[Federal Register Volume 62, Number 87 (Tuesday, May 6, 1997)]
[Rules and Regulations]
[Pages 24746-24753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11719]
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Part III
Department of Agriculture
_______________________________________________________________________
Animal and Plant Health Inspection Service
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7 CFR Part 301
Karnal Bunt; Compensation for the 1995-1996 Crop Season; Final Rule
Karnal Bunt Regulatory Flexibility Analysis and Regulatory Impact
Analysis; Final Rule
Federal Register / Vol. 62, No. 87 / Tuesday, May 6, 1997 / Rules and
Regulations
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DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
7 CFR Part 301
[Docket No. 96-016-17]
RIN 0579-AA83
Karnal Bunt; Compensation for the 1995-1996 Crop Season
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Final rule.
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SUMMARY: We are adopting as a final rule, with changes, an interim rule
that amended 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 in the 1995-1996 crop season. In this final rule, we are
adding compensation provisions for handlers of wheat that was tested
and found negative for Karnal bunt, handlers and growers with wheat
inventories for past crop seasons, and participants in the National
Karnal Bunt Survey whose wheat or grain storage facility is found
positive for 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.
EFFECTIVE DATE: April 30, 1997.
FOR FURTHER INFORMATION CONTACT: Mr. Mike Stefan, Operations Officer,
Domestic and Emergency Operations, PPQ, APHIS, 4700 River Road Unit
134, Riverdale, MD 20737-1236, (301) 734-8247.
SUPPLEMENTARY INFORMATION:
Background
Karnal bunt is a fungal disease of wheat (Triticum aestivum), durum
wheat (Triticum durum), and triticale (Triticum aestivum X Secale
cereale), a hybrid of wheat and rye. 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 would have
significant consequences with regard to the export of wheat to
international markets. Karnal bunt is caused by the smut fungus
Tilletia indica (Mitra) Mundkur and is spread by spores. The
regulations regarding Karnal bunt are set forth in 7 CFR 301.89-1
through 301.89-14.
In an interim rule effective on June 27, 1996, and published in the
Federal Register on July 5, 1996 (61 FR 35102-35107, Docket No. 96-016-
7), we amended 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
actions taken by the Secretary to prevent the spread of Karnal bunt
(Sec. 301.89-12, redesignated as Sec. 301.89-14 in a final rule
published on October 4, 1996 (61 FR 52189-52213, Docket No. 96-016-
14)).
We solicited comments concerning the interim rule for 60 days
ending September 3, 1996. We received 15 comments by that date. They
were from wheat growers, handlers, harvesters, railroad companies, seed
producers, a member of Congress, and a State department of agriculture.
We have carefully considered all of the comments we received. The
comments generally supported the interim rule offering compensation to
certain groups affected by the Karnal bunt quarantine and emergency
actions. However, all the comments recommended additions or revisions
to the compensation provisions. Each of these recommendations is
discussed below by topic.
The Karnal bunt regulations that were initially established were
necessarily broad due to the lack of data available at the time as to
the extent of the infestation. The discovery of Karnal bunt and
subsequent quarantine and emergency actions occurred after production
and marketing decisions had been made. Producers and other affected
individuals had little time or ability to avoid the unexpected costs or
pass those costs on to others in the marketing chain. The impact was
particularly severe on the wheat industry in the regulated area because
much of the crop is grown under contract at specified amounts and
prices.
In order to alleviate some of these hardships and to ensure full
and effective compliance with the Karnal bunt regulatory program,
compensation to mitigate certain losses was offered to producers and
other affected parties in a regulated area. 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 predominantly on a small segment of
the affected wheat industry within the regulated area.
The Agency has identified three principles for deciding whether to
provide compensation. First, compensation may be appropriate where
quarantine and emergency actions cause losses over and above those that
would result from the normal operation of market forces. Payment of
compensation would reflect the incremental burdens of complying with
regulatory requirements insofar as market forces would not otherwise
impose similar or analogous costs. Second, compensation may be
appropriate where parties undertake actions that confer significant
benefits on others. Under this principle, payment of compensation would
be intended to overcome the usual disincentives to produce such
benefits. Third, compensation may be appropriate where a small number
of parties necessarily bears a disproportionate share of the burden of
providing such benefits. This principle rests on the widely shared
belief that burden-sharing is a fundamental principle of equity.
Individual decisions regarding what specific losses to compensate
and how much compensation to offer in each case were made in line with
the above basic principles which describe the goals of compensation. A
top equity priority was compensation for costs of plowing down fields,
and for wheat and other articles the Agency ordered destroyed or
prohibited movement. Compensation amounts took into account the need to
mitigate real losses caused by the regulations, so that regulated
parties would not have a strong economic incentive to avoid compliance.
At the same time, amounts were not set at a high enough rate to
establish a ``bounty'' that would encourage fraudulent claims or
behavior that would result in increases in contaminated wheat or other
articles eligible for compensation.
The interim rule establishing compensation for the Karnal bunt
program provided compensation in the 1995-1996 crop season for the
plow-down of infected fields in New Mexico and Texas; the loss in value
of nonpropagative wheat grown in the regulated area (this was provided
for producers and handlers); decontamination of grain storage
facilities; and the cost of heat-treating millfeed made from wheat
produced in the quarantined area. Several commenters requested
compensation for costs that were not provided for in the interim rule.
These comments are discussed below.
The interim rule provided compensation for handlers who sell
nonpropagative wheat only if the wheat is positive for Karnal bunt, and
under the following circumstances: (1) Handlers who honor contracts by
paying
[[Page 24747]]
the grower full contract price on nonpropagative wheat grown in the
quarantined area that was tested by the Animal and Plant Health
Inspection Service (APHIS) and found positive for Karnal bunt; or (2)
handlers who purchase contracted or noncontracted nonpropagative wheat
grown 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. As explained in the
interim rule, we expected that handlers who purchase negative wheat
that continues to test negative after purchase would not experience a
loss in value for the wheat compared to the price they paid for it.
Some commenters, however, said that handlers who purchased
negative-testing wheat after the Karnal bunt quarantine was imposed,
but purchased it for the price that was contracted before Karnal bunt
was discovered (in Arizona in March 1996), did experience a loss in
value of the wheat compared to the price they paid for it. Even though
the wheat was negative for Karnal bunt, handlers had to sell it for a
lower price than anticipated because the wheat was from the quarantined
area. Some handlers adjusted their purchase price to account for the
loss in value; others honored the prices agreed on in their contracts
prior to March 1996. Commenters said that handlers who honored their
contracts on negative wheat by paying the price that was agreed on
before the discovery of Karnal bunt in March 1996, should be
compensated.
We believe that compensating these handlers would be consistent
with our compensation to other individuals who experience a loss in
value of their wheat because of the regulations for Karnal bunt.
Therefore, we are amending the regulations at Sec. 301.89-14(b) to
provide compensation to handlers under the following additional
circumstance: Except as explained below, handlers who honored contracts
by paying the grower or another handler full contract price on
nonpropagative wheat grown in the regulated area that was tested by
APHIS and found negative for Karnal bunt if a price was determined in
the contract before March 1, 1996. The exception to this compensation
eligibility is handlers who had contracted to sell the wheat (for
example, to another handler, a mill, or a foreign country) at a price
determined in the contract before March 1, 1996, and who received the
full contract price. Such handlers would not have experienced any loss
in value of their wheat due to Karnal bunt. To claim compensation under
this new circumstance, we are requiring that, in addition to the
documents already required for handlers (see Sec. 301.89-14(b)(4)),
handlers who had contracted to sell the wheat at a price determined in
the contract before March 1, 1996, must submit to FSA a copy of the
contract the handler has for the sale of the wheat.
Handlers who honored contracts on negative wheat will be eligible
for compensation using the same calculation provided in the interim
rule for growers of negative wheat not grown under contract--the
estimated market price for the relevant class of wheat (meaning type of
wheat, such as durum or hard red winter) minus the higher of either the
salvage value or the actual price received by the handler (see
Sec. 301.89-14(b)(1)(iii)). We explained in the interim rule that 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 the 1995-1996 crop season, estimated market prices were
calculated for durum wheat and hard red winter wheat. The estimated
market prices for durum wheat were calculated based on the following:
the daily closing cash prices for choice milling durum wheat traded on
the Minneapolis Grain Exchange during the period of May 1 to June 30,
1996, adjusted to account for the handling and transportation charges
incurred in getting the wheat from the regulated area in California and
Arizona to the central market in Minneapolis. These adjustments were
based on the average difference between the Minneapolis cash price and
the cash prices within the regulated area for 1995. Estimated market
prices for hard red winter wheat were calculated in a similar manner,
based on the daily closing futures prices for the July hard red winter
wheat contract traded on the Kansas City Board of Trade during the
period of May 1 to June 30, 1996, adjusted to account for the handling
and transportation charges incurred in getting the wheat from a central
point in the regulated area to the market in Kansas City. These
adjustments were based on the average difference between the Kansas
City futures price and the cash prices within the regulated area for
1995.
The estimated market prices used to calculate compensation for
handlers who honored their contracts on negative wheat will be
determined in the same manner. However, if the salvage value is used in
the calculation, the rate of compensation will be different than the
rate that has been paid to other handlers under the interim rule,
because the salvage value appropriate for negative wheat will be used
in the calculation. Compensation payments will be issued by the Farm
Service Agency (FSA).
One commenter requested that we provide compensation for lost
income due to the quarantine on wheat straw. Many growers sell wheat
straw to supplement their wheat grain income. Straw is sold for use at
places such as racetracks, highway shoulders, feed yards, and parks for
erosion control and to minimize muddy conditions. Wheat straw is listed
in the Karnal bunt regulations as a regulated article and is prohibited
from being moved outside of the regulated area. This has prevented many
wheat straw producers from shipping their 1995-1996 crop season straw
to the intended markets. Some wheat straw was sold to alternative
markets within the regulated area for a lower price; other wheat straw
was not able to be sold.
We are considering what, if any, compensation should be provided
for lost income due to the restrictions that have been placed on the
movement of 1995-1996 crop season wheat straw. We will publish any
proposed compensation for wheat straw producers in a future edition of
the Federal Register.
The interim rule did not provide compensation for any losses
concerning wheat grown outside the area regulated for Karnal bunt.
APHIS is conducting a National Karnal Bunt Survey to demonstrate to our
trading partners that areas producing wheat for export are free of the
disease. APHIS is receiving voluntary cooperation from many grain
storage facilities in wheat producing areas both within and outside the
States in which the Secretary of Agriculture has declared an
extraordinary emergency.
Some commenters asked that we clarify what compensation we plan to
offer to participants in the National Karnal Bunt Survey who are found
to have positive grain or whose grain storage facility outside of the
regulated area is found to have Karnal bunt. We have every intention of
making sure that all participants in the survey whose wheat or grain
storage facilities are found to be positive for Karnal bunt will be
compensated for the loss in value of their wheat and for the costs for
part of
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decontaminating their grain storage facilities.
The declarations of extraordinary emergency authorize the Secretary
of Agriculture to take emergency action in those States with regard to
Karnal bunt, and authorize the Secretary to compensate growers and
other persons in those States for economic losses incurred by them as a
result of those emergency actions. USDA is not authorized to pay
compensation to individuals who are not in States for which an
extraordinary emergency has been declared. If a grain storage facility
participating in the National Survey in one of the States for which an
extraordinary emergency has been declared tests positive for Karnal
bunt, USDA will regulate the facility under an Emergency Action
Notification (PPQ Form 523), and will compensate the owner of the grain
storage facility for the loss in value of the wheat and for up to 50
percent of the direct cost of decontaminating the facility (not to
exceed $20,000) on a one time only basis for wheat harvested in 1996,
if the facility is required to be decontaminated. In the event that a
grain storage facility participating in the National Survey that is in
a State not covered by a declaration of extraordinary emergency should
test positive for Karnal bunt, the State may offer to compensate the
owner of the facility for the loss in value of the positive wheat and
for the cost of decontamination. If the State is unwilling or unable to
offer compensation at a level equal to that offered by USDA, USDA will
consider, after consultation with the State Department of Agriculture,
declaring an extraordinary emergency in that State. USDA could then
compensate the owner of the facility.
We completed the National Survey for the 1995-1996 crop season in
the fall of 1996. In this final rule, we are adding a new paragraph
Sec. 301.89-14(f) to the 1995-1996 crop season compensation regulations
stating that if a grain storage facility participating in the National
Karnal Bunt Survey tests positive for Karnal bunt, the facility will be
regulated under an Emergency Action Notification (PPQ Form 523), and
the owner may be required to decontaminate the facility to remove the
quarantine. If a Declaration of Extraordinary Emergency has been
declared in the State in which the grain storage facility is located,
the owner of the facility will be compensated for the loss in value of
the wheat. Compensation will equal the estimated market price for the
relevant class of wheat minus the salvage value (as described in
Sec. 301.89-14(b)(3)). 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 October 1 and November 30, 1996, with adjustments for
transportation and other handling costs. However, compensation will not
exceed $2.50 per bushel under any circumstances. Compensation payments
for loss in value of wheat will be issued by FSA. To claim
compensation, the owner of the facility must submit to the local FSA
office a copy of the Emergency Action Notification under which the
facility is or was quarantined. The owner must also submit to the FSA
office verification as to the actual (not estimated) weight of the
wheat (such as a copy of the limited permit under which the wheat was
moved to a mill or a copy of the bill of lading for the wheat, if the
actual weight appears on those documents, or other verification).
The owner of the facility will also be compensated for the direct
cost of decontamination at the same rate provided by the interim rule
for decontamination of grain storage facilities (a maximum of $20,000
per facility, paid on a one time only basis for wheat harvested in
1996). Compensation payments for decontamination of grain storage
facilities will be issued by APHIS.
A few commenters requested compensation for damage to harvesting
equipment caused by disinfection in accordance with the Karnal bunt
regulations. We are still considering what compensation would be
appropriate for grain harvesters and are continuing to gather
information to help us make that determination. If we determine to take
regulatory action to compensate grain harvesters, we will publish
proposed compensation regulations in a future edition of the Federal
Register.
Commenters also requested compensation for loss in value of 1995-
1996 crop season seed. We stated in the interim rule that we do intend
to compensate seed producers for the loss in value of their seed. That
intention has not changed, and we plan to publish proposed compensation
regulations for seed producers in a future edition of the Federal
Register.
Several commenters requested that we add compensation provisions to
cover numerous circumstances other than those provided for in the
interim rule and those discussed previously in this document. These
include requested compensation for demurrage charges on railcars; the
cost of cleaning and sanitizing railcars prior to loading; declines in
transporter operations due to delays caused by the Karnal bunt
regulations; extra labor to clean and disinfect combines; loss in
customers for harvesters due to delays in waiting for field test
results; loss in wheat income and soil nutrients due to a 5-year
quarantine on wheat production; and loan interest on funds borrowed to
see producers through delays in selling 1996 wheat. Commenters also
requested several other changes to the compensation provisions in the
interim rule. Two commenters requested that we lower the $3.60 minimum
salvage value because they do not believe it adequately reflects the
costs to handlers of freight charges and railcar cleaning. One
commenter said that the maximum $20,000 per premises compensation for
decontamination of grain storage facilities is inadequate. Another
commenter said that the same compensation offered to flour millers for
heat-treating millfeed should be available to all producers, grain
handlers, and millers regardless of whether or not the wheat originated
in the quarantined area.
We have considered all of these comments very carefully, but we are
not making any changes to the compensation regulations in response to
these comments. We recognize that the compensations we have offered do
not fully account for every loss or expense due to the Karnal bunt
quarantine and emergency actions. However, we believe the compensation
provisions in this final rule do significantly mitigate losses and
expenses due to the actions taken to control Karnal bunt. We are
continuing to consider the effects of the Karnal bunt quarantine and
emergency actions on all affected individuals. If we make any further
determinations as to additional compensations, we will publish another
document in the Federal Register.
Miscellaneous Changes
We are making a number of miscellaneous changes to the interim
rule. Many of these changes are necessary to clarify the intent of the
regulations and to deal with circumstances identified during
implementation of the interim rule.
The compensation regulations established by the interim rule were
intended to apply to the 1995-1996 crop season. Therefore, we are
revising the heading and introductory text for the compensation
regulations in this rule to make it clear that they apply only to the
1995-1996 crop season. For the same reason, we are revising
Sec. 301.89-14(d) to clarify that compensation for
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decontamination of grain storage facilities under this rule will be
made on a one time only basis for each covered crop year wheat.
This final rule will add a requirement to Sec. 301.89-14 that all
claims for compensation for the 1995-1996 crop season must be made by
May 31, 1997. In addition, we are adding a provision that the
Administrator may extend this deadline upon request in specific cases
when unusual and unforeseen circumstances occur which prevent or hinder
a claimant from requesting compensation on or before May 31, 1997.
The term ``contract price'' is used several times in Sec. 301.89-
14. In some cases, the contract price is a determining factor in the
amount of compensation received by a claimant. Some contracts provide
for adjustments in the contract price contingent on grain quality or
other factors. To ensure that growers or handlers are not paid
compensation for quality issues not related to Karnal bunt, and to
clarify what we intended to mean by the term ``contract price,'' we are
adding a definition to Sec. 301.89-1 of the regulations, to read as
follows:
Contract price. The net price after adjustment for any premiums or
discounts stated in the contract.
Paragraph (b)(1) of Sec. 301.89-14 contains compensation
calculations for growers who sell nonpropagative wheat; one for wheat
grown under contract, and one for wheat not grown under contract. In
implementing the interim rule, it became apparent that different
calculations were needed to account for other contracting
circumstances. For example, not all contracted wheat had a price in the
contract prior to the discovery of Karnal bunt in March 1996.
Therefore, even though the wheat was contracted prior to the discovery
of Karnal bunt, the price eventually agreed on may have reflected the
loss-in-value of wheat due to Karnal bunt.
Contracts without prices set before March 1996 normally stipulated
that the price was to be determined at harvest. The 1996 harvest began
in April 1996 and was not complete in all regulated areas until August
1996. Compensation regulations were not in effect until June 27, 1996
(see Docket No. 96-016-7, published in the Federal Register on July 5,
1996), mid-way through the 1996 harvest, and claims for compensation
could not be processed for several more weeks. Because growers and
handlers did not know what compensation APHIS would offer, some
contract prices set at harvest reflected the loss-in-value of wheat due
to the Karnal bunt regulations, while some contract prices set at
harvest were based on what market prices would have been without the
presence of Karnal bunt. This situation warranted calculating
compensation using the higher of either the contract price or the
estimated market price. This procedure for calculating compensation
would not unfairly disadvantage growers whose contract prices set at
harvest reflected the loss-in-value of wheat due to the Karnal bunt
regulations. Contract prices settled after August 1996 may have
reflected the compensation offered by APHIS, and would not have been
consistent with the original intent of the contract that the price be
determined at harvest. For these reasons, we are changing the
compensation calculations for growers who sell nonpropagative wheat to
accommodate three circumstances, as follows:
If the wheat was grown under contract and a price was determined in
the contract before March 1, 1996, compensation will equal the
contracted price minus the higher of either the salvage value or the
actual price received by the grower. If the wheat was grown under
contract and a price was determined in the contract on or after March
1, 1996, and on or before August 1, 1996, compensation will equal the
higher of either the contract price or the estimated market price minus
the higher of either the salvage value or the actual price received by
the grower. If the wheat was not grown under contract or the price was
determined in the contract after August 1, 1996, compensation will
equal the estimated market price for the relevant class of wheat minus
the higher of either the salvage value or the actual price received by
the grower.
We are also revising the requirements for growers and handlers for
claiming compensation to ensure that growers and handlers supply all
the information necessary to determine the amount of compensation for
which they are eligible. In addition to the documentation already
required by Sec. 301.89-14(b), growers will have to submit a copy of
the receipt for the final sale of the wheat, showing the intended use
for which the wheat was sold, total bushels sold, and the total amount
paid to the grower by the handler. Handlers will have to submit a copy
of the receipt for the purchase of the wheat from the grower, showing
the total bushels purchased and the amount the handler paid to the
grower, and a copy of the receipt for the final sale of the wheat,
showing the intended use for which the wheat was sold. Both growers and
handlers must submit a copy of the Karnal bunt certificate issued by
APHIS that shows Karnal bunt test results.
At the time that Karnal bunt was discovered in Arizona in March
1996, some handlers and growers in the regulated area had wheat
inventories on hand from past crop seasons. These inventories became
subject to the same restrictions as 1995-1996 crop season wheat from
the regulated area, and handlers and growers with such inventories
experienced a loss in value of that wheat. For this reason, we are
revising Sec. 301.89-14(b)(2) to clarify that handlers and growers in
the regulated area are eligible to be compensated for 1995-1996 crop
season wheat and for wheat inventories in their possession that were
unsold as of March 1, 1996.
We are revising the provision in Sec. 301.89-14(c) of the
regulations for growers and handlers who do not sell their wheat. The
interim rule stated that compensation will only be paid to growers and
handlers on wheat that is not sold if the wheat has been buried in a
sanitary landfill. In implementing the regulations, APHIS has approved
sites for burying wheat other than a sanitary landfill. These sites
were determined to be acceptable because they were in areas where
burying the wheat would not pose a risk of spreading Karnal bunt (for
example, the desert). To accommodate these situations, we are amending
paragraph (c) to state that unsold wheat must be buried in a landfill
or other site that has been approved by APHIS. To claim compensation,
the interim rule required that a grower or handler must submit
verification of how much wheat was buried, in the form of a receipt
from the landfill. We are adding that the verification may also be in
the form of a document signed by an APHIS inspector.
The interim rule stated at Sec. 301.89-14(d) that compensation for
decontamination of grain storage facilities will not exceed $20,000 per
premises. The term premises has proven to be confusing to both affected
entities and inspectors in determining the amount of compensation for
which an owner is eligible. We believe the term ``facility'' would be
more clear. To clarify our intent, we are revising paragraph (d) to
state that compensation will not exceed $20,000 per grain storage
facility. We are also removing the definition of premises from
Sec. 301.89-1 of the regulations and adding a definition for grain
storage facility, to mean ``That part of a grain handling operation or
unit of a grain handling operation, consisting of structures,
conveyances, and equipment that receive, unload, and store grain, and
that is able to operate as an independent unit from other units of the
grain handling operation. A grain handling
[[Page 24750]]
operation may be one grain storage facility or may be comprised of many
grain storage facilities on a single premises.''
We are revising the provisions at Sec. 301.89-14(e) by which flour
millers must claim compensation. The interim rule provided that, to
claim compensation, flour millers must 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. However, some
flour millers have purchased their own heat treating equipment and do
not need to move the wheat under a limited permit to a treatment
facility. To accommodate this, we are stating that verification of
treatment may also be provided in the form of a copy of PPQ Form 700,
which includes a certification of processing, signed by the inspector
who monitors the mill.
We are adding sentences to Sec. 301.89-14(a), (b)(4), and (c),
concerning growers and handlers, to clarify that these compensation
payments will be issued by FSA. We are also adding sentences to
Sec. 301.89-14(d) and (e), concerning grain storage facilities and
flour millers, to clarify that these compensation payments will be
issued by APHIS.
The interim rule requires certain claimants to file three forms:
ASCS Form 574, ASCS Form 578, and FCI Form 73. The correct names for
ASCS Form 574 and ASCS Form 578 are FSA Form 574 and FSA Form 578,
respectively. We are making this change in this final rule.
A final rule published in the Federal Register on October 4, 1996,
and effective on November 4, 1996 (61 FR 52189-52213, Docket No. 96-
016-14), established ``regulated areas'' to replace the areas
previously called ``quarantined areas.'' To reflect this change, we are
removing the term ``quarantined area'' each time it appears in
Sec. 301.89-14 and replacing it with the term ``regulated area.''
Further, the interim rule provided that growers and handlers will
be compensated for wheat ``grown in the quarantined area.'' In addition
to changing the term to ``regulated area,'' we would add a provision
that growers and handlers in States where the Secretary has declared an
extraordinary emergency would also be compensated for wheat grown in an
area for which an Emergency Action Notification (PPQ Form 523) has been
issued by an inspector, in accordance with Sec. 301.89-3(d) of the
regulations. Section 301.89-3(d) of the regulations allows the
Administrator or an inspector to temporarily designate any nonregulated
area as a regulated area. When this occurs, an inspector provides
written notice of this action to the owner or person responsible for
the management of the area, in the form of an Emergency Action
Notification. Areas temporarily regulated under an Emergency Action
Notification will not necessarily be listed in the regulations as
``regulated areas,'' but are subject to the same restrictions (and
potential losses or expenses) as areas that are listed in the
regulations.
Therefore, based on the rationale set forth in the interim rule and
in this document, we are adopting the provisions of the interim rule as
a final rule, with the changes discussed in this document.
This final rule also affirms the information contained in the
interim rule concerning Executive Orders 12372 and 12988.
Effective Date
Pursuant to the administrative procedure provisions in 5 U.S.C.
553, we find good cause for making this rule effective less than 30
days after publication in the Federal Register. This rule provides
compensation to individuals 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. Immediate
action is necessary to compensate these losses and expenses. Therefore,
the Administrator of the Animal and Plant Health Inspection Service has
determined that this rule should be effective upon signature.
Executive Order 12866 and Regulatory Flexibility Act
This rule has been reviewed under Executive Order 12866. This rule
has been determined to be economically significant for purposes of
Executive Order 12866 and, therefore, has been reviewed by the Office
of Management and Budget.
This action makes final with certain changes an interim rule that
amended 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 in the 1995-1996 crop
season because of the Karnal bunt quarantine and emergency actions. The
quarantine and regulations for Karnal bunt were established by a series
of interim rules and a final rule published in the Federal Register on
October 4, 1996. The interim rules and the final rule were published on
an emergency basis. We stated in those rules that the emergency
situation made timely compliance with section 6, subsections (3)(B)(ii)
and (3)(C), of Executive Order 12866 impracticable. We also stated that
we would complete the required cost-benefit analysis for those rules as
soon as possible and make the information available to the public.
Elsewhere in the ``Rules'' section of this issue of the Federal
Register, we are publishing a companion docket (Docket No. 96-016-20)
to this final rule that includes a Regulatory Impact Analysis that
analyzes the costs and benefits of the interim rules and the final rule
we have already published, as well as those of the provisions of this
final rule.
On April 3, 1997, we published in the Federal Register a Regulatory
Flexibility Analysis for the interim rules and the final rule we have
already published regarding the Karnal bunt quarantine and regulations
(62 FR 15809-15819, Docket No. 96-016-18).
In accordance with 5 USC 604, we have performed a Final Regulatory
Flexibility Analysis regarding the impact of this final rule on small
entities, and are publishing that analysis in a companion docket
(Docket No. 96-016-20) to this final rule elsewhere in the ``Rules''
section of this issue of the Federal Register.
Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L.
104-121, USC 801-808)
This rule has been designated by the Administrator, Office of
Information and Regulatory Affairs, Office of Management and Budget, as
a major rule under the Small Business Regulatory Enforcement Fairness
Act of 1996 (Act). The Administrator of the Animal and Plant Health
Inspection Service has determined, however, that there is good cause
for making this rule effective less than 60 days after submission of
the rule to each House of Congress and to the Comptroller General
because a delay in the implementation of this rule would be contrary to
the public interest. This final rule adds handlers of negative grain,
handlers with past crop season wheat inventories, and participants in
the National Karnal Bunt Survey to the list of individuals eligible for
compensation. It is necessary to make this rule effective upon
publication in the Federal Register in order that these individuals can
be compensated for economic losses and expenses in the 1995-1996 crop
season resulting from the quarantine and emergency actions taken by the
Department because of Karnal bunt. Section 808 of the Act provides that
rules which would be exempted from the notice and comment provisions of
the Administrative Procedure Act may be excepted from
[[Page 24751]]
section 801(a)(1)(A), and the delay in the effective date for major
rules under section 801(a)(3). Such rules may be made effective as the
agency promulgating the rule determines. A 60-day or longer delay of
the effective date for this final rule would clearly be contrary to the
public interest, since it would delay compensation for affected
handlers and National Survey participants.
Paperwork Reduction Act
In accordance with section 3507(d) of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), the information collection or
recordkeeping requirements included in this final rule have been
submitted for approval to the Office of Management and Budget (OMB).
When OMB notifies us of its decision, we will publish a document in the
Federal Register providing notice of the assigned OMB control numbers
or, if approval is denied, providing notice of what action we plan to
take.
The information collection or recordkeeping requirements included
in the interim rule that preceded this final rule were approved by OMB.
However, this final rule contains an information collection requirement
that was not included in the interim rule. Specifically, this final
rule requires a claimant to make a request in order to be granted an
extension of the deadline for filing compensation claims.
Estimate of burden: Public reporting burden for this collection of
information is estimated to average .166 hours per response.
Respondents: 10.
Estimated number of responses per respondent: 1.
Estimated total annual burden on respondents: 2 hours.
List of Subjects in 7 CFR Part 301
Agricultural commodities, Plant diseases and pests, Quarantine,
Reporting and recordkeeping requirements, Transportation.
Accordingly, the interim rule amending 7 CFR part 301 which was
published at 61 FR 35102-35107 on July 5, 1996, is adopted as a final
rule with the following changes:
PART 301--DOMESTIC QUARANTINE NOTICES
1. The authority citation for part 301 continues to read as
follows:
Authority: 7 USC 150bb, 150dd, 150ee, 150ff, 161, 162, and 164-
167; 7 CFR 2.22, 2.80, and 371.2(c).
2. In Sec. 301.89-1, the definition for Premises is removed and
definitions for Contract price and Grain storage facility are added in
alphabetical order to read as follows:
Sec. 301.89-1 Definitions.
* * * * *
Contract price. The net price after adjustment for any premiums or
discounts stated in the contract.
* * * * *
Grain storage facility. That part of a grain handling operation or
unit of a grain handling operation, consisting of structures,
conveyances, and equipment that receive, unload, and store grain, and
that is able to operate as an independent unit from other units of the
grain handling operation. A grain handling operation may be one grain
storage facility or may be comprised of many grain storage facilities
on a single premises.
* * * * *
3. Section 301.89-14 is revised to read as set forth below.
Sec. 301.89-14 Compensation for the 1995-1996 crop season.
The following individuals are eligible to receive compensation from
the United States Department of Agriculture (USDA) for the 1995-1996
crop season to mitigate losses or expenses incurred because of the
Karnal bunt regulations 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.
Compensation payments will be issued by the Farm Service Agency (FSA).
To claim compensation, the grower must complete and submit to a local
FSA county office whichever of the following three forms are
applicable, as determined by FSA: FSA Form 574, FSA Form 578, and FCI
Form 73. The forms will be furnished by FSA. Claims for compensation
must be received by FSA on or before May 31, 1997. The Administrator
may extend this deadline, upon request in specific cases, when unusual
and unforeseen circumstances occur which prevent or hinder a claimant
from requesting compensation on or before May 31, 1997.
(b) Growers and handlers who sell nonpropagative wheat. Growers and
handlers in a State where the Secretary has declared an extraordinary
emergency, and who sell nonpropagative wheat grown in the regulated
area or in an area for which an Emergency Action Notification (PPQ Form
523) has been issued in accordance with Sec. 301.89-3(d), are eligible
to be compensated for the loss in value of their wheat due to the
Karnal bunt regulations, as follows:
(1) Growers who sell nonpropagative wheat. Growers are eligible to
be compensated for nonpropagative 1995-1996 crop season wheat and for
nonpropagative wheat inventories in their possession that were unsold
as of March 1, 1996, as described in paragraphs (b)(1)(i), (b)(1)(ii),
and (b)(1)(iii) of this section. However, compensation will not exceed
$2.50 per bushel under any circumstances.
(i) If the wheat was grown under contract and a price was
determined in the contract before March 1, 1996, compensation will
equal the contracted price minus the higher of either the salvage
value, as described in paragraph (b)(3) of this section, or the actual
price received by the grower.
(ii) If the wheat was grown under contract and a price was
determined in the contract on or after March 1, 1996, and on or before
August 1, 1996, compensation will equal the higher of either the
contract price or the estimated market price for the relevant class of
wheat (meaning type of wheat, such as durum or hard red winter) minus
the higher of either the salvage value, as described in paragraph
(b)(3) of this section, or the actual price received by the grower. 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.
(iii) If the wheat was not grown under contract or a price was
determined in the contract after August 1, 1996, 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
higher of either the salvage value, as described in paragraph (b)(3) of
this section, or the actual price received by the grower. 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 for nonpropagative 1995-1996 crop season wheat and
for nonpropagative wheat inventories in their possession that were
unsold as of March 1, 1996, only under the circumstances described in
paragraphs (b)(2)(i), (b)(2)(ii), and (b)(2)(iii) of this section.
Compensation for the
[[Page 24752]]
circumstances in paragraphs (b)(2)(i) and (b)(2)(ii) 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. Compensation for the
circumstance in paragraph (b)(2)(iii) 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 higher of either the salvage value,
as described in paragraph (b)(3) of this section, or the actual price
received by the handler. 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 regulated area
that was tested by APHIS and found positive for Karnal bunt;
(ii) Handlers who purchase contracted or noncontracted wheat grown
for nonpropagative purposes in the regulated 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; or
(iii) Except as explained in this paragraph, handlers who honor
contracts by paying the grower or another handler full contract price
on nonpropagative wheat grown in the regulated area that was tested by
APHIS and found negative for Karnal bunt if a price was determined in
the contract before March 1, 1996. Handlers who had contracted to sell
the wheat at a price determined in the contract before March 1, 1996,
and who received the full contract price, are not eligible for
compensation.
(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 regulated 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 regulated 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.
(4) To claim compensation. Compensation payments will be issued by
the Farm Service Agency (FSA). Claims for compensation must be received
by FSA on or before May 31, 1997. The Administrator may extend this
deadline, upon request in specific cases, when unusual and unforeseen
circumstances occur which prevent or hinder a claimant from requesting
compensation on or before May 31, 1997. To claim compensation, a grower
or handler must complete and submit to the local FSA county office the
following documents:
(i) Both growers and handlers. A grower or handler must submit
whichever of the following three forms are applicable, as determined by
FSA: FSA Form 574, FSA Form 578, and FCI Form 73. A grower or a handler
must also submit a copy of the receipt for the final sale of the wheat,
showing the intended use for which the wheat was sold, and a copy of
the Karnal bunt certificate issued by APHIS that shows the Karnal bunt
test results.
(ii) Growers. In addition to the documents required in paragraph
(b)(4)(i), growers 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, total bushels sold, and the total amount paid
to the grower by the handler.
(iii) Handlers. In addition to the documents required in paragraph
(b)(4)(i), handlers must submit a copy of the contract the handler had
with the grower for the wheat, if the wheat was under contract; a copy
of the receipt for the purchase of the wheat from the grower or
handler, showing the total bushels purchased and the amount the handler
paid for the wheat; and a copy of the receipt for the final sale of the
wheat, showing the intended use for which the wheat was sold. Handlers
who had contracted to sell the wheat at a price determined in the
contract before March 1, 1996, must submit a copy of the contract for
the sale of the wheat.
(c) Nonpropagative wheat that is not sold. If a grower or handler
of nonpropagative wheat grown in the regulated area in a State where
the Secretary has declared an extraordinary emergency 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 or other site that has been approved by APHIS.
Compensation claims will be issued by the Farm Service Agency (FSA). To
claim compensation, the grower or handler must complete and submit to
the local FSA county office whichever of the following three forms are
applicable, as determined by FSA: FSA Form 574, FSA Form 578, and FCI
Form 73. In addition, the grower or handler must submit verification of
how much wheat was buried, in the form of a receipt from the sanitary
landfill or verification signed by an APHIS inspector. Claims for
compensation must be received by FSA on or before May 31, 1997. The
Administrator may extend this deadline, upon request in specific cases,
when unusual and unforeseen circumstances occur which prevent or hinder
a claimant from requesting compensation on or before May 31, 1997.
(d) Decontamination of grain storage facilities. 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 an Emergency Action Notification (PPQ
Form 523) issued by an inspector, are eligible to be compensated, on a
one time only basis for each facility and each covered crop year wheat,
for up to 50 percent of the cost of decontamination. However,
compensation will not exceed $20,000 per grain storage facility (as
defined in Sec. 301.89-1). General clean-up, repair, and refurbishment
costs are excluded from compensation. Compensation payments will be
issued by APHIS. 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. 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
[[Page 24753]]
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. Claims for compensation must be
received by APHIS on or before May 31, 1997. The Administrator may
extend this deadline, upon request in specific cases, when unusual and
unforeseen circumstances occur which prevent or hinder a claimant from
requesting compensation on or before May 31, 1997.
(e) Flour millers. Flour millers who, in accordance with a
compliance agreement with APHIS, heat-treat millfeed made from wheat
produced in regulated areas that require such treatment 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 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 the
limited permit under which the wheat was moved to the mill 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). Claims for compensation must be
received by APHIS on or before May 31, 1997. The Administrator may
extend this deadline, upon request in specific cases, when unusual and
unforeseen circumstances occur which prevent or hinder a claimant from
requesting compensation on or before May 31, 1997.
(f) National Karnal Bunt Survey participants. If a grain storage
facility participating in the National Karnal Bunt Survey tests
positive for Karnal bunt spores, the facility will be regulated and may
be ordered decontaminated pursuant to an Emergency Action Notification
(PPQ Form 523) issued by an inspector. If a Declaration of
Extraordinary Emergency has been declared for the State in which the
grain storage facility is located, the owner of the grain storage
facility will be eligible for compensation as follows:
(1) Loss in value of positive wheat. 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 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 October 1 and November 30, 1996, with
adjustments for transportation and other handling costs. However,
compensation will not exceed $2.50 per bushel under any circumstances.
Compensation payments for loss in value of wheat will be issued by the
Farm Service Agency (FSA). To claim compensation, the owner of the
facility must submit to the local FSA office a copy of the Emergency
Action Notification under which the facility is or was quarantined and
verification as to the actual (not estimated) weight of the wheat (such
as a copy of the limited permit under which the wheat was moved to a
mill or a copy of the bill of lading for the wheat, if the actual
weight appears on those documents, or other verification). Claims for
compensation must be received by FSA on or before May 31, 1997. The
Administrator may extend this deadline, upon request in specific cases,
when unusual and unforeseen circumstances occur which prevent or hinder
a claimant from requesting compensation on or before May 31, 1997.
(2) Decontamination of grain storage facilities. The owner of the
facility will be compensated on a one time only basis for each grain
storage facility and each covered crop year wheat for the direct costs
of decontamination of the facility at the same rate described under
paragraph (d) of this section (up to 50 per cent 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 paragraph (d) of this section.
Claims for compensation must be received by APHIS on or before May 31,
1997. The Administrator may extend this deadline, upon request in
specific cases, when unusual and unforeseen circumstances occur which
prevent or hinder a claimant from requesting compensation on or before
May 31, 1997.
Done in Washington, DC, this 30th day of April 1997.
Donald W. Luchsinger,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 97-11719 Filed 5-1-97; 11:27 am]
BILLING CODE 3410-34-P
