[Federal Register: May 1, 2002 (Volume 67, Number 84)]
[Rules and Regulations]
[Page 21561-21566]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01my02-1]
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[[Page 21561]]
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
7 CFR Part 301
[Docket No. 01-112-1]
RIN 0579-AB45
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 Karnal bunt regulations to provide
compensation for certain growers and handlers of grain and seed
affected by Karnal bunt who are not currently eligible for
compensation, and for certain wheat grown outside the regulated area
that was commingled with wheat grown in regulated areas in Texas. The
payment of compensation is necessary in order to encourage the
participation of, and obtain cooperation from, affected individuals in
our efforts to contain and reduce the prevalence of Karnal bunt.
DATES: This interim rule is effective May 1, 2002. We will consider all
comments we receive that are postmarked, delivered, or e-mailed by July
1, 2002.
ADDRESSES: You may submit comments by postal mail/commercial delivery
or by e-mail. If you use postal mail/commercial delivery, please send
four copies of your comment (an original and three copies) to: Docket
No. 01-112-1, Regulatory Analysis and Development, PPD, APHIS, Station
3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state
that your comment refers to Docket No. 01-112-1. If you use e-mail,
address your comment to regulations@aphis.usda.gov. Your comment must
be contained in the body of your message; do not send attached files.
Please include your name and address in your message and ``Docket No.
01-112-1'' on the subject line.
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 dockets, are available on the Internet at
http://www.aphis.usda.gov/ppd/rad/webrepor.html.
FOR FURTHER INFORMATION CONTACT: Mr. Robert G. Spaide, Director for
Surveillance and Emergency Programs Planning and Coordination, PPQ,
APHIS, 4700 River Road Unit 98, Riverdale, MD 20737-1231; (301) 734-
7819.
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. The regulations also provide for the payment of compensation 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 during
certain years. These provisions are in Sec. 301.89-15, ``Compensation
for growers, handlers, and seed companies in the 1999-2000 and
subsequent crop seasons,'' and Sec. 301.89-16, ``Compensation for grain
storage facilities, flour millers, and National Survey participants for
the 1999-2000 and subsequent crop seasons.''
On August 6, 2001, the Animal and Plant Health Inspection Service
(APHIS) published in the Federal Register a final rule (66 FR 40839-
40843, Docket No. 96-016-37) that established the compensation levels
for the 1999-2000 growing season and subsequent years and made several
other changes to the compensation regulations. One of these changes was
that, after the 2000-2001 growing season, compensation would no longer
be made available to persons growing or handling crops that were
knowingly planted in previously regulated areas.
We have recently identified and analyzed five situations where
certain wheat growers, handlers, and other parties covered by the
compensation regulations appear to be ineligible to receive
compensation for grain or seed affected by Karnal bunt due to
restrictive language used in the regulations that did not anticipate
certain complications in the harvest and storage of grain that arose
following discovery of Karnal bunt in four counties in northern Texas.
The situations we are addressing primarily affect growers and handlers
in Texas, and certain handlers who moved grain from other States to
Texas for storage. In particular, four counties in northern Texas
became regulated areas during the latter part of the 2000-2001 growing
season, and due to the need to quicky declare these counties as
regulated areas, we were unable to modify the compensation regulations
at that time to address certain relevant aspects of the way seed and
grain are moved, stored, and used in the newly regulated areas. We are
now revising the compensation regulations to address five particular
situations in Texas regulated areas. These cases represent
unanticipated circumstances applicable only to the 2000-2001 growing
season where we believe the parties affected should, in fairness, be
eligible for compensation.
We are revising the compensation regulations to allow persons
included in
[[Page 21562]]
these five situations to apply for compensation. The situations covered
by these regulatory changes are described below.
Compensation for Certain Karnal Bunt Negative Wheat
In 2001, we have added four counties in Texas (Archer, Baylor,
Throckmorton, and Young Counties) to the list of Karnal bunt regulated
areas (66 FR 32209-32210, Docket No. 01-058-1, June 14, 2001, and 66 FR
37575-37576, Docket No. 01-063-1, July 19, 2001). Approximately 7.4
million bushels of negative-tested wheat from the four counties added
in 2001 are currently stored in grain elevators.
Even though this wheat is Karnal bunt negative, it cannot be
exported to major markets as it normally would be, because it was
tested after harvest at the elevator, not in the field. Major foreign
importers will accept U.S. wheat only if it can be certified as coming
from an area where Karnal bunt is not known to exist. Such
certification is currently based on testing at the field level.
For this reason, when a producer near an area affected by Karnal
bunt knows his wheat is destined for export, he generally arranges to
have his fields tested for Karnal bunt. However, in northern Texas this
past crop season, most wheat had already been harvested when Karnal
bunt was discovered in the four counties subsequently added as
regulated areas, so that wheat could only be tested in bins. The result
is that approximately 7.4 million bushels of this wheat are still in
storage, cannot be exported, must move under limited permit, and are
currently ineligible for compensation under the regulations.
We are making this wheat eligible for compensation payments by
adding a new paragraph (d) to Sec. 301.89-15, ``Compensation for
growers, handlers, and seed companies in the 1999-2000 and subsequent
crop seasons.'' This new paragraph reads as follows: ``(d) Special
allowance for negative wheat grown in Archer, Baylor, Throckmorton, and
Young Counties, TX, in the 2000-2001 growing season. Notwithstanding
any other provision of this section, wheat that was harvested from
fields in Archer, Baylor, Throckmorton, or Young Counties, TX, in the
2000-2001 growing season, and that tested negative for Karnal bunt
after harvest, is eligible for compensation in accordance with
paragraph (a) of this section.''
Compensation for the Cost of Replacing Uncertified Seed
With regard to seed, the regulations in effect prior to this rule
limit compensation payments to certified seed and seed being grown as
certified seed. This provision does not address compensation in
situations where a producer holds back grain from sale in order to use
it as seed the next season. This practice of holding back grain for use
as seed is common in regulated areas of Texas but is rare in other
regulated States. The regulations do not address losses associated with
the inability of producers to use held-back grain as seed for planting
the next year's crop if Karnal bunt spores are detected in that grain.
Because they cannot use spore-positive held-back grain as seed for
planting, growers must purchase replacement seed to plant next year's
crop.
Growers who hold back wheat in order to use it as seed only to find
that it contains Karnal bunt spores may be able to sell that wheat as
grain, but the cost of replacement seed will exceed the income
generated from the sale of the seed as grain. Approximately 176
growers, and 483,000 bushels of uncertified seed, are affected by this
situation. The growers involved will incur losses between $2 and $3 per
bushel. As an incentive for program participation, we intend to
partially mitigate this loss by changing the regulations to make
producers in this situation eligible for compensation for held-back
grain intended for use as seed that is determined to be Karnal bunt
spore-positive. The current compensation cap on both grain and seed is
$1.80 per bushel in an area under the first regulated crop season and
$0.60 per bushel in previously regulated areas, regardless of the
actual loss.
To accomplish this change, we are changing the last sentence of the
introductory text of Sec. 301.89-15(a) to read ``The compensation
provided in this section is for wheat grain, certified wheat seed,
wheat held back from harvest by a grower in the 2000-2001 growing
season for use as seed in the next growing season, and wheat grown with
the intention of producing certified wheat seed.''
Compensation for the Cost of Disposing of Uncertified Treated Seed
Another case where the regulations in effect prior to this rule did
not provide compensation applies to the owners of uncertified Karnal
bunt spore-positive seed that has been treated with fungicides or other
chemicals, and thus cannot be sold as grain. The regulations did not
allow compensation for uncertified seed, or provide any reimbursement
for disposal costs. An estimated 56,000 bushels of uncertified treated
seed tested positive for spores in the 2000-2001 growing season. This
treated seed cannot be used for consumption by humans or animals; it
must be disposed of in an approved manner, such as burying in a
landfill or on-farm disposal.
We are adding a paragraph to provide compensation for the disposal
costs for treated uncertified wheat seed. This compensation for
disposal costs is in addition to the payments discussed in the previous
section regarding compensation for replacing uncertified seed. The cost
to bury wheat seed, whether on the producer's premises or at a
landfill, is about $1.00 per bushel. In addition, there are
transportation costs involved in moving seed to a landfill, which
average about $0.20 per bushel. Therefore, we are adding new paragraph
Sec. 301.89-15(e) to read as follows: ``(e) Special allowance for
disposal costs for treated uncertified wheat seed in Archer, Baylor,
Throckmorton, and Young Counties, TX, in the 2000-2001 growing season.
Notwithstanding any other provision of this section, growers in Archer,
Baylor, Throckmorton, or Young Counties, TX, who own treated
uncertified wheat seed that tested positive for Karnal bunt spores
during the 2000-2001 growing season are eligible for compensation in
accordance with this paragraph. The grower is eligible for compensation
for the costs of disposing of such wheat seed, by burial on the
grower's premises, by burial at a landfill, or through another means
approved by APHIS. The compensation for disposing of wheat seed by
burial on the grower's premises is $1.00 per bushel. The compensation
for disposing of wheat seed by burial at a landfill, or through another
means approved by APHIS, is the actual cost of disposal, up to $1.20
per bushel, as verified by receipts for disposal costs. To apply for
this compensation, the grower must submit a Karnal Bunt Compensation
Claim form, provided by the Farm Service Agency, and 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 uncertified wheat seed that tested positive
for spores (such as a copy of a facility weigh ticket, or other
verification). For seed disposed of by burial at a landfill, the grower
must also submit one or more receipts for the disposal costs of the
uncertified wheat seed, showing the total bushels destroyed and the
total disposal costs (landfill fees, transportation costs, etc.).''
[[Page 21563]]
Compensation for Affected Wheat Grown Outside of Regulated Areas
Approximately 2.8 million bushels of wheat stored in bins in Texas
is considered Karnal bunt positive; some of this wheat was grown in
regulated areas and an unknown amount was grown by Texas producers
located outside the regulated area and by producers located in
Oklahoma. Because of commingling, all 2.8 million bushels--including
that wheat grown outside of the regulated area--is considered positive.
The regulations provide that to be eligible for compensation, the wheat
must be grown in a State where the Secretary has declared an
extraordinary emergency and must meet certain other criteria.
Therefore, prior to this rule, compensation could be paid for that
portion of the 2.8 million bushels that was grown in Texas, but the
wheat grown in Oklahoma was not eligible for compensation, because the
Secretary has not declared an extraordinary emergency in that State.
To address this, we are adding a new sentence to Sec. 301.89-15(a),
the paragraph that describes eligibility for compensation of growers
and handlers. The new sentence reads ``Growers and handlers of wheat
grown in Oklahoma during the 2000-2001 growing season are eligible to
receive compensation if the wheat was commingled in storage with wheat
that meets the above requirements of this paragraph.'' This change
allows compensation to be paid to Oklahoma growers and handlers whose
wheat has been commingled in Texas with Texas-grown Karnal bunt
positive wheat during storage. The Oklahoma growers and handlers will
receive the same compensation as the Texas growers; i.e., payments of
up to $1.80 per bushel.
Eligibility for Compensation in the 2001-2002 Crop Season
The regulations state that, beginning with the 2001-2002 crop
season, growers who knowingly plant wheat in previously regulated areas
are not eligible for compensation. We included this requirement based
on our belief that the regulations should not provide ``insurance'' for
growers who knowingly take the risk of planting in an area where their
wheat crop faces an increased risk of testing positive for Karnal bunt.
Growers who are aware that previously regulated areas present a greater
risk of contaminating their crop with Karnal bunt can choose to alter
their planting or contracting decisions to avoid experiencing losses
due to Karnal bunt. However, when this policy was announced in the
August 6, 2001, final rule, growers in northern Texas were faced with a
situation where they had incomplete knowledge upon which to base their
business decisions for the next growing season. Karnal bunt was
discovered in northern Texas well into the 2000-2001 growing season,
reducing the time growers had to plan for the next season. While APHIS
had declared four entire counties as regulated areas, there had been
only limited testing of certain fields in those counties (about 150
fields were tested before the final rule), and growers knew that the
regulated area might be either reduced to less than the entire
counties, or conversely expanded to include fields in adjacent
counties, depending on future test results. Therefore, growers could
not make fully informed business decisions on whether it was prudent to
plant wheat in the four regulated counties, or adjacent areas, in the
2001-2002 growing season. The discovery of Karnal bunt in these
counties also came at the same time growers were making commitments for
field usage, seed, and equipment for the next growing season, and some
growers had already committed to growing wheat the following year in
what became a regulated area. Finally, the weather and moisture
conditions in this part of northern Texas make it unlikely that growers
could successfully substitute another crop for wheat in the regulated
areas.
For these reasons, growers in the four northern Texas counties have
sought 1-year deferral of the regulatory requirement that growers who
knowingly plant wheat in previously regulated areas are not eligible
for compensation. We agree that to enforce the requirement in this case
would represent an unanticipated and unintended hardship on growers in
the Texas counties of Archer, Baylor, Throckmorton, and Young, and are
changing the regulations to make this provision take effect, with
regard only to only those counties, beginning with the 2002-2003 crop
season instead of the 2001-2002 crop season. This deferral does not
apply to the 27 fields in northern Texas that were discovered to be
infected (i.e., to contain one or more bunted kernels) in the course of
Karnal bunt surveys in 2001, as owners of these fields had timely
notice of the survey results and had a reasonable opportunity to change
their planting plans for the next season.
To accomplish this change, we are adding an exception to the
second-to-last sentence of the introductory text of Sec. 301.89-15(b),
``Growers, handlers, and seed companies in previously regulated
areas.'' As amended, that sentence reads: ``Growers, handlers, and seed
companies in previously regulated areas will not be eligible for
compensation for wheat from the 2001-2002 and subsequent crop seasons;
except that, for growers or handlers of wheat harvested in any field in
the Texas counties of Archer, Baylor, Throckmorton, and Young during
the 2000-2001 crop season that has not been found to contain a bunted
wheat kernel, this requirement applies to compensation for wheat from
the 2002-2003 and subsequent crop seasons.''
Deadline for Submission of Claims
As discussed previously, this rule extends existing compensation
provisions to cover certain additional growers, handlers, and owners of
grain storage facilities to mitigate losses and expenses incurred in
the 2000-2001 crop season because of the Karnal bunt quarantine and
emergency actions. The regulations in Sec. 301.89-15(c) provide that
compensation payments to growers, handlers, and seed companies will be
issued by the Farm Service Agency (FSA), and that claims for
compensation must be received by FSA on or before March 1 of the year
following the crop season during which the losses occurred. Thus,
claims for compensation for the 2000-2001 crop season were due on March
1, 2002. The regulations in Sec. 301.89-15(c) also provide that 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. Given
that the effective date of this rule falls after the March 1, 2002,
deadline cited above, we are extending, for a period of 90 days from
the effective date of this rule, the 2000-2001 crop season claims
deadline to provide for the submission of claims for the compensation
provided for by this interim rule. Such claims must be received by FSA
on or before July 30, 2002.
Emergency Action
This rulemaking is necessary on an emergency basis to eliminate the
risk presented by maintaining large stores of Karnal bunt-positive
wheat, which cannot be destroyed until its eligibility for indemnity is
clarified. The indemnity payments authorized by this rule are also
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 our efforts to contain
and
[[Page 21564]]
reduce the prevalence of Karnal bunt. Under these circumstances, the
Administrator has determined that prior notice and opportunity for
public comment are contrary to the public interest and that there is
good cause under 5 U.S.C. 553 for making this rule effective less than
30 days after publication in the Federal Register.
We will consider comments we receive during the comment period for
this interim rule (see DATES above). After the comment period closes,
we will publish another document in the Federal Register. The document
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. The rule
has been determined to be significant for the purposes of Executive
Order 12866 and, therefore, has been reviewed by the Office of
Management and Budget.
This rule extends existing compensation provisions to cover certain
additional growers, handlers, and owners of grain storage facilities to
mitigate losses and expenses incurred in the 2000-2001 crop season
because of the Karnal bunt quarantine and emergency actions. The
affected parties are primarily growers and handlers in four northern
Texas.
Below is an economic analysis for this interim rule. The economic
analysis provides a cost-benefit analysis as required by Executive
Order 12866 and an analysis of the potential economic effects on small
entities as required by the Regulatory Flexibility Act.
The following economic analysis indicates that the cost of the rule
would be about $4.8 million. It would be necessary to obtain these
funds from the Commodity Credit Corporation. Benefits cannot be
monetized with accuracy, but would include averting future wheat crop
losses that would occur without the improved producer participation
this rule is expected to achieve.
Benefits would also include greater likelihood of grower
cooperation in Karnal bunt testing requirements and participation in
the National Karnal Bunt Survey.
Compensation for Certain Karnal Bunt-Negative Wheat
Prior to this rule, the regulations did not allow for compensation
for any Karnal bunt-negative wheat.\1\ This rule allows compensation
for losses associated with certain negative wheat, i.e., elevator-
tested-negative wheat harvested in the 2000-2001 crop season in
northern Texas. The level of compensation offered is the same as that
currently being offered for positive-testing grain and certified seed
in first regulated areas, i.e., up to $1.80/bushel. The four-county
regulated area in northern Texas became a regulated area in the 2000-
2001 crop season.
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\1\ This is because there are no regulatory restrictions on the
movement of negative wheat, and thus generally no costs or losses
imposed on its owners. However, there is precedent for paying
compensation for negative wheat when its value is affected by
movement restrictions applied to positive wheat. In the 1995-1996
crop season, when Karnal bunt was first discovered in Arizona,
compensation was paid for the loss in value of negative-testing
wheat, due to regulatory restrictions that existed at that time,
which included a requirement that the negative-testing wheat could
be moved only under a limited permit.
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Approximately 7.4 million bushels of negative-tested wheat from the
four-county regulated area in northern Texas is currently stored in
grain elevators. Even though it is Karnal bunt-negative, this wheat
cannot be exported to major markets as it normally would be because it
was tested after harvest at the elevator, not in the field. (Major
foreign importers will accept U.S. wheat only if it can be certified as
coming from an area where Karnal bunt is not known to exist. Such
certification is currently based on testing at the field level.) In
northern Texas this past crop season, most wheat had already been
harvested when Karnal bunt was discovered, so it could only be tested
in bins. The glut on the local domestic market created by the absence
of an export outlet, and the reluctance of some mills to accept
``tainted'' wheat that may move only under a limited permit, have
severely limited the market for this negative wheat, resulting in a
loss in its value.
The loss in value of the negative grain is estimated at about
$0.35/bushel. Based on this per bushel loss estimate, compensation will
total about $2.6 million for all 7.4 million bushels of grain.
It is estimated that approximately 20 to 30 handlers will be
affected by this rule, including two handlers who, together, account
for 70 percent of the 7.4 million affected bushels.
Compensation for the Cost of Replacing Certain Uncertified Seed
Prior to this rule, the regulations limited compensation payments
to certified seed and seed being grown as certified seed, and did not
address losses associated with the inability of growers to use held-
back grain that is found to be spore-positive for planting the next
year's crop. This rule makes compensation available for such losses on
a one crop season-only basis, i.e., for grain grown in the 2000-2001
crop season intended for use in planting the 2001-2002 season's crop.
The level of compensation offered is the same as that currently being
offered for positive-testing grain and certified seed in the 2000-2001
crop season, i.e., up to $1.80/bushel in first regulated areas and
$0.60/bushel in previously regulated areas.
Growers in Texas normally hold back a quantity of grain for use as
seed in the next planting season. During the 2000-2001 crop season,
approximately 483,000 bushels of this seed (457,000 bushels in the four
northern Texas counties and 26,000 bushels in San Saba County, Texas)
tested negative for bunted kernels but positive for spores, which means
that it can be used for grain but not seed. Growers, therefore, will
have to purchase replacement seed. However, the cost of replacement
seed will exceed the income generated from the sale of the seed as
grain, meaning that growers involved will incur losses. Grower losses,
before any compensation from USDA, are estimated to range between $2
and $3/bushel.
Total compensation is estimated at $838,200; i.e., $822,600 for the
457,000 bushels in the four newly regulated northern Texas counties
(457,000 x $1.80), and $15,600 for the 26,000 bushels in previously
regulated San Saba County (26,000 x $0.60). Since grower losses are
expected to range between $2 and $3/bushel, growers and handlers
qualify for compensation at the maximum levels offered. Approximately
176 growers will be affected by this aspect of the rule.
Compensation for the Cost of Disposing of Certain Uncertified Treated
Seed
Prior to this rule, there was no compensation for the cost of
disposing of uncertified treated seed that tests positive for spores or
bunted kernels. This rule allows for such compensation on a one crop
season-only basis, i.e., for seed grown in the 2000-2001 crop season.
This compensation for disposal costs is in addition to the payments
discussed in the previous paragraphs regarding compensation for
replacing uncertified seed. The level of compensation offered for the
cost of disposing of uncertified treated seed that tests positive for
spores or bunted kernels is $1.00/bushel, or up to $1.20/bushel,
depending on whether the seed is disposed of in a landfill or on-farm.
The former is for on-farm disposal, the
[[Page 21565]]
latter for landfill disposal.\2\ The landfill disposal cost of $1.00/
bushel is based on a telephone survey of regional landfills conducted
by the APHIS Texas area office.
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\2\ For landfill disposal, the maximum level of compensation
(i.e., $1.20/bushel) is derived based on the estimated cost to buy
wheat seed at a landfill ($1.00/bushel) and the estimated cost to
transport the seed to the landfill ($0.20/bushel). Although on-farm
disposal eliminates the need to transport the seed to the landfill,
that disposal method still involves additional costs for growers.
For these purposes, it is assumed that the cost of on-farm disposal
and the estimated cost of landfill disposal (excluding
transportation costs) are the same. If on-farm disposal costs do
exceed $1.00/bushel, growers always have the option of landfill
disposal. The transportation cost of $0.20/bushel is the approximate
cost to transport one bushel of wheat from the four county regulated
area in northern Texas to the landfill site, near Wichita Falls,
Texas. In January 2002, the Texas Department of Natural Resources
began accepting applications for permits to dispose of the seed at
the landfill site.
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As indicated above, approximately 457,000 bushels of uncertified
seed grown in the four northern Texas counties in the 2000-2001 crop
season tested positive for spores. Of that total, about 38,000 bushels
were treated with fungicides prior to testing, which means that it
cannot be used for consumption by humans or animals; it must be
disposed of in an approved manner, e.g., burying it in a landfill or
disposing of it on-farm. Such disposal requirements impose additional
costs on growers.
In addition, about 18,000 bushels of uncertified seed grown in the
four northern Texas counties in the 2000-2001 crop season tested
positive for bunted kernels. These 18,000 bushels, because they were
treated with fungicides prior to testing, must also be disposed of in
an approved manner.
For all 56,000 bushels, compensation is estimated to total $66,080.
This compensation estimate assumes that 50,400 bushels, or 90 percent
of the total affected bushels, will be disposed of in a landfill at a
cost of $1.20/bushel, and that the remainder (5,600 bushels) will be
disposed of on-farm at a cost of $1.00/bushel.\3\ Approximately 15 to
20 growers will be affected by this change.
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\3\ For several reasons, including the fact that many growers
lease rather than own their land, on-farm disposals are assumed to
be much fewer in number than landfill disposals.
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Compensation for Handlers With Positive Wheat Grown Outside the
Regulated Area
Prior to this rule, handlers in Texas were not eligible for
compensation for losses associated with any wheat grown outside the
regulated area that was declared positive because it was commingled in
storage with positive wheat grown in the regulated areas. This rule
offers such compensation. The level of compensation offered will be the
same as that currently being offered for positive-testing grain and
certified seed in first regulated areas, i.e., up to $1.80/bushel.
Approximately 2.8 million bushels of Karnal bunt-positive wheat is
stored in bins in Texas, including a relatively small amount (no more
than 25,000 bushels) of wheat grown by producers located in Oklahoma.
(Because of commingling, all of the grain--including that grown outside
the regulated area is considered positive.) The one handler who owns
all of the Oklahoma-grown wheat has incurred losses, because it was
purchased from the Oklahoma producers at the price for Karnal bunt-
negative wheat but can now be sold only at the much lower price for
positive wheat. Prior to this rule, the regulations provided that, for
handlers and others to be eligible for compensation, the wheat must
have been grown in a State where the Secretary has declared an
extraordinary emergency and meet certain other criteria. Thus,
compensation was available for that portion of the 2.8 million bushels
that was grown in Texas, but the wheat grown in Oklahoma, because the
Secretary has not declared an extraordinary emergency in that State,
was not eligible for compensation.
Compensation is estimated to total no more than $45,000 (25,000
bushels x $1.80). One handler will be affected by this aspect of the
rule.
Eligibility for Compensation in 2001-2002 Crop Season
The regulations in effect prior to this interim rule stated that,
effective with the 2001-2002 crop season, growers who knowingly plant
wheat in previously regulated areas are not eligible for compensation.
This rule defers, for 1 year, the effective date of that ineligibility
provision with regard to the four-county regulated area in northern
Texas (excluding areas in or near one of the 27 known infected fields).
Growers in northern Texas have argued that, because of limited
testing, they and USDA have limited knowledge about the status of
fields in the regulated area and the risk of infection next year. The
growers requested the 1-year deferral to allow for the completion of
next year's delimiting survey.
The estimated amount of compensation that will result from the 1-
year deferral for growers in the four-county regulated area in northern
Texas is unknown, because future infection rates are unknown. However,
based on operational experience conducting the Karnal bunt program in
other areas, there is no reason to believe that next year's
compensation costs will be higher than this year's total. If 43 percent
of the 5 million bushels expected to be produced in the four-county
regulated area during 2000-2001 turn up positive, the compensation
would total $1,290,000 (2,150,00 bushels x $0.60). The infection rate
of 43 percent is an average of last year's infection rate in Arizona's
largest production area and in San Saba County, TX. This aspect of the
rule will affect approximately 400 to 450 growers in northern Texas.
The Regulatory Flexibility Act requires that agencies consider the
economic impact of rules on small businesses, organizations, and
governmental jurisdictions. Growers and handlers of wheat grain and
seed are those most affected by this rule. It is estimated that there
are a total of 420 to 480 wheat growers and handlers potentially
affected by this rule, most of whom are located in the four northern
Texas counties of Archer, Baylor, Throckmorton, and Young. Most of
these entities have total annual sales of less than $750,000, the Small
Business Administration's threshold for classifying wheat producers as
small entities. Accordingly, most economic impacts of this rule will be
on small entities.
This rule is expected to have a positive economic impact on all
affected entities, large and small. Although most of the affected
entities are small in size, the bulk of this rule's benefits, in dollar
terms, are likely to accrue to two large handlers. Compensation for
Karnal bunt-related losses and expenses serves to encourage compliance
with testing requirements within the regulated areas, 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 program.
Under these circumstances, the Administrator of the Animal and
Plant Health Inspection Service has determined that this action will
not have a significant economic impact on a substantial number of small
entities.
Executive Order 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 rule has been reviewed under Executive Order 12988, Civil
Justice
[[Page 21566]]
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
This interim rule contains no new information collection or
recordkeeping requirements under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).
List of Subjects in 7 CFR Part 301
Agricultural commodities, Plant diseases and pests, Quarantine,
Reporting and recordkeeping requirements, Transportation.
Accordingly, we are amending 7 CFR part 301 as follows:
PART 301--DOMESTIC QUARANTINE NOTICES
1. The authority citation for part 301 continues to read as
follows:
Authority: 7 U.S.C. 166, 7711, 7712, 7714, 7731, 7735, 7751,
7752, 7753, and 7754; 7 CFR 2.22, 2.80, and 371.3.
Section 301.75-15 also issued under Sec. 204, Title II, Pub. L.
106-113, 113 Stat. 1501A-293; sections 301.75-15 and 301.75-16 also
issued under Sec. 203, Title II, Pub. L. 106-224, 114 Stat. 400 (7
U.S.C. 1421 note).
2. Section 301.89-15 is amended as follows:
a. In the introductory text of paragraph (a), by removing the last
two sentences and by adding three sentences in their place to read as
follows.
b. In the introductory text of paragraph (b), by removing the last
two sentences and by adding two sentences in their place to read as
follows.
c. By adding new paragraphs (d) and (e) to read as follows.
Sec. 301.89-15 Compensation for growers, handlers, and seed companies
in the 1999-2000 and subsequent crop seasons.
* * * * *
(a) * * * Growers and handlers of wheat grown in Oklahoma during
the 2000-2001 growing season are eligible to receive compensation if
the wheat was commingled in storage with wheat that meets the above
requirements of this paragraph. Growers, handlers, and seed companies
in areas under the first regulated crop season are eligible for
compensation for 1999-2000 or subsequent crop season wheat and for
wheat inventories in their possession that were unsold at the time the
area became regulated. The compensation provided in this paragraph is
for wheat grain, certified wheat seed, wheat held back from harvest by
a grower in the 2000-2001 growing season for use as seed in the next
growing season, and wheat grown with the intention of producing
certified wheat seed.
* * * * *
(b) * * * Growers, handlers, and seed companies in previously
regulated areas will not be eligible for compensation for wheat from
the 2001-2002 and subsequent crop seasons; except that, for growers or
handlers of wheat harvested in any field in the Texas counties of
Archer, Baylor, Throckmorton, and Young during the 2000-2001 crop
season that has not been found to contain a bunted wheat kernel, this
requirement applies to compensation for wheat from the 2002-2003 and
subsequent crop seasons. The compensation provided in this paragraph is
for wheat grain, certified wheat seed, and wheat grown with the
intention of producing certified wheat seed.
* * * * *
(d) Special allowance for negative wheat grown in Archer, Baylor,
Throckmorton, and Young Counties, TX, in the 2000-2001 growing season.
Notwithstanding any other provision of this section, wheat that was
harvested from fields in Archer, Baylor, Throckmorton, or Young
Counties, TX, in the 2000-2001 growing season, and that tested negative
for Karnal bunt after harvest, is eligible for compensation in
accordance with paragraph (a) of this section.
(e) Special allowance for disposal costs for treated uncertified
wheat seed in Archer, Baylor, Throckmorton, and Young Counties, TX, in
the 2000-2001 growing season. Notwithstanding any other provision of
this section, growers in Archer, Baylor, Throckmorton, or Young
Counties, TX, who own treated uncertified wheat seed that tested
positive for Karnal bunt spores during the 2000-2001 growing season are
eligible for compensation in accordance with this paragraph. The grower
is eligible for compensation for the costs of disposing of such wheat
seed, by burial on the grower's premises, by burial at a landfill, or
through another means approved by APHIS. The compensation for disposing
of wheat seed by burial on the grower's premises is $1.00 per bushel.
The compensation for disposing of wheat seed by burial at a landfill,
or through another means approved by APHIS, is the actual cost of
disposal, up to $1.20 per bushel, as verified by receipts for disposal
costs. To apply for this compensation, the grower must submit a Karnal
Bunt Compensation Claim form, provided by FSA, and 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 uncertified wheat seed that tested positive
for spores (such as a copy of a facility weigh ticket, or other
verification). For seed disposed of by burial at a landfill the grower
must also submit one or more receipts for the disposal costs of the
uncertified wheat seed, showing the total bushels destroyed and the
total disposal costs (landfill fees, transportation costs, etc.).
(Approved by the Office of Management and Budget under control
number 0579-0182)
Dated: Done in Washington, DC, this 26th day of April 2002.
Bill Hawks,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 02-10723 Filed 4-30-02; 8:45 am]
BILLING CODE 3410-34-U
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