[Federal Register: August 18, 2003 (Volume 68, Number 159)]
[Rules and Regulations]
[Page 49327-49329]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au03-1]
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Rules and Regulations
Federal Register
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1427
RIN 0560-AH03
Outside Storage of Extra Long Staple Loan Cotton
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Interim rule.
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SUMMARY: This rule amends cotton loan eligibility, packaging, and
storage approval requirements to permit extra long staple (ELS) cotton
to be stored outside while pledged as collateral for a Commodity Credit
Corporation (CCC) marketing assistance loan. The intent of this rule is
to permit producers to reduce storage costs for ELS cotton without
increasing risk of quality or value loss to producers, merchants, CCC,
or ultimate users of the cotton. This interim rule is effective upon
its publication, but provides an opportunity for the public to comment
on the administration of the new provisions.
DATES: This rule is effective August 18, 2003. Comments on this rule
should be submitted on or before September 17, 2003 to be assured of
consideration.
ADDRESSES: Address all comments concerning this interim final rule to
John Johnson, Deputy Administrator for Farm Programs, USDA/Farm Service
Agency, 1400 Independence Avenue, SW, STOP 0510, Washington, DC 20250-
0510. Comments may be submitted by electronic mail to
johnjohnson@wdc.usda.gov, or through the Internet at
www.regulations.gov. Comments received in connection with this rule may
be viewed by contacting Mr. Johnson and arranging a time during normal
business hours. Persons with disabilities who require alternative means
for communication (Braille, large print, audio tape, etc.) should
contact the USDA Target Center at (202) 720-2600 (voice and TDD).
FOR FURTHER INFORMATION CONTACT: John Johnson at (202) 720-3175, or via
electronic mail at johnjohnson@wdc.usda.gov. Persons with disabilities
who require alternative means for communication (Braille, large print,
audiotape, etc.) should contact the USDA Target Center at (202) 720-
2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Background
Current Rule
Current CCC regulations require a warehouse operator to promptly
place cotton stored outside within the warehouse when notified that a
loan has been made on such cotton. CCC is amending regulations to allow
outside storage of ELS by producers who meet the requirements of this
interim rule. All other requirements in 7 CFR part 1427 for cotton loan
eligibility will continue to apply.
Reason for Change
CCC is making this change to reduce the costs to producers of
storing ELS cotton in areas of the country where outside storage is a
cost effective and accepted industry practice. CCC has determined that
outside storage may be effective at lowering the costs of ELS cotton
storage with minimal increased risk. This rule is effective beginning
with 2003-crop ELS cotton and will be effective for subsequent crops.
In order to implement this change, the CCC cotton marketing assistance
loan agreement (attached to this rule as an exhibit) is also amended to
include the following conditions:
Outside Storage Requirements
Eligible Cotton: ELS cotton pledged as collateral for a CCC
marketing assistance loan may be stored outside by the producer only if
all requirements in CFR part 1427 are met except the cotton must be (1)
hermetically sealed to maintain internal bale humidity at a certain
level, and (2) packaged using bale ties and bags that meet or exceed
industry minimum standards for gauge, gauge tolerance, tensile
strength, elongation, tear resistance, impact resistance, slip
characteristics, size or length, and rust inhibition, as applicable to
the materials selected for use. Additionally, the producer must not
pledge as loan collateral any bale with a torn bag that is stored
outside.
Storage area: The outside storage area must be: (1) Limited to an
area identified as suitable for cotton storage; (2) constructed so as
to prevent water accumulation under the cotton; and (3) serviced by
bale handling equipment that will not damage the sealed bale (no bale
hooks); and (4) serviced by bale handling and transport systems that
will not degrade the drainage characteristics of the storage area.
Additional limitations: CCC will not pay handling charges to move
cotton between inside and outside storage. Also, the producer must
deliver all outside-stored forfeited ELS to a site designated by CCC
and re-class such cotton within 30 days after the date of delivery. The
producer will be responsible for any charges for this delivery, re-
classification, receiving charges, weighing, issuance of an electronic
warehouse receipt, and other charges as may be levied by the warehouse
associated with outside-stored cotton.
Notice and Comment
Section 1601(c) of the Farm Security and Rural Investment Act of
2002 (2002 Act) provides that the regulations needed to implement Title
I of the 2002 Act, including those involved here, may be promulgated
without regard to the notice and comment provisions of 5 U.S.C. 553 or
the Statement of Policy of the Secretary of Agriculture effective July
24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and
public participation in rulemaking. Because this rule involves
technical storage and packaging requirements, it was determined that it
was in the public's interest to solicit comments on the rule. The rule
is effective upon publication in order to provide its benefit to
producers for 2003, and because the rule is consistent with commercial
storage practices used, under limited circumstances, for years.
Executive Order 12866
This interim rule has been reviewed by the Office of Management and
Budget under Executive Order 12866 and has been designated as ``not
significant.''
[[Page 49328]]
Federal Assistance Programs
This final rule applies to the following Federal assistance
programs, as found in the Catalog of Federal Domestic Assistance:
10.051--Commodity Loans and Loan Deficiency Payments.
Regulatory Flexibility Act
The Regulatory Flexibility Act does not apply to this rule because
CCC is not required by 5 U.S.C. 553 or any other law to publish a
notice of proposed rulemaking for the subject of this rule.
Environmental Assessment
The environmental impacts of this rule have been considered under
the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et
seq., the regulations of the Council on Environmental Quality (40 CFR
parts 1500-1508), and regulations of the Farm Service Agency (FSA) of
the Department of Agriculture (USDA) for compliance with NEPA, 7 CFR
part 799. An environmental evaluation was completed and the proposed
action has been determined not to have the potential to significantly
impact the quality of the human environment and no environmental
assessment or environmental impact statement is necessary. A copy of
the environmental evaluation is available for inspection and review
upon request.
Executive Order 12778
This rule has been reviewed under Executive Order 12778. This rule
preempts State laws that are inconsistent with it and is not
retroactive. Before judicial action may be brought concerning this
rule, all administrative remedies must be exhausted.
Executive Order 12372
This program is not subject to Executive Order 12372, which
requires intergovernmental consultation with State and local officials.
See the notice related to 7 CFR part 3015, subpart V, published at 48
FR 29115 (June 24, 1983).
Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does
not apply to this rule because CCC is not required by 5 U.S.C. 553 or
any other law to publish a notice of proposed rulemaking for the
subject of this rule. Further, this rule contains no unfunded mandates
as defined in sections 202 and 205 of UMRA.
Paperwork Reduction Act
Section 1601(c) of the 2002 Act provides that these regulations may
be promulgated and the programs administered without regard to chapter
5 of title 44 of the United States Code (the Paperwork Reduction Act).
Accordingly, these regulations and the forms and other information
collection activities needed to administer the provisions authorized by
these regulations are not subject to review by the Office of Management
and Budget under the Paperwork Reduction Act.
Government Paperwork Elimination Act
CCC is committed to compliance with the Government Paperwork
Elimination Act, which requires Federal Government agencies to provide
the public the option of submitting information or transacting business
electronically to the maximum extent possible. However, the contract
and other information collections required by this rule are not yet
fully implemented for the public to conduct business with FSA
electronically. CCC will make the Outside Storage Addendum available on
the agency's Internet web site. The form may be completed and saved on
a computer, but must be printed, signed and submitted to FSA in paper
form.
List of Subjects in 7 CFR Part 1427
Agricultural commodities, Cottonseeds, Price support programs,
Warehouses.
0
Accordingly, CCC amends 7 CFR part 1427 as follows:
PART 1427--COTTON
0
1. The authority citation for part 1427 continues to read as follows:
Authority: 7 U.S.C. 7231-7237; and 15 U.S.C. 714b and 714c.
0
2. Amend Sec. 1427.5 by revising paragraph (b)(3) and (10) to read as
follows:
Sec. 1427.5 General eligibility requirements.
* * * * *
(b) * * *
(3) Be represented by a warehouse receipt meeting the requirements
of Sec. 1427.11, except as provided in Sec. Sec. 1427.10(e) and
1427.23(a)(4);
* * * * *
(10) Be packaged in materials which meet the specifications adopted
by the Joint Cotton Industry Bale Packaging Committee sponsored by the
National Cotton Council of America for the applicable year or which are
identified and approved by the Joint Industry Bale Packaging Committee
as experimental packaging materials for the applicable crop year,
except that producers approved for the outside storage of 2003 and
subsequent crops of ELS cotton as provided for in Sec. 1427.10(e) must
assure that the packaging materials used for bales stored outside must
meet the materials, sealing, and humidity specifications contained in
the outside-storage addendum to their ELS cotton marketing assistance
loan agreement.
* * * * *
0
3. Amend Sec. 1427.10 by adding paragraph (e) to read as follows:
Sec. 1427.10 Approved storage.
* * * * *
(e) With respect to 2003 and subsequent crops of ELS cotton, a
producer may obtain a loan on cotton that is not stored as otherwise
provided in this section if such cotton is stored:
(1) At a commercial entity that is involved in the handling or
storage of cotton in a county where the 10-year average level of
precipitation is 10 inches or less;
(2) The site is constructed so as to prevent the accumulation of
water under such cotton; and
(3) As otherwise provided in the loan agreement. The collateral for
such loan shall be as specified in the loan agreement and may include
the actual bale of cotton or a document of title representing such
cotton.
0
4. Amend Sec. 1427.18 by adding paragraph (k) to read as follows:
Sec. 1427.18 Liability fo the producer.
* * * * *
(k)(1) Notwithstanding any other provision of this part, for ELS
cotton stored as provided in Sec. 1427.10(e), the producer shall be
liable for all costs associated with the storage of the cotton while it
is stored outside. CCC shall make no storage payment or any other
payment with respect to ELS cotton stored as provided in Sec.
1427.10(e).
(2) The producer of ELS cotton which is stored as provided in Sec.
1427.10(e) shall:
(i) Certify the quantity of such cotton on the loan application;
(ii) Be responsible for any loss in quantity or quality of such
cotton;
(iii) If the loan is satisfied by forfeiting the cotton to CCC, be
responsible for all costs associated with delivering such cotton to a
warehouse designated by CCC, all costs associated with any re-
classification and repackaging that may be required by CCC or the
warehouse operator to whom the cotton is delivered, all charges by the
receiving warehouse for receiving the cotton and issuing an electronic
warehouse receipt
[[Page 49329]]
for the cotton, and other charges as may be levied by the warehouse
specific to outside-stored cotton; and
(iv) Not move such cotton after the loan application is submitted
to CCC without prior written approval of the county committee. Failure
of the producer to receive such permission shall subject the producer
to administrative actions.
0
5. Amend Sec. 1427.21 by adding paragraph (d) to read as follows:
Sec. 1427.21 Settlement.
* * * * *
(d) With respect to ELS cotton which is stored as provided in Sec.
1427.10(e), settlement of loans shall be made based upon the
determination of the quantity and quality made by CCC at the time of
acceptance of the cotton by CCC at the warehouse designated by CCC as
provided in Sec. 1427.18(k).
Signed in Washington, DC, on August 7, 2003.
Verle E. Lanier,
Executive Vice President, Commodity Credit Corporation.
Note: The following appendix will not be published in the Code of
Federal Regulations.
U.S. Department of Agriculture
Commodity Credit Corporation
Outside Storage (Cotton) Appendix to Note and Security Agreement Terms
and Conditions
PART A--TERMS AND CONDITIONS
A producer submitting cotton to the Commodity Credit Corporation
as collateral for a marketing assistance loan may store such
collateral outside subject to the following terms and conditions:
(1) Collateral Identification. The producer must identify all
outside-stored cotton loan collateral by providing CCC, for each
individual bale, the gin code number (5-digit number) and gin bale
number (gin-assigned 7-digit number) as presented to the
Agricultural Marketing Service (AMS) for classification services,
and the bale net weight.
(2) Collateral Location. The producer must provide CCC the
address, and any additional storage location information sufficient
to enable a CCC representative to locate the cotton.
(3) Initial Classification Information. The producer must
provide that AMS classification information, based on bale samples
collected by an AMS-approved sampler, is available to CCC.
(4) Classification Information for Forfeited ELS Cotton. In
addition to submitting bale samples as required by paragraph (3) of
this appendix, for all outside-stored ELS loan collateral delivered
to CCC in satisfaction of the loan obligation, the producer is
responsible to provide, within 30 days after the date of delivery of
the cotton into a warehouse designated by CCC, AMS classification
information, based on bale samples collected by an AMS-approved
sampler.
(5) Settlement. Notwithstanding provisions of paragraph 9(c) of
the Note and Security Agreement Terms and Condition (form CCC-601),
if the producer elects to forfeit outside-stored loan collateral in
satisfaction of the amount due: (i) the value of the collateral for
purposes of settlement will be determined using the applicable
schedules of premiums and discounts on the basis of the
classification information provided after delivery of the cotton to
CCC; and, (ii) the collateral shall be delivered to CCC in the
original bags with original bale identification as provided by the
ginner.
(6) Settlement Charges. If the producer forfeits outside-stored
ELS cotton loan collateral to CCC in satisfaction of the amount due,
the producer is liable, in addition to charges included in paragraph
4 of the Note and Security Agreement Terms and Condition (form CCC-
601), for (i) expenses or charges associated with the storage of the
cotton during the period of the loan, and (ii) charges levied by the
warehouse associated with receiving, weighing, compression, issuance
of an electronic warehouse receipt, other charges as may be levied
by the warehouse specific to outside-stored cotton, and for
classification services as required under paragraph (4) of this
appendix.
PART B--PRODUCER CERTIFICATION
I accept that the terms and conditions of this appendix apply to
the cotton pledged as collateral for this loan. I certify that the
cotton pledged as collateral for this loan is packaged in a
hermetically sealed bag, packaged at a measured internal humidity
level established by the gin as appropriate to safeguard cotton
quality, using packaging materials that meet or exceed industry
minimum standards. I further certify that the storage area is
suitable for cotton storage, is constructed to prevent water
accumulation under the cotton, is outside a 100-year floodplain, and
is serviced by bale handling and transport equipment that will not
damage the sealed bag or degrade the drainage characteristics of the
storage area.
Signature of Contact Producer Date
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Signature of Other Producer Date
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Signature of Other Producer Date
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[FR Doc. 03-20879 Filed 8-15-03; 8:45 am]
BILLING CODE 3410-05-P