2010-20352. Cotton Program Changes for Upland Cotton, Adjusted World Price, and Active Shipping Orders

AGENCY:

Commodity Credit Corporation, USDA.

ACTION:

Final rule, technical corrections.

SUMMARY:

CCC is amending a previous final rule that implemented the 2008 Farm Bill provisions for the cotton program. The correction removes definitions that are no longer used concerning Northern Europe prices for cotton. CCC is also making clarifying changes to the regulations for the cotton program and for CCC-approved warehouses. CCC is clarifying the payment calculation for upland cotton that is eligible for the Economic Adjustment Assistance Program (EAAP) and clarifying the definition of “active shipping order.”

DATES:

Effective Date: August 18, 2010.

FOR FURTHER INFORMATION CONTACT:

Timothy Murray, Cotton Program Manager, Commodity Operations Division, Farm Service Agency, USDA, Mail Stop 0533, 1400 Independence Ave, SW., Washington, DC 20250-0572; phone: [phone]; e-mail: [e-mail]. Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.) should contact the USDA Target Center at [phone] (voice and TDD).

SUPPLEMENTARY INFORMATION:

This rule makes three changes to the regulations for the cotton program and to the regulations for CCC-approved warehouses used for cotton. It removes obsolete definitions from the regulations for cotton non-recourse loans and loan deficiency payments. It clarifies the payment calculation for eligible upland cotton to ensure that the EAAP meets the original purpose. It adds definitions to the regulations for CCC-approved warehouses to clarify the information that cotton warehouse operators must report to CCC.

Adjusted World Price—Removing Obsolete Definitions

CCC published a final rule in the Federal Register on November 5, 2008 (73 FR 65715-65724) implementing changes to the cotton program required by the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill, Pub. L. 110-246), including changes in the way the adjusted world price for cotton is calculated for the purposes of CCC programs. The final rule amended 7 CFR part 1427. That rule inadvertently did not remove several terms that are no longer needed and accordingly, this correcting amendment removes the terms “Northern Europe current price,” “Northern Europe forward price,” and “Northern Europe price” from § 1427.3 because these terms are no longer used in calculating the adjusted world price.

Because these terms are defined in 7 CFR part 1427, but not used in any of the regulatory provisions in that part, this change should have no impact on cotton producers or on CCC cotton programs.

Upland Cotton—Clarifying Eligible Cotton

The 2008 Farm Bill provides benefits to domestic users of upland cotton through EAAP. EAAP provides a payment of four cents ($0.04) for each pound of upland cotton consumed by an eligible user during the period beginning on August 1, 2008, and ending on July 31, 2012. Beginning on August 1, 2012, the value of the assistance provided will be 3 cents per pound. As specified in 7 CFR 1427.101, the eligible types of cotton for EAAP are baled lint, loose samples that have been re-baled, semi-processed motes, and re-ginned (processed) motes.

Cotton motes are a byproduct of the cotton ginning process. Typically, the motes (the waste product from the initial ginning process) are run back through the gin to capture the residual cotton fiber. In this process, while some usable fiber is recovered, a substantial proportion of the waste product by weight is foreign material, seeds, and non-usable plant parts. The motes are typically reprocessed and cleaned several times before the resulting recovered fiber is of a quality suitable for end use.

The purpose of EAAP is to pay users of upland cotton for usable fiber, and not for foreign material, seeds, and non-usable plant parts. There has been a sudden increase in the number of pounds of semi-processed motes submitted for payment under EAAP raising concern about the amount of the payment and to address that matter this rule amends in the payment calculation for semi-processed and reginned motes in 7 CFR 1427.105.

This rule does not change the payment calculation for baled upland cotton, including lint, loose samples, or reginned motes, that is used without further processing. With respect, however, to unbaled reginned motes used in a continuous manufacturing process, the payment will be determined based on the weight of the reginned motes after final cleaning. It specifies that for semi-processed motes that are of a quality suitable, without further processing, for spinning, paper, or non-woven cotton fabric, the payment will be calculated on 25 percent of the weight (gross weight minus the weight of baling and ties, if baled). This is the consistent with the payment calculations and with market discounts. The discounts provide a reasonable measure for converting cotton-from-motes to the normal baled cotton that is the focus of the statute. Eliminating semi-processed motes entirely on the grounds that the motes are not, because of their limited uses and their nature, really “cotton” within the meaning of the statute was considered. The 20 percent rule implemented in this rule was considered to be a reasonable and proper compromise for treating semi-processed motes as compensable cotton.

A parallel conforming change will be made to the Upland Cotton Domestic User Agreement between CCC and participants in the EAAP. This change will ensure that the EAAP payments are based on the amount of upland cotton actually used for domestic production, and not for unusable waste products.

CCC Warehouses—Clarifying Active Shipping Order

This rule clarifies what an “active shipping order” is because the term is currently used although not defined in 7 CFR part 1423. To clarify the term, this rule adds definitions for “active shipping order,” “early shipping order,” and “shipping order” to § 1423.3. As defined in this rule, early shipping orders and shipping orders are types of active shipping orders. An active shipping order, as defined in this rule, is an “early shipping order or shipping order, as defined in this section, scheduled for a current cotton warehouse reporting week or for a prior reporting week, but not picked up.” An “early shipping order” is a list of bale tag numbers sent to a cotton warehouse operator without transfer of warehouse receipts. A shipping order is a list of bale tag numbers accompanied by the transfer of warehouse receipts.

Operators of CCC-approved cotton warehouses asked for this clarifying change, which relates to the information they are required to report to CCC. This change should not result in any cost to CCC, cotton producers, or the warehouse operators.

Notice and Comment

These regulations are exempt from the notice and comment requirements of the Administrative Procedures Act (5 U.S.C. 553), as specified in section 1601(c) of the 2008 Farm Bill, which requires that these regulations be promulgated and administered without regard to the notice and comment provisions of section 553 of title 5 of the United States Code 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. Therefore, these regulations are issued as final.

Executive Order 12866

The Office of Management and Budget (OMB) designated this final rule as not significant under Executive Order 12866 and, therefore, OMB has not reviewed this rule.

Regulatory Flexibility Act

This rule is not subject to the Regulatory Flexibility Act because FSA is not required to publish a notice of proposed rulemaking for this rule.

Environmental Review

The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations for compliance with NEPA (7 CFR part 799). The technical corrections identified in this final rule do not change the structure or goals of the program and are considered simply administrative in nature. Therefore, FSA has determined that NEPA does not apply to this final rule and no environmental assessment or environmental impact statement will be prepared.

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 in the Federal Register on June 24, 1983 (48 FR 29115).

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This final rule is not retroactive and does not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. Before any judicial action may be brought regarding provisions of this rule, the administrative appeal provisions of 7 CFR parts 11 and 780 must be exhausted.

Executive Order 13132

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

Executive Order 13175

The policies contained in this rule do not have tribal implications that preempt tribal law.

Unfunded Mandates

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA, Pub. L. 104-4) requires Federal agencies to assess the effects of their regulatory actions on State, local, or tribal governments or the private sector. Agencies generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local, or tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates as defined by Title II of UMRA for State, local, or tribal governments or for the private sector. In addition, FSA was not required to publish a notice of proposed rulemaking for this rule. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule under the Small Business Regulatory Enforcement Fairness Act of 1996, (Pub. L. 104-121, SBREFA). Therefore, FSA is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review and this rule is effective on the date of publication in the Federal Register.

Paperwork Reduction Act

The regulations in this rule are exempt from requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in section 1601 of the 2008 Farm Bill, which provides that these regulations be promulgated and administered without regard to the Paperwork Reduction Act.

E-Government Act Compliance

FSA is committed to complying with the E-Government Act, to promote the use of the Internet and other Information technologies to provide increased opportunities for citizen access to Government Information and services, and for other purposes.

List of Subjects

7 CFR Part 1423

• Agricultural commodities
• Honey
• Oilseeds
• Reporting and recordkeeping requirements
• Surety bonds
• Warehouses

7 CFR Part 1427

• Cotton
• Loan programs—agriculture
• Price support programs
• Reporting and recordkeeping requirements
• Warehouses

For the reasons discussed above, this rule amends 7 CFR parts 1423 and 1427 as follows:

PART 1423—COMMODITY CREDIT CORPORATION APPROVED WAREHOUSES

1. The authority citation for part 1423 continues to read as follows:

Authority: 15 U.S.C. 714b and 714c.

2. Amend § 1423.3 by adding, in alphabetical order, definitions for “active shipping order,” “early shipping order,” and “shipping order” to read as follows:

§ 1423.3

Definitions.

Active shipping order means an early shipping order or shipping order, as defined in this section, scheduled for a current cotton warehouse reporting week or for a prior reporting week, but not picked up.

* * * * *

Early shipping order means a list of bale tag numbers sent to a cotton warehouse operator without transfer of warehouse receipts.

* * * * *

Shipping order means a list of bale tag numbers sent to a cotton warehouse operator accompanied by transfer of warehouse receipts.

* * * * *

PART 1427—COTTON

3. The authority citation for part 1427 is revised to read as follows:

Authority: 7 U.S.C. 7231-7236 and 8737; and 15 U.S.C. 714b, and 714c.

§ 1427.3

[Amended]

4. Amend § 1427.3 by removing the definitions for “Northern Europe current price,” “Northern Europe forward price,” and “Northern Europe price.”

5. Amend § 1427.105 as follows:

a. Revise paragraphs (a) and (b) to read as set forth below,

b. Remove paragraph (c), and

c. Redesignate paragraphs (d) and (e) as paragraphs (c) and (d).

§ 1427.105

Payment.

(a) Payments specified in this subpart will be determined by multiplying the payment rate, as specified in § 1427.104, by

(1) In the case of baled upland cotton, whether lint, loose samples or reginned motes, but not semi-processed motes, the net weight of the cotton used (gross weight minus the weight of bagging and ties);

(2) In the case of unbaled reginned motes consumed, without rebaling, for an end use in a continuous manufacturing process, the weight of the reginned motes after final cleaning; and

(3) In the case of semi-processed motes which are of a quality suitable, without further processing, for spinning, papermaking, or manufacture of non-woven cotton fabric, 25 percent of the weight (gross weight minus the weight of bagging and ties, if baled) of the semi-processed motes; provided further, that with respect to semi-processed motes that are used prior to August 18, 2010, payment may be allowed by CCC in its sole discretion at 100 percent of the weight as determined appropriate for a transition of the program to the 25 percent factor.

(b) In all cases, the payment will be determined based on the amount of eligible upland cotton that an eligible domestic user consumed during the immediately preceding calendar month. For the purposes of this subpart, eligible upland cotton will be considered consumed by the domestic user on the date the bale is opened for consumption, or if not baled, the date consumed, without further processing, in a continuous manufacturing process.

* * * * *

Signed in Washington, DC, on August 11, 2010.

Jonathan W. Coppess,

Executive Vice President, Commodity Credit Corporation.