05-17684. Transfer of Sugar Program Marketing Allocations

AGENCY:

Commodity Credit Corporation, USDA.

ACTION:

Proposed rule.

SUMMARY:

The Commodity Credit Corporation (CCC) proposes several changes to the sugar program regulations. First, CCC proposes to amend the regulations for transferring sugar marketing allocation when a mill closes and growers request to move their allocation.

Second, CCC proposes imposing a regulatory deadline for the program's information reporting requirements. The required monthly information would be due on the 20th of each month.

Third, CCC proposes to amend the requirements for the maintenance and inspection of records to require each cane processor, cane refiner and beet processor to provide an annual report by a Certified Public Accountant (CPA) that verifies the company's data submitted to CCC.

DATES:

Comments on this rule must be submitted by November 7, 2005 to be assured consideration.

ADDRESSES:

The Farm Service Agency (FSA) invites interested persons to submit comments on this proposed rule. Comments may be submitted by any of the following methods:

E-mail: Send comments to [e-mail].

Mail: Submit comments to: Director, Dairy and Sweeteners Analysis Group (DSAG), FSA, United States Department of Agriculture (USDA), STOP 0516, 1400 Independence Avenue, SW., Washington, DC 20250-0516.

Fax: Submit comments by facsimile transmission to [phone].

Hand Delivery or Courier: Deliver comments to the above address.

Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

Comments may be inspected in the Office of the Director, DSAG, FSA, USDA, Room 3752-S South Building, Washington, DC, between 8 a.m. and 4:30 p.m. Monday through Friday, except holidays. A copy of this proposed rule is available on the DSAG Web site at http://www.fsa.usda.gov/​ao/​epas/​dsa.htm.

FOR FURTHER INFORMATION CONTACT:

Barbara Fecso at [phone], or via e-mail at [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:

Background

Annually, CCC establishes sugar marketing allotments at a level estimated to prevent sugar loan collateral forfeitures to CCC. CCC establishes the overall allotment quantity, beet sugar and cane sugar allotments, State cane sugar allotments, and marketing allocations for processors marketing sugar domestically processed from sugar beets and domestically-produced sugarcane. If a processing mill closes, growers who delivered sugar beets or sugarcane to that mill may request a transfer of a portion of the closed mill's marketing allocation to another mill that reflects their production history at the closed mill.

CCC proposes to amend the regulations at 7 CFR 1435.308 to provide for an orderly and transparent method of distributing allocation to successor mills after growers have petitioned the Executive Vice President, CCC, to transfer allocation when their mill closes. CCC is proposing to use a formula to distribute the closed mill's allocation that will calculate grower shares based on the grower's contribution to the mill's allocation. Since the formula that determines a mill's allocation is different in the beet sector and among the cane states, the formula CCC will use to transfer allocation of closed mills will reflect these differences.

Since the enactment of the Farm Security and Rural Investment Act of 2002 (2002 Act), (Pub. L. 107-171), the only processing facilities to have closed have been cane processing facilities in Louisiana. The procedure used then to transfer allocations, while not explicit in the sugar program regulations, reflected the two main components of the cane marketing allocation formula, (1) past production history, which is a fixed value, and (2) current year production, known as the “ability to market,” a value that changed from year to year. CCC published an amendment to the regulations on September 13, 2004 (69 FR 35061), which fixed the “ability to market” factor in the allocation formula for each mainland cane State and cane processor until the program expires in 2008, under the 2002 Act. The other components of the mainland cane marketing allocation formulas were already fixed on the basis of historical production.

When two Louisiana mills announced they would not reopen for the 2005 crop, issues arose such as whether to allow growers with production history at the closed mill to petition if they had not delivered cane to the mill in the preceding year. There was also debate over which years to consider in the transfer formula, given that the “ability to market” change to the regulation had added more crop years in the allocation formula. In the end, CCC and successor mills were able to negotiate transfer shares that satisfied all parties. CCC considered allowing successor mills the opportunity to negotiate a distribution of allocation from the closed mill in the proposed rule. However, no mill can be expected to take less than it would under a formula, so CCC did not propose that option under this proposed rule. While the closure of cane mills precipitated this proposed rule, it applies to all beet and cane processors.

The second change CCC proposes is to include a due date in the information reporting provisions in 7 CFR 1435.200. This section requires every sugar beet processor, sugarcane processor, cane sugar refiner, and importer of sugar, syrup, and molasses to report to CCC, on a monthly basis, information necessary to administer the sugar programs. CCC established an informal reporting due date of the 20th of each month in 1991, which would be incorporated in the regulations. The chronic lateness of some reporters in recent times has delayed processing and analysis of all data, which is detrimental to the sound administration of the Sugar Program. The civil penalties provisions in section 156h(4) of the Federal Agriculture Improvement and Reform Act of 1996, as amended (7 U.S.C. 7272(h)(4)) and 7 CFR 1435.201 allow CCC to assess a civil penalty of no more than $10,000 to reporters who willfully fail or refuse to furnish the information, or who willfully furnish false data. CCC will consider a reporter to have willfully failed to provide the information and subject to penalty, if CCC does not receive the data by the 20th of the month.

The final proposal would require each reporting entity to have an independent third party verify each company's data submitted to CCC. CCC will require an Agreed-upon Procedures engagement, conducted by an independent Certified Public Accountant (CPA), to analyze the company data annually. The provisions of 7 CFR 1435.3, Maintenance and inspection of records give CCC, as well as any other U.S. Government agency, the right of access to the premises of any sugar beet processor, sugarcane processor, cane sugar refiner, importer of sugars, syrups, and molasses, or of any other person having custody of records that the examining agency deems necessary to verify compliance with this part's requirements. Since this information is necessary to determine whether a processor is in compliance with sugar marketing allotment program requirements, CCC proposes to require that an independent CPA conduct a yearly agreed-upon procedures engagement of each reporter to validate their materials balance. CCC will provide the procedures to be followed by each independent CPA.

Executive Order 12866

This rule has been determined to be not significant under Executive Order 12866 and has not been reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

The requirements of the Regulatory Flexibility Act (5 U.S.C. 601—602) do not apply to this rule because CCC is not required to publish a notice of proposed rulemaking for the subject of this rule. Nonetheless, CCC has determined that this rule will not have a significant economic impact on a substantial number of small entities and a Regulatory Flexibility Analysis was not performed.

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 12988

This rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All State and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings in accordance with 7 CFR part 11 must be exhausted before seeking judicial review.

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 Reform Act of 1995

This rule contains no Federal mandates, as defined under title II of the 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 UMRA.

Executive Order 13132

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national 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.

Paperwork Reduction Act

Under 7 U.S.C 7991(c)(2)(A) these regulations may be promulgated and the program 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 (GPEA) and the Freedom to E-File Act, which require Government agencies in general, and the FSA in particular, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. Because of the nature of the forms and other information collection activities required for this program, they are not fully implemented in a way that would allow the public to conduct business with CCC electronically. Accordingly, at this time, all forms and information required to be submitted under this rule may be submitted to CCC by mail or FAX.

List of Subjects in 7 CFR Part 1435

• Loan programs—agriculture
• Price support programs
• Reporting and Recordkeeping requirements, and Sugar

Accordingly, 7 CFR part 1435 is proposed to be amended as follows:

PART 1435—SUGAR PROGRAM

1. The authority citation continues to read as follows:

Authority: 7 U.S.C. 1359aa—1359jj and 7272 et seq.; 15 U.S.C. 714b and 714c.

2. In § 1435.200 revise paragraph (a), redesignate paragraph (g) as paragraph (h), and add new paragraph (g) to read as follows:

§ 1435.200

Information reporting.

(a) Every sugar beet processor, sugarcane processor, cane sugar refiner, and importer of sugar, syrup, and molasses shall report, by the 20th of each month, on CCC-required forms, its imports and receipts, processing inputs, production, distribution, stocks and other information necessary to administer the sugar programs. If the 20th of the month falls on a weekend or a Federal holiday, the report shall be made by the next business day.

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(g) By November 20 of each year, each sugar beet processor, sugarcane processor, sugarcane refiner, and importer of sugars, syrups, and molasses will submit to CCC a report, as specified by CCC, from an independent Certified Public Accountant that reviews its information submitted to CCC during the previous October 1 through September 30 period.

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3. Revise § 1435.308(a) to read as follows:

§ 1435.308

Transfer of allocation, new entrants.

(a) If a sugar beet or sugarcane processing facility is closed and the growers that delivered their crops to the closed facility elect to deliver their crops to another processor, the growers may petition the Executive Vice President, CCC, to transfer their share of the allocation from the processor that closed the facility to their new processor. If CCC determines to transfer the allocations, it will distribute the closed mill's allocation based on the contribution of the growers' production history to the closed mill's allocation. CCC may grant the allocation transfer upon:

(1) Written request by a grower to transfer allocation,

(2) Written approval of the processing company that will accept the additional deliveries, and

(3) Evidence satisfactory to CCC that the new processor has the capacity to accommodate the production of petitioning growers.

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Signed in Washington, DC, on August 18, 2005.

James R. Little,

Executive Vice President, Commodity Credit Corporation.