat pursuant to an Emergency Action 
Notification (PPQ Form 523) issued by an inspector are eligible to be 
compensated at the rate of $300 per acre of destroyed crop. To claim 
compensation, the grower must complete and submit to an inspector 
whichever of the following three forms are applicable, as determined by 
the inspector: ASCS Form 574, ASCS Form 578, and FCI Form 73. The forms 
will be furnished by USDA.
    (b) Growers and handlers who sell nonpropagative wheat grown in the 
quarantined area. Growers and handlers who sell nonpropagative wheat 
grown in the quarantined area are eligible to be compensated for the 
loss in value of their wheat due to the quarantine for Karnal bunt, as 
follows:
    (1) Growers who sell nonpropagative wheat. For growers who sell 
wheat grown for nonpropagative purposes, compensation will be as 
described in paragraphs (b)(1)(i) and (b)(1)(ii) of this section. 
However, compensation will not exceed $2.50 per bushel under any 
circumstances.
    (i) If the wheat was grown under contract, compensation will equal 
the contracted price minus the salvage value, as described in paragraph 
(b)(3) of this section.
    (ii) If the wheat was not grown under contract, 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 
salvage value, as described in paragraph (b)(3) of this section. 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) for the period between May 1 
and June 30, 1996, with adjustments for transportation and other 
handling costs.
    (2) Handlers who sell nonpropagative wheat. Handlers are eligible 
to be compensated only under the circumstances described in paragraphs 
(b)(2)(i) and (b)(2)(ii) of this section. Compensation for both 
circumstances 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 salvage value, as described in paragraph (b)(3) of 
this section. 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) for the 
period between May 1 and June 30, 1996, with adjustments for 
transportation and other handling costs. However, compensation will not 
exceed $2.50 per bushel under any circumstances.
    (i) Handlers who honor contracts by paying the grower full contract 
price on wheat grown for nonpropagative purposes in the quarantined 
area that was tested by APHIS and found positive for Karnal bunt; or
    (ii) Handlers who purchase contracted or noncontracted wheat grown 
for nonpropagative purposes in the quarantined area that was tested by 
APHIS and found negative for Karnal bunt prior to purchase but that was 
tested by APHIS and found positive for Karnal bunt after purchase.
    (3) Salvage value. Salvage values will be as follows:
    (i) If the wheat is positive for Karnal bunt and is sold for use as 
animal feed, salvage value equals $6.00 per hundredweight or $3.60 per 
bushel for all classes of wheat.
    (ii) If the wheat is positive for Karnal bunt and is sold for a use 
other than animal feed, salvage value equals whichever is higher of the 
following: the average price paid in the region of the quarantined area 
where the wheat is sold for the relevant class of wheat (meaning type 
of wheat, such as Durum or Hard red winter) for the period between May 
1 and June 30, 1996; or, $3.60 per bushel.
    (iii) If the wheat is negative for Karnal bunt and is sold for any 
use, salvage value equals whichever is higher of the following: the 
average price paid in the region of the quarantined area where the 
wheat is sold for the relevant class of wheat (meaning type of wheat, 
such as

[[Page 35107]]

Durum or Hard red winter) for the period between May 1 and June 30, 
1996; or, $3.60 per bushel.
    (4) To claim compensation. To claim compensation, a grower or 
handler must complete and submit to an inspector whichever of the 
following three forms are applicable, as determined by the inspector: 
ASCS Form 574, ASCS Form 578, and FCI Form 73. The forms will be 
furnished by USDA. Growers must also submit a copy of the contract the 
grower has for the wheat, if the wheat was under contract; handlers 
must also submit a copy of the contract the handler had with the grower 
for the wheat, if the wheat was under contract. Finally, a grower or 
handler must submit a copy of the receipt for the final sale of the 
wheat, showing the intended use for which the wheat was sold.
    (c) Nonpropagative wheat that is not sold. If a grower or handler 
of nonpropagative wheat in the quarantined area is not able to or 
elects not to sell their wheat, they will be eligible to receive 
compensation at the rate of $2.50 per bushel. Compensation will only be 
paid if the grower or handler has destroyed the wheat by burying it in 
a sanitary landfill. To claim compensation, the grower or handler must 
complete and submit to an inspector whichever of the following three 
forms are applicable, as determined by the inspector: ASCS Form 574, 
ASCS From 578, and FCI Form 73. The forms will be furnished by USDA. In 
addition, the grower or handler must submit a receipt from the sanitary 
landfill verifying how much wheat was buried.
    (d) Decontamination of grain storage facilities. Owners of grain 
storage facilities that have been decontaminated pursuant to an 
Emergency Action Notification (PPQ Form 523) issued by an inspector are 
eligible to be compensated, on a one time only basis, for up to 50 
percent of the cost of decontamination. However, compensation will not 
exceed $20,000 per premise (as defined in Sec. 301.89-1). Compensation 
is limited to the direct costs of decontaminating facilities. General 
clean-up, repair, and refurbishment costs are excluded from 
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 to be decontaminated by the Emergency Action 
Notification on the facility premise. The records must include a copy 
of the Emergency Action Notification, 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 decontamination has been completed.
    (e) Flour millers. Flour millers who, in accordance with a 
compliance agreement with APHIS, heat-treat millfeed made from wheat 
produced in the quarantined area are eligible to be compensated at the 
rate of $35.00 per short ton of millfeed. The amount of millfeed 
compensated will be calculated by multiplying the weight of wheat from 
the quarantined area received by the miller by 25 percent (the average 
percent of millfeed derived from a short ton of grain). To claim 
compensation, the miller must submit to an inspector a copy of the 
limited permit under which the wheat was moved to the mill and a copy 
of the bill of lading for the wheat (showing the weight of the wheat in 
short tons). Flour millers must also submit verification that the 
millfeed was heat treated, in the form of 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.

    Done in Washington, DC, this 27th day of June 1996.
Terry L. Medley,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-16999 Filed 7-3-96; 8:45 am]
BILLING CODE 3410-34-P
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