[Federal Register Volume 64, Number 194 (Thursday, October 7, 1999)]
[Rules and Regulations]
[Pages 54508-54511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26167]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 735
RIN 0560-AE60
Amendments to the Regulations for Cotton Warehouses--Electronic
Warehouse Receipts, and Other Provisions
AGENCY: Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This final rule adopts, with minor changes, a proposed rule
that was published in the November 2, 1996, Federal Register (61 FR
60637) regarding cotton warehouses that are operating under the United
States Warehouse Act (USWA). This rule makes a number of clarifying and
technical changes to existing warehouse regulations, but also removes
the requirement that all electronic warehouse receipts for cotton must
be issued as single bale receipts. The rule will thereby allow
warehouse operators to issue single and multiple bale warehouse
receipts as either paper or electronic warehouse receipts. Portions of
the proposed rule were already adopted in a final rule that was
[[Page 54509]]
published in the June 20, 1997, Federal Register (62 FR 33539).
EFFECTIVE DATE: October 7, 1999.
FOR FURTHER INFORMATION CONTACT: Steve Mikkelsen, Deputy Director,
Warehouse and Inventory Division, Farm Service Agency, STOP 0553, 1400
Independence Avenue, SW, Washington, DC, 20250-0553; telephone 202-720-
2121 or FAX 202-690-3123,
e-mail: Steve__Mikkelsen@wdc.fsa.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has reviewed this final
rule and determined the rule to be significant for the purposes of
Executive Order 12866. A Cost-Benefit Assessment (CBA) was prepared.
The CBA summarized the cost and benefit impact of this final rule as
follows:
The costs associated with the implementation of the final rule will
be minimal to all parties involved.
This final rule will benefit warehouse operators because it allows
for the issuance of a single electronic cotton warehouse receipt for
more than one bale of cotton. Presently, the regulations require
warehouse operators who elect to use electronic warehouse receipts to
issue receipts in a single-bale format.
Warehouse operators who elect to continue to issue single-bale
electronic warehouse receipts or to issue multiple bale receipts as
paper receipts can continue to do so under these regulations, and thus
will be unaffected by this final rule.
The Cost-Benefit Assessment is available for public inspection in
Room 5968, South Agriculture Building, U.S. Department of Agriculture,
1400 Independence Avenue, SW, Washington, DC, between 8:00 a.m. and
4:30 p.m., Monday through Friday, except holidays.
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988. The provisions of this final rule do not preempt State
laws, are not retroactive, and do not involve administrative appeals.
Environmental Evaluation
It has been determined by an environmental evaluation that this
action will not have a significant impact on the quality of the human
environment. Therefore, neither an Environmental Assessment nor an
Environmental Impact Statement is needed.
Executive Order 12612
It has been determined that this rule is consistent with the
Federalism principles espoused in Executive Order 12612, and does not
warrant the preparation of a Federalism Assessment.
Executive Order 12372
This program/activity is not subject to the provisions of 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 Reform Act of 1995
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995
(UMRA) for State, local, and tribal governments or the private sector.
Thus, this rule is not subject to the requirements of sections 202 and
205 of the UMRA.
Paperwork Reduction Act of 1995
The amendments set forth in this final rule do not generate any new
or revised information collection or record keeping requirements on the
public. The existing information collections were previously cleared by
OMB and assigned OMB control number 0560-0120.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this final rule, because it has been determined that this
rule will not have a significant effect on a substantial number of
small businesses. The decision to request a license under the USWA is a
voluntary decision made by the warehouse operator.
Background
The USWA, as amended (7 U.S.C. 241 et seq.) provides the Secretary
of Agriculture the authority to license public warehouse operators that
store cotton. As part of this licensing authority, the Secretary
regulates the issuance of warehouse receipts by the cotton warehouse
operators it licenses (7 U.S.C. 260). The USWA was amended in 1990 and
1992, and regulations were issued on March 31, 1994, (59 FR 15033), to
permit warehouse operators to issue electronic warehouse receipts for
cotton. Currently, the regulations require that all electronic
warehouse receipts issued by warehouse operators must be single bale
receipts. Some warehouse operators have requested permission to issue
electronic warehouse receipts for cotton using a multiple bale format
to accommodate differences in the manner cotton is handled throughout
the United States.
This final rule (l) modifies the method to identify and weigh each
bale of cotton in a multiple bale lot, while still requiring an
identification for each bale and lot, (2) deletes obsolete provisions
regarding the issuance and printing of warehouse receipts; (3) removes
masculine pronouns; (4) removes the requirement that all multiple bale
receipts must represent between 25 and 200 bales of cotton, and as
amended allows for the storage and tagging of such bales to be
conducted as efficiency dictates; (5) clarifies the section relating to
the system of accounts; (6) modifies the means by which a warehouse
operator may notify the Administrator in the event of a fire; (7)
clarifies the contents of complaints; (8) removes the requirement that
all electronic cotton warehouse receipts must be issued as single bale
receipts, and as amended specifically allows for the issuance of
multiple bale electronic receipts; and (9) makes other clarifications
and nomenclature changes.
Summary of Comments
A proposed rule was published in the Federal Register (61 FR 60637)
on November 29, 1996, to change the regulations governing cotton
warehouses.
Comments on the proposed rule were received from two cotton
associations, one bank, one U.S. Department of Agriculture employee,
one electronic warehouse receipt provider, one merchant, and four
warehouse operators. All of the comments related to the use of
electronic receipts for multiple bale lots.
In general comments supported the issuance of multiple bale
warehouse receipts in electronic format, however, five comments
indicated that multiple bale warehouse receipts should not be required
to contain individual bale tags and weights. These comments indicated
that individual bale tags and weights for each bale included on a
multiple bale receipt should be kept on file at the warehouse, and
should not be part of the multiple bale warehouse receipt data
forwarded to the central filing system.
One commenter indicated they would like to have for each warehouse
the number of multiple bale receipts, number of bales covered by each
multiple bale warehouse receipt, and the receipt number for each
electronic receipt. This commenter went on to indicate that this
information should enable interested parties to obtain a tag list of
the bales covered by each
[[Page 54510]]
multiple bale warehouse receipt from the issuing warehouse for
identification purposes.
Four comments indicated that tag numbers and individual bale
weights should be part of each multiple bale warehouse receipt because
requiring such information would provide proper identification and
preserve the information for each multiple bale lot of cotton stored
under a multiple bale warehouse receipt. Three comments expressed no
opinion on this issue.
The commenters that suggested bale tag numbers and individual bale
weights should not be included on the warehouse receipt indicated they
could contact the warehouse and obtain the information via another
method. However, none of the commenters addressed the issue as to why
this information, which is needed for normal commerce, should not also
be required on the electronic warehouse receipt.
The Department has reviewed these comments and has determined that
section 18(f) of the USWA (7 U.S.C. 260) requires each warehouse
receipt issued to contain the following: ``* * * a description of such
bales or packages by marks, numbers, or other means of identification
and the weight of such bales or packages, * * *'' Accordingly, the
governing statute requires that this information be included on all
receipts, including multiple bale receipts. Therefore, comments to the
contrary were not adopted.
List of Subjects in 7 CFR Part 735
Administrative practice and procedure, Cotton, Reporting and
recordkeeping requirements, Surety bonds, Warehouses.
Accordingly, the provisions of 7 CFR part 735 are amended as
follows:
PART 735--COTTON WAREHOUSES
1. The authority citation for part 735 continues to read as
follows:
Authority: 7 U.S.C. 241 et seq.
2. Section 735.16 is amended by revising paragraphs (a)(5), (a)(9),
(b), and (e) to read as follows:
Sec. 735.16 Form.
(a) * * *
(5) The tag identifier given to each bale of cotton in accordance
with Sec. 735.31;
* * * * *
(9) A statement indicating that the weight was determined by a
weigher licensed under the U.S. Warehouse Act, except that if at the
request of the depositor, the weight is not so determined or if the
point of origin weight was determined as permitted in Sec. 735.38, the
receipt shall contain a statement to that effect.
(b) Except when an expiration date authorized by the Department is
shown on the face of the receipt, every negotiable receipt issued for
cotton stored in a licensed warehouse shall be effective until
surrendered for delivery of the cotton, and every non-negotiable
receipt shall be effective until surrendered for delivery of the cotton
or until all cotton covered by the receipt has been delivered in
response to proper delivery orders of the person rightfully entitled to
the cotton: Provided, that nothing contained in this section shall
prohibit a warehouseman from legally selling the cotton when the
accrued storage and other charges approach the current market value of
the cotton.
* * * * *
(e) If, at the request of the depositor, a warehouseman issues a
receipt omitting the statement of grade and/or weight, such receipt
shall have clearly and conspicuously stamped or written on the face
thereof, or included as part of the electronic warehouse receipt
record, either one or both of the following: ``Not graded on request of
the depositor'' or ``Not weighed on request of the depositor,'' as
applicable.
* * * * *
3. Section 735.19 is revised to read as follows:
Sec. 735.19 Printing of receipts.
No receipt shall be issued by a licensed warehouseman unless it is:
(a) In a form prescribed by the Administrator;
(b) Upon distinctive paper or card stock specified by the
Administrator;
(c) Printed by a printer with whom the United States has a
subsisting agreement and bond for such printing; and
(d) On paper and/or card stock tinted with ink in the manner
prescribed by the agreement under paragraph (c) of this section.
4. Section 735.21 is revised to read as follows:
Sec. 735.21 Return of receipts before delivery of cotton.
Except as permitted by law or by the regulations in this part, a
warehouseman shall not deliver cotton for which a negotiable receipt
has been issued under the Act until such receipt has been returned and
canceled; and shall not deliver cotton for which a non-negotiable
receipt has been issued until such receipt has been returned or until
the warehouseman has obtained from the person lawfully entitled to such
delivery or their authorized agent, a written delivery order that is
properly signed, specifying by bale or tag number, mark, or identifier
each bale to be delivered from any receipt or receipts. * * *
5. Section 735.31 is revised to read as follows:
Sec. 735.31 Tags to be attached to bales.
Except as provided in Sec. 735.32, each warehouseman shall, upon
acceptance of any bale of cotton for storage, immediately attach
thereto an identification tag of good quality which shall identify the
bale. Such tag either shall be made of reasonably heavy waterproof
paper or linen, with reinforced eyelet or eyelets, and be attached to
the bale with a flexible, rustproof wire, or shall be made of such
other material and attached by such other means as shall be approved by
the Administrator. These tags will contain a number, mark, or
identifier and shall be attached in an orderly systematic sequence,
clearly distinguishable from each other.
6. Section 735.32 is amended by revising paragraphs (b) and the
first two sentences of (c) to read as follows:
Sec. 735.32 Arrangement of stored cotton.
* * * * *
(b) If cotton is tendered to a licensed warehouseman for storage
and the cotton is of the same grade and staple and is tendered in such
quantity by any one depositor that efficiency of operation dictates
that such cotton should be stored in a lot or lots without regard to
visibility of all tags on all bales within any lot, the warehouseman
may store such cotton if each lot originally contained two or more
bales: Provided, however, that each bale entering into a lot must bear
an individual bale identification, and must be stored so that the
number of bales within the lot may be accurately determined.
(c) An individual lot identification tag showing the lot number and
the number of bales in the lot shall be affixed by the warehouseman to
each lot of cotton. The warehouseman shall also maintain an office
record showing the bale or tag number, mark, or identifier of each bale
in the lot and the location of the lot in the warehouse. * * *
7. Section 735.33 is revised to read as follows:
Sec. 735.33 System of accounts.
Each warehouseman shall use a system of accounts which is approved
by the Service. The system of accounts shall show the following for
each bale of cotton: the tag number, mark, or identifier as specified
in Sec. 735.31; its weight; its class when required or
[[Page 54511]]
ascertained; its location; the dates received for, and delivered out
of, storage; and the receipts issued and canceled. All systems of
accounts shall include a detailed record of all moneys received and
disbursed and of all effective insurance policies.
8. Section 735.38 is amended by revising paragraph (a) to read as
follows:
Sec. 735.38 Weighing of cotton; weighing apparatus.
(a) Before being stored in a licensed warehouse, all cotton shall
be weighed at the warehouse by a licensed weigher, and the weight so
determined shall be stated on the warehouse receipt. Point of origin
weights may be used for single bale or lot stored cotton by agreement
with the depositor. Any point of origin weights shown on a warehouse
receipt will be the official warehouse bale or lot weight. Lot cotton
tendered for storage on which a multiple bale warehouse receipt is
issued must be maintained so as to preserve its individual and
collective identity during storage and shipment, provided that if such
lot is broken at the warehouse, for the issuance of new receipts, each
bale shall be weighed at the warehouse by a licensed weigher before
single bale warehouse receipts are issued.
* * * * *
9. Section 735.40 is amended by revising paragraph (b) (3) to read
as follows:
Sec. 735.40 Excess storage.
* * * * *
(b) * * *
(3) The shipping warehouseman must transfer all identity-preserved
cotton in lots and must list on a Bill of Lading all forwarded bales by
receipt number and weight. The receiving warehouseman shall promptly
issue a non-negotiable warehouse receipt for each lot of cotton stored
and shall attach a copy of the corresponding Bill of Lading to each
receipt and return the receipt promptly to the shipping warehouseman.
The receiving warehouseman will store each such lot intact, and will
attach a header card to the lot showing the receipt number, number of
bales, and a copy of the Bill of Lading with the individual tag
numbers, marks, or identifiers to the stored lot. Such non-negotiable
warehouse receipts issued for forwarded cotton shall have printed or
stamped diagonally in large bold outline letters across the face of the
receipt the words: ``NOT NEGOTIABLE.''
* * * * *
10. Section 735.44 is revised to read as follows:
Sec. 735.44 Fire loss to be reported.
If at any time a fire occurs at or within any licensed warehouse,
it shall be the duty of the warehouseman to report immediately the
occurrence of such fire and the extent of damage to the Administrator.
11. Section 735.47 is revised to read as follows:
Sec. 735.47 Certificates to be filed with warehouseman.
When a grade or weight certificate has been issued by a licensed
grader or weigher, a copy of such certificate shall be filed with the
warehouseman in whose warehouse the cotton covered by such certificate
is stored, and such certificates shall become a part of the records of
the licensed warehouseman. All certificates and supporting
documentation that form the basis for any receipt issued by the
warehouseman shall be retained in the records of the warehouseman for a
period of 1 year after December 31 of the year in which the receipt
based on such certificates or supporting documentation is canceled.
12. Section 735.49 is revised to read as follows:
Sec. 735.49 Methods for drawing and marking samples.
Each sample shall be appropriately marked to show the tag number,
mark, or identifier of the bale of cotton from which it was drawn and
the date of sampling.
13. Section 735.77 is revised to read as follows:
Sec. 735.77 Contents of complaint.
(a) Complaints shall be in English and shall state:
(1) The name and post office address of the complainant;
(2) The nature of the complainant's interest in the cotton;
(3) The name and post office address of the holder of the receipt,
if someone other than the complainant;
(4) The name and post office address of any other interested party;
(5) The name and location of the licensed warehouse in which the
cotton is stored, and the tag number, mark, or identifier assigned to
each bale of cotton involved in the appeal, the grade or other class
assigned to such cotton by the licensed warehouseman, and the date of
the receipt issued therefor;
(6) The grade or other class assigned by the licensed classifier,
if any;
(7 ) The grade or other class, different from that assigned by the
licensed warehouseman, which is contended for by any interested party;
(8) Whether, within complainant's knowledge, any appeal involving
the same cotton previously has been taken, and if so, an appropriate
identification of such other appeal; and
(9) If samples have been agreed upon and submitted in accordance
with Sec. 735.79(b).
(b) When practicable, the complainant shall file with the
complaint, the warehouse receipt or class certificate, if any, covering
the cotton involved in the appeal. When such receipt or certificate is
not filed before the issuance of the cotton appeal certificate, a
definite statement indicating why such papers are not produced shall be
filed with the complaint.
14. Section 735.101 is amended by removing paragraph (b) and
redesignating paragraphs (c) through (p) as paragraphs (b) through (o).
15. Section 735.102 is amended by revising paragraphs (d) (4), and
(f) to read as follows:
Sec. 735.102 Provider requirements and standards for applicants.
* * * * *
(d) * * *
(4) The provider or the Service may terminate the provider
agreement without cause solely by giving the other party written notice
60 calendar days prior to termination.
* * * * *
(f) Application form. Application for a provider agreement shall be
made to the Secretary on forms prescribed and furnished by the Service.
Signed at Washington, DC, on October 1, 1999.
Parks Shackelford,
Acting Administrator, Farm Service Agency.
[FR Doc. 99-26167 Filed 10-6-99; 8:45 am]
BILLING CODE 3410-05-P
