E7-9121. Emergency and Temporary Storage of Agricultural Commodities

AGENCY:

Commodity Credit Corporation, USDA.

ACTION:

Notice.

SUMMARY:

The Commodity Credit Corporation (CCC) is taking actions to ensure adequate availability of commercial warehouse storage space for the 2007 crops and for producers seeking warehouse-stored marketing assistance loans for eligible commodities. CCC is announcing authorization, under certain conditions, of emergency and temporary storage for the 2007 crops of wheat, corn, sorghum and feed grains, and temporary storage for the 2007 crops of soybeans, rice and other commodities deemed storable by CCC. The authorizations include agricultural commodities stored by warehouse operators licensed under the U.S. Warehouse Act (USWA) and those warehouse operators who store commodities pledged as collateral for Commodity Credit Corporation (CCC) marketing assistance loans and issue warehouse receipts for such commodities in emergency or temporary storage.

EFFECTIVE DATE:

May 11, 2007.

FOR FURTHER INFORMATION CONTACT:

Roger Hinkle, Warehouse and Inventory Division, Farm Service Agency, United States Department of Agriculture, 1400 Independence Avenue, SW., STOP 0553, Washington, DC 20250-0553, telephone [phone], FAX [phone], e-mail: [e-mail]. Persons with disabilities who require alternative means for communication for regulatory information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at [phone] (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

To be eligible for a Marketing Assistance Loan under the loan provisions of 7 CFR part 1421, an eligible commodity must be stored in approved storage, which is either on-farm storage or an approved warehouse that meets the CCC standards for approval of warehouses. Further, in accordance with the CCC Charter Act (15 U.S.C. 714 et seq.), CCC enters into storage agreements with commercial warehouse operators to provide for the storage of commodities owned by CCC or pledged as security to CCC for marketing assistance loans. To ease the demands made on approved warehouse space for the 2007 crops, CCC will accept as collateral for marketing assistance loans the emergency and temporary storage of wheat, corn, sorghum and feed grains and temporary storage of soybeans, rice and other commodities deemed storable by CCC for which warehouse receipts are issued by a warehouse operator that is storing such commodity in emergency or temporary storage if the warehouse has executed a storage agreement with CCC and if the warehouse is either:

1. A federally-licensed warehouse under the USWA and is in compliance with the provisions of its USWA license; or

2. For all other warehouses, the warehouse operator is in compliance with State laws allowing emergency or temporary storage of such commodities.

USWA Emergency Storage Requirements

Emergency storage is limited to wheat, corn, sorghum and feed grains unless otherwise allowed by the USWA. The warehouse operator may use such space from the time of initial licensing until March 31, 2008. Emergency storage space must be operated in conjunction with a USWA-licensed warehouse. In addition, warehouse operators requesting emergency storage space under the USWA must:

1. Receive USWA's authorization for the use of emergency storage space;

2. Meet all USWA security, net worth, bonding, and insurance requirements as required for conventional storage space;

3. Provide written justification that a need for emergency storage exists in the local area including the exact location, kind of commodity and quantity requested;

4. Meet USWA's requirement that emergency storage space be accessible for examination purposes;

5. Receive USWA authorization for the emergency storage space prior to using such space;

6. Maintain a separate inventory record of all commodities stored in emergency storage space, as well as accounting for such commodities in their Daily Position Record (DPR);

7. Agree that all emergency storage space will be deleted from the license no later than March 31, 2008;

8. Agree to move all commodities stored in emergency storage space into licensed space by that date;

9. Notify USWA in writing when commodities are moved into licensed space; and

10. If the warehouse chooses to continue using the emergency storage space for company-owned commodities after that date, the warehouse operator shall:

• Remove that quantity of the commodity from the warehouse's official records,
• Not use the commodity to cover the storage or warehouse receipted obligations of the warehouse, and
• Agree that the quantity will not be included in any warehouse examination conducted by CCC.

USWA Temporary Storage Requirements

The warehouse operator may use such space from the time of initial licensing until March 31, 2008, for soybeans, rice and other commodities deemed storable by CCC and until July 1, 2008, for wheat, corn, sorghum and feed grains. Temporary storage structures must be operated in conjunction with a USWA-licensed warehouse. In addition:

1. Asphalt, concrete, or other approved base material must be used;

2. Rigid self-supporting sidewalls must be used;

3. Aeration must be provided;

4. Acceptable covering, as determined by CCC, must be provided;

5. Receive USWA's authorization for the use of temporary storage;

6. Meet all USWA security, net worth, bonding, and insurance requirements as required for conventional storage space;

7. Warehouse operators must maintain a separate record of all commodities stored in temporary storage space and must account for such commodities in their DPR;

8. Agree to move all commodities stored in temporary storage space into licensed space by its respective final date;

9. Notify USWA in writing when commodities are moved into licensed space; and

10. If the warehouse chooses to continue using the temporary storage space for company-owned commodities after that date, the warehouse operator shall:

• Remove that quantity of the commodity from the warehouse's official records,
• Not use the commodity to cover the storage or warehouse receipted obligations of the warehouse, and
• Agree that the quantity will not be included in any warehouse examination conducted by CCC.

Application for Emergency and Temporary Storage

USWA licensees should direct questions regarding the use of emergency or temporary storage to Terry Chapman, Chief, Licensing Branch, Warehouse License and Examination Division, at: Kansas City Commodity Office, Mail Stop 9148, P.O. Box 419205 Kansas City, MO 64141-6205, telephone: [phone]; facsimile: 816-926-1774. E-mail: [e-mail].

All other warehouse operators should direct questions regarding the use of emergency or temporary storage to the Chief of the Storage Contract Branch, Bulk Commodities Division, Kansas City Commodity Office—MAIL STOP 8748, PO Box 419205, Kansas City, Missouri 64141-6205, Telephone: [phone]—Facsimile: [phone] or [phone]; E-mail: [e-mail].

Warehouse Operator's Liability

The authorization and licensing of emergency and temporary storage space does not relieve warehouse operators of their obligations under the USWA. Warehouse operators are responsible for the quantity and quality of commodities stored in emergency and temporary storage space to the same extent as their liability for licensed storage space. All commodities stored in emergency and temporary storage space are considered a part of the warehouse operator's commingled inventory.

Warehouse Security

CCC strongly recommends that warehouse operators review their warehouse security plans and conduct a prudent risk assessment in connection with their application for emergency and temporary storage space. Warehouse operators may want to pay particular attention to threats that may not have been considered significant in the past and consider restricting access to facilities to authorized personnel only.

Signed in Washington, DC, on April 26, 2007.

Teresa C. Lasseter,

Executive Vice President, Commodity Credit Corporation.