[Federal Register Volume 64, Number 103 (Friday, May 28, 1999)]
[Proposed Rules]
[Pages 28938-28940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13635]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 64, No. 103 / Friday, May 28, 1999 / Proposed
Rules
[[Page 28938]]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 735
RIN 0560-AF13
Amendments to the Regulations for Cotton Warehouses Regarding the
Delivery of Stored Cotton
AGENCY: Farm Service Agency, USDA.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to amend the regulations governing cotton
warehouses under the United States Warehouse Act (USWA) to establish a
cotton shipping standard that would define the statutory phrase
``without unnecessary delay'' which could be used to determine whether
warehouse operators deliver cotton timely. The Department of
Agriculture (USDA) is taking this action as the result of two Federal
District Court orders requesting USDA to define the statutory phrase
``without unnecessary delay'' as set forth in the USWA. Concurrently,
several segments of the cotton industry requested the implementation of
a uniform national cotton shipping standard for the delivery of stored
cotton that would increase the market value of producer cotton through
timely and improved delivery. Before issuing this proposed rule, the
Farm Service Agency (FSA) published an advanced notice of proposed
rulemaking (ANPRM) in the May 26, 1998, Federal Register (63 FR 28488)
seeking comments on two independent options and specific questions
regarding National Cotton Flow Standard issues. Each option contained
identical methods for defining ``without unnecessary delay,'' and
establishment of both a uniform cotton shipping standard and dispute
resolution. Along with minimal USDA involvement Option I offered
nothing more. However, Option II offered standardized terminology,
definitions, dispute mediation, a national cotton flow shipping status
report, user fees, and greater USDA regulatory role. Public comments
favored Option I and expressed a strong conviction that USDA should
only establish a cotton shipping standard, but allowed enforcement by
the cotton industry without USDA involvement, assessment of user fees,
or increased governmental costs. This proposed rule expresses those
public comments and provides another opportunity for the public to
comment before FSA publishes a final rule.
DATES: Comments should be submitted on or before July 27, 1999 to be
assured of consideration.
ADDRESSES: FSA invites interested persons to submit written comments on
this proposed rule to: Steve Gill, Director, Warehouse and Inventory
Division, U.S. Department of Agriculture, Farm Service Agency, STOP
0553, 1400 Independence Avenue, SW, Washington, D.C. 20250-0553;
telephone (202) 720-2121; fax (202) 690-3123; or by E-mail comments to:
Steve Mikkelsen@wdc.fsa.usda.gov. Additionally, interested persons may
send comments via the Internet through the National Cotton Flow's (NCF)
homepage at: http://www.fsa.usda.gov/ncf.
All written comments received in response to this proposed rule
will be available for public inspection in Room 5968, South Agriculture
Building, U.S. Department of Agriculture, 1400 Independence Avenue, SW,
Washington, D.C., between 8:00 a.m. and 4:30 p.m., Monday through
Friday, except holidays.
FOR FURTHER INFORMATION CONTACT: Steve Mikkelsen, Deputy Director,
Warehouse and Inventory Division, U.S. Department of Agriculture, Farm
Service Agency, STOP 0553, 1400 Independence Avenue, SW, Washington,
D.C. 20250-0553; telephone (202) 720-2121; or fax (202) 690-3123.
Persons with disabilities who require alternative means for
communication of regulatory information (braille, large print,
audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600
(voice and TDD).
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget has reviewed the proposed rule
and determined the rule to be significant for the purposes of Executive
Order 12866. A Cost-Benefit Assessment (CBA) was prepared. The costs
associated with the implementation of the proposed rule will be minimal
to all parties involved. The CBA summarized the cost and benefit impact
of the proposed rule as follows:
The cost associated with the implementation of the proposed rule
will be minimal to all parties involved.
The cotton industry will benefit from FSA establishing a shipping
standard that the industry can apply through arbitration or legal
proceedings to determine whether warehouse operators are delivering
cotton ``without unnecessary delay.'' Establishment of a national
shipping standard would potentially help (1) maintain the
competitiveness of U.S. cotton in domestic and world markets, (2)
improve the prices that producers receive in those areas affected by
delivery delays, and (3) eliminate any disruption in commerce due to
uncertainty of delivery expectations.
Copies of the CBA are available upon request at the address listed
above.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988. The provisions of this proposed 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, Federalism
This proposed rule would not involve any policies that have
federalism implications under Executive Order 12612.
Executive Order 12372
FSA programs are not subject to the provisions of Executive Order
12372, which require 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).
[[Page 28939]]
Paperwork Reduction Act
The amendments set forth in this proposed rule do not affect
information collection or recordkeeping requirements.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this proposed rule because this rule will not have a
significant effect on a substantial number of small businesses.
Licensing under the USWA is strictly voluntary on the warehouseman's
part.
Unfunded Mandate Reform Act of 1995 (UMRA)
This proposed rule contains no Federal mandates under the
regulatory provisions of 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 the UMRA.
Background
Since the early 1960's, the timely delivery and shipping of stored
cotton (cotton flow) has been an ongoing issue throughout the cotton
industry. While cotton shippers and cotton merchants require timely
delivery and shipping to meet the demands of the marketplace, cotton
warehousemen contend that the delivery and shipping demands placed on
them by shippers and merchants are unreasonable and exceeded warehouse
capabilities. When delivery and shipping delays began to occur during
the 1995/96 crop year, rather than exercising the arbitration rights
incorporated in the voluntary standard that was implemented by the
Coalition for Cotton Flow Standards (CCFS), an organization created by
the National Cotton Council, several cotton shippers filed complaints
with FSA. These shippers requested FSA to investigate the cotton flow
situation, and suspend the federal license of those warehouses that had
not delivered and shipped cotton ``without unnecessary delay'' as
required by the USWA. USWA personnel investigated and found the lack of
uniform common terms and a standard process for requesting services may
have contributed to confusion and the appearance of longer delivery and
shipping delays.
In addition to filing complaints with FSA, several shippers also
filed lawsuits in United States District Courts against two cotton
warehousemen. In each of these cases, the lack of determination by USDA
in the use and meaning of the USWA statutory phrase ``without
unnecessary delay'' was a key issue for the courts. Ultimately, the
shippers elected to dismiss their suits after jointly agreeing to
request that the cases be remanded for USDA to determine the definition
of the statutory phrase ``without unnecessary delay.'' The Courts
agreed and remanded the matter of defining ``without unnecessary
delay'' to USDA.
Concurrently, several segments of the cotton industry requested
USDA to implement a uniform national cotton shipping standard, based on
weekly deliveries of 4.5% of each warehouse's Commodity Credit
Corporation's (CCC) Cotton Storage Agreement (CSA) approved capacity.
The industry presented 4.5% as the level that would expedite the
delivery and shipment of U.S. cotton into marketing trade channels and
enhance prices paid producers while reducing the cost of handling
cotton. Because the CSA's applicability was for CCC-interest cotton
only and about 80% of all cotton being receipted under the USWA's
electronic warehouse receipt authority. USDA perceived that a delivery
and shipping standard should be based on the USWA rather than the CSA.
As a result of these events, on May 26, 1998, USDA published an
ANPRM (63 FR 28488) that sought public comments on two independent
options and specific questions regarding National Cotton Flow Standard
issues. Each contained identical methods for defining ``without
unnecessary delay,'' and establishment of both a uniform cotton
shipping standard and dispute resolution. Along with minimal USDA
involvement Option I offered nothing more. However, Option II offered
standardized definitions, terminologies, dispute mediation, a national
cotton flow shipping status report, operated with user fees, and a
greater USDA regulatory role. Public comments favored Option I and
strongly expressed a conviction that USDA should only establish a
cotton shipping standard, but allow enforcement by the cotton industry
without USDA involvement, assessment of user fees, or increased
governmental costs.
Summary of Public Comments
FSA received 47 public comments in response to the ANPRM that was
published on May 26, 1998 (63 FR 28488). Comments and suggestions were
received from 6 sectors of the trade-industry as follows: 6 Cotton
Trade Associations; 23 Cotton Warehouse Operators; 15 Cotton Brokers/
Merchants; 1 Attorney; 1 Retired USDA Employee; and 1 Cottonseed Oil
Processor. Of the comments received, 1 respondent approved of the
ANPRM's Option I as written; 35 respondents approved of the ANPRM's
stated cotton flow standard, but believed that any dispute resolution
should be administered by cotton industry arbitration procedures; 4
respondents favored the ANPRM's stated cotton flow standard without
arbitration procedures; 2 respondents believed that compliance should
be enforced through the Commodity Credit Corporation's Cotton Storage
Agreement with modified cotton industry arbitration provisions; 1
respondent favored the ANPRM's 4.5% shipping requirement, but opposed
the 14-day shipping period included in Option II; 1 respondent favored
the ANPRM's 4.5% shipping requirement, but wanted it to be based on the
previous week's ending inventory rather than a licensed or approved
capacity; 1 respondent opposed the entire ANPRM, but favored cotton
industry self-regulation; and 2 respondents favored no established
cotton shipping standard.
Public comments received in response to the ANPRM expressed the
strong conviction that USDA should define ``without unnecessary delay''
through the establishment of a national cotton shipping standard based
on weekly deliveries of 4.5% of a warehouse's approved capacity, but
allowed enforcement by the cotton industry without governmental
involvement, assessment of user fees, or increased governmental costs.
Since public comments strongly expressed that USDA limit its role and
involvement to defining ``without unnecessary delay'' through
establishing a national cotton shipping standard, reserving enforcement
by the cotton industry without governmental involvement, assessment of
user fees, or governmental costs. FSA is limiting USDA's role and
involvement in publishing this proposed rule that sets forth a national
cotton shipping standard that defines ``without unnecessary delay,''
and reserves any compliance or dispute resolution for the cotton
industry without USDA enforcement or involvement.
The provisions in this proposed rule would be applicable to cotton
warehousemen licensed under the USWA and warehousemen who utilize
electronic warehouse receipts stored in a central filing system
approved under the USWA.
List of Subjects in 7 CFR Part 735
Administrative practice and procedure, Cotton, Delivery, Reporting
and recordkeeping requirements, Shipping, Surety bonds, Warehouses.
For the reasons stated in the preamble, the Farm Service Agency
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proposes to amend 7 CFR part 735 as follows:
PART 735--COTTON WAREHOUSES
1. The authority citation for 7 CFR part 735 continues to read as
follows:
Authority: 7 U.S.C. 241 et seq.
Secs. 735.106 through 735.199 [Added and Reserved]
2. Sections 735.106 through 735.199 are added and reserved.
3. Section 735.2 is amended by adding paragraph ((jj) to read as
follows:
Sec. 735.2 Terms defined.
* * * * *
(jj) Force majeure. Severe weather conditions, fire, explosion,
flood, earthquake, insurrection, riot, strike, labor dispute, act of
civil or military authority, non-availability of transportation
facilities, or any other cause beyond the control of the warehouseman
that renders performance impossible.
4. Add an undesignated center heading entitled, ``Delivery and
Shipping'' after reserved Sec. 735.199.
5. Sections 735.200 through 735.202 are added under the
undesignated heading ``Delivery and Shipping'' to read as follows:
Sec. 735.200 Applicability.
The cotton shipping standard set forth in Sec. 735.201 is
applicable to all cotton warehousemen licensed under the Act and to all
warehousemen that issue electronic warehouse receipts through an
authorized electronic warehouse receipt provider in accordance with
Secs. 735.100 through 735.105 regardless of whether the warehouse is
licensed under the Act.
Sec. 735.201 Cotton Shipping Standard.
Unless prevented from doing so by force majeure, a warehouseman
identified in Sec. 735.200 shall deliver stored cotton without
unnecessary delay. A warehouseman shall be considered to have delivered
cotton without unnecessary delay if for the week in question, the
warehouseman has delivered or staged for scheduled delivery at least
4.5% of either their licensed capacity or Commodity Credit Corporation
approved storage capacity or other storage capacity as determined by
the Secretary to be in effect during the week of shipment.
Sec. 735.202 Compliance and Dispute Resolution.
(a) Any claims for noncompliance with the cotton shipping standard
will be resolved by the parties involved through established industry,
professional, or mutually agreed upon arbitration procedures. The
arbitration procedures shall be nondiscriminatory and provide all
persons equal access and protection relating to the cotton shipping
standard.
(b) No arbitration determination or award resulting from
noncompliance with the shipping standard shall affect, obligate, or
restrict the Farm Service Agency's authority to provide, administer,
and regulate the issuance of licenses and receipts, contractual
agreements, or authorized electronic warehouse receipt provider systems
in accordance with the Act.
(c) The Farm Service Agency shall not settle unresolved disputes
involving the cotton shipping standard or associated damages.
(d) In the event any party requests assistance from or initiates
the involvement of the Farm Service Agency in matters relating to the
cotton shipping standard, the initiating party shall be responsible for
all costs incurred by the Farm Service Agency. Before any such
assistance is provided, the initiating party shall make payment to the
Farm Service Agency in an amount equal to the Agency's good faith
estimate of costs and expenses that will be incurred in fulfilling the
request. Costs incurred that exceed the Agency's good faith estimate
will be the responsibility of the initiating party.
Signed at Washington, D.C., on May 24, 1999.
Parks Shackelford,
Acting Administrator, Farm Service Agency.
[FR Doc. 99-13635 Filed 5-27-99; 8:45 am]
BILLING CODE 3410-05-P
