[Federal Register Volume 59, Number 147 (Tuesday, August 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18694]
[[Page Unknown]]
[Federal Register: August 2, 1994]
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DEPARTMENT OF AGRICULTURE
7 CFR Part 1427
RIN 0560-AD82
1994 Cotton Loan and LDP Provisions
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Interim rule.
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SUMMARY: This interim rule amends the regulations with respect to the
upland and extra long staple cotton loans and loan deficiency payments
(LDP) made by the Commodity Credit Corporation (CCC) in accordance with
The Agricultural Act of 1949 (the 1949 Act), as amended. The amendments
made by this interim rule will provide: greater clarity; enhance the
administration of CCC programs by providing uniformity between CCC
price support programs; eliminate obsolete provisions; provide more
authority to State and county committees in administering the programs;
lessen administrative actions CCC imposes on producers who violate the
loan and LDP agreements; and correct errors.
DATES: Interim rule effective August 2, 1994. Comments must be received
on or before September 1, 1994 in order to be assured of consideration.
ADDRESSES: Submit comment to Director, Cotton, Grain, and Rice Price
Support Division, Agricultural Stabilization and Conservation Service,
United States Department of Agriculture (USDA), P.O. Box 2415,
Washington, DC 20013-2415; telephone 202-720-7641. Comments received
may be inspected between 9 a.m. and 4:30 p.m., Monday through Friday,
except holidays, in room 3623, South Agriculture Building, USDA, 14th
Street and Independence Avenue, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Philip Sharp, Program Specialist,
Cotton, Grain, and Rice Price Support Division, Agricultural
Stabilization and Conservation Service, USDA, P.O. Box 2415,
Washington, DC 20013-2415; telephone 202-720-7988.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not-significant for purposes of
Executive Order 12866 and therefore has not been reviewed by OMB.
Federal Assistance Program
The title and number of the Federal Assistance Program, as found in
the Catalog of Federal Domestic Assistance, to which this rule applies
are: Commodity Loans and Purchases--10.051.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable because CCC is not required by 5 U.S.C. 553 or any other
provision of law to publish a notice of proposed rulemaking with
respect to the subject matter of these determinations.
Environmental Evaluation
It has been determined by an environmental evaluation that this
action will not have a significant impact on the quality of human
environment.
Executive Order 12372
This program 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).
Executive Order 12778
This rule has been reviewed pursuant to Executive Order 12778. To
the extent State and local laws are in conflict with these regulatory
provisions, it is the intent of CCC that the terms of the regulations
prevail. The provisions of this rule are not retroactive. Prior to any
judicial action in a court of jurisdiction, administrative review under
7 CFR part 780 must be exhausted.
Paperwork Reduction Act
Public reporting burden for the information collections contained
in this regulation with respect to price support programs is estimated
to average 15 minutes per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. The information collections have previously
been cleared under the current regulations by OMB, and assigned OMB
Nos. 0560-0087 and 0560-0129. The content and format of the information
collections have not changed as a result of this amendment to 7 CFR
part 1427; however, the frequency of reporting has been reduced. ASCS
will submit a burden correction worksheet to OMB for review.
Comments
Since producers are currently making decisions regarding upland and
extra long staple cotton which may be pledged as collateral for CCC
price support loans, it has been determined that it is impractical and
contrary to the public interest for CCC to engage in proposed
rulemaking requirements with respect to the provisions of this rule.
Accordingly, the provisions of this interim rule are effective upon
publication in the Federal Register. Comments are requested, however,
and will be taken into consideration when developing the final rule.
This interim rule will be scheduled for review so that a final document
discussing comments received and any amendments required can be
published in the Federal Register as soon as possible.
Background
The 1949 Act sets forth the statutory authority for CCC price
support programs. CCC price support programs are intended to stabilize
market prices and provide interim financing and assistance to producers
in the orderly marketing of eligible commodities.
This interim rule amends regulations found at 7 CFR part 1427 to
provide rules for administering CCC price support programs for the 1994
and subsequent crop years.
Section 1427.1 (b) is amended to clarify what information is
available in State and county Agricultural Stabilization and
Conservation Service offices.
Section 1427.3 is amended to: (a) correct a typographical error;
and (b) add the definition of ``warehouse receipt''.
This interim rule amends Sec. 1427.4(b) to add references to
receivers, guardians, or trustees which were inadvertently omitted.
This interim rule amends Sec. 1427.5(b)(1)(v)(B)(4) to clarify that
certain extra long staple cotton is ineligible for CCC price support
loans.
This interim rule amends Sec. 1427.5(c)(2)(ii) by removing the
reference to incentive payments and thereby allow purchases of cotton
to make such payments to a producer without affecting the ability of
the producer to obtain a price support loan with respect to such
cotton.
This interim rule amends Sec. 1427.6(b) to clarify who may disburse
loan proceeds to approved cooperative marketing associations.
Section 1427.11 refers to warehouse receipts that may be used as
collateral for CCC price support loans. This section has been revised
to recognize the existence of electronic receipts by removing specific
statements such as ``stamped'' and ``initialed''.
Provisions for taking administrative offsets are provided in part 3
of this title and part 1403 of this chapter. Accordingly, this interim
rule removes and reserves Secs. 1427.14 and 1427.168.
CCC has determined that the liquidated damages can be reduced
without affecting the administration of the cotton price support
programs. Accordingly, this interim rule amends Sec. 1427.18 and
Sec. 1427.175 to: (a) decrease the liquidated damages amounts; and (b)
add provisions that provide that any or all of the liquidated damages
may be waived under certain conditions.
Section 1427.23 is amended by removing paragraph (f) and
redesignating paragraph (g) as paragraph (f). The removed provision was
originally included to allow upland cotton producers who lost
beneficial interest at the time of ginning an opportunity to file for a
LDP on the day such upland cotton was ginned. This required producers
to report ginning to the county office on a weekly basis. Since this
provision was implemented, CCC developed a more workable procedure that
allows producers to request LDP's in advance of ginning with the LDP
rate based on the loan repayment rate announced and in effect on the
day the upland cotton is ginned in accordance with redesignated
Sec. 1427.23(f).
Section 1427.171 is amended to clarify provisions relating to
locations that are approved for the storage of CCC loan collateral by
removing the reference to commercial warehouse houses.
Section 1427.174 is amended to correct a spelling error.
List of Subjects in 7 CFR Part 1427
Cotton, Loan programs--agriculture, Packaging and containers, Price
support programs, Reporting and recordkeeping requirements, Surety
bonds, Warehouses.
Accordingly, 7 CFR part 1427 is amended as follows:
PART 1427--COTTON
1. The authority citation for 7 CFR part 1427 continues to read as
follows:
Authority: 7 U.S.C. 1421, 1423, 1425, 1444, and 1444-2; 15
U.S.C. 714b and 714c.
2. Section 1427.1 is amended by revising paragraph (b)(3) to read
as follows:
Sec. 1427.1 Applicability.
* * * * *
(b) * * *
(3) For ELS cotton, the schedules of discounts for micronaire.
* * * * *
3. Section 1427.3 is amended by:
A. Revising the definition of ``Authorized loan servicing agent
(LSA)'', and
B. Adding the definition of ``warehouse receipt'' in alphabetical
order.
Sec. 1427.3 Definitions.
* * * * *
Authorized loan servicing agent (LSA) means a legal entity that
enters into a written agreement with CCC to act as a loan servicing
agent for CCC in making and servicing Form A cotton loans. The
authorized LSA may perform, on behalf of CCC, only those services which
are specifically prescribed by CCC including, but not limited to, the
following:
(1) Preparing and executing loan and loan deficiency payment
documents;
(2) Disbursing loan and loan deficiency payment proceeds;
(3) Handling the extension of loans as authorized by CCC;
(4) Accepting cotton loan repayments;
(5) Handling documents involved with forfeiture of cotton loan
collateral to CCC; and
(6) Providing loan, loan deficiency payment, and accounting data to
CCC for statistical purposes;
* * * * *
Warehouse receipt means a receipt issued with respect to a bale of
cotton by a warehouse with an existing cotton storage agreement,
approved by CCC, in accordance with Secs. 1427.1081 through 1427.1089,
that is:
(1) A negotiable, machine card type warehouse receipt that is pre-
numbered and pre-punched;
(2) An electronic warehouse receipt record issued by such warehouse
recorded in a central filing system or systems maintained in one or
more locations which are approved by ASCS or CCC to operate such
system; or,
(3) Other such acceptable evidence of title, as determined by CCC.
4. Section 1427.4 is amended by revising paragraph (b) to read as
follows:
Sec. 1427.4 Eligible producer.
* * * * *
(b) A receiver or trustee of an insolvent or bankrupt debtor's
estate, an executor or an administrator of a deceased person's estate,
a guardian of an estate of a ward or an incompetent person, and
trustees of a trust estate shall be considered to represent the
insolvent or bankrupt debtor, the deceased person, the ward or
incompetent, and the beneficiaries of a trust, respectively, and the
production of the receiver, executor, administrator, guardian, or
trustee shall be considered to be the production of the person or
estate represented by the receiver, executor, administrator, guardian,
or trust. Loan and loan deficiency payment documents executed by any
such person will be accepted by CCC only if they are legally valid and
such person has the authority to sign the applicable documents.
* * * * *
5. Section 1427.5 is amended by:
A. Revising paragraph (b)(1)(v)(B)(4) and
B. Revising paragraph (c)(2)(ii) to read as follows
Sec. 1427.5 General eligibility requirements.
* * * * *
(b)(1) * * *
(v) * * *
(B) * * *
(4) Must not have noted on the classing record the presence of
spindle twist, preparation, grass, oil, and/or other extraneous matter;
* * * * *
(c) * * *
(2) * * *
(ii) Enters into a contract to sell the cotton if the producer
retains title, risk of loss, and beneficial interest in the commodity
and the purchaser does not pay to the producer any advance payment
amount to enter into such contract, except as provided in part 1425 of
this chapter.
* * * * *
6. Section 1427.6 is amended by revising paragraph (b) to read as
follows:
Sec. 1427.6 Disbursement of price support loans.
* * * * *
(b) Loan proceeds may be disbursed by CCC or by an approved
servicing agent bank to approved cooperative marketing associations.
* * * * *
7. Section 1427.11 is amended by:
A. Revising paragraph (a)(1),
B. Revising introductory text of paragraph (e),
C. Revising paragraphs (f)(2) and (f)(3),
D. Revising introductory text of paragraph (g) and revising
paragraph (g)(2),
E. Removing paragraph (h), and
F. Redesignating paragraph (i) as paragraph (h) and revising
redesignated paragraph (h) to read as follows:
Sec. 1427.11 Warehouse receipt and insurance.
(a) * * *
(1) Meet the definition of a warehouse receipt,
* * * * *
(e) Warehouse receipts, in accordance with Sec. 1427.3, when issued
as block warehouse receipts will be accepted when authorized by CCC
only under the following conditions:
* * * * *
(f) * * *
(2) The tare shown on the receipt shall be the tare furnished to
the warehouse by the ginner or entered by the ginner on the gin bale
tag. A machine card type warehouse receipt reflecting an alteration in
gross, tare, or net weight will not be accepted by CCC unless it bears,
on the face of the receipt, the following legend or similar wording
approved by CCC, duly executed by the warehouse or an authorized
representative of the warehouse:
Corrected (gross, tare, or net) weight
(Name of warehouse)
By (Signature or initials)
Date
(3) Alterations in other inserted data on a machine card type
warehouse receipt must be initialed by an authorized representative of
the warehouse.
(g) If warehouse storage charges have been paid, the receipt must
show that date through which the storage charges have been paid.
* * * * *
(2) If warehouse receiving charges have been paid or waived, the
receipt must show such fact.
* * * * *
(h) The warehouse receipt must show the compression status of the
bale, i.e., flat, modified flat, standard, gin standard, gin universal,
or warehouse universal density. The receipt must show if the
compression charge has been paid, or if the warehouse claims no lien
for such compression.
Sec. 1427.14 [Removed and Reserved]
8. Section 1427.14 is removed and reserved.
9. Section 1427.18 is amended by:
A. Revising paragraph (e),
B. Revising paragraph (f)(2),
C. Adding paragraph (f)(3),
D. Revising paragraph (g)(2), and
E. Adding paragraph (j) to read as follows:
Sec. 1427.18 Liability of the producer.
* * * * *
(e) The producer and CCC agree that it will be difficult, if not
impossible, to prove the amount of damages to CCC if a producer makes
any fraudulent representation in obtaining a loan or loan deficiency
payment or in maintaining, or settling a loan or disposing of or moving
the loan collateral without the prior written approval of CCC.
Accordingly, if the county committee determines that the producer has
violated the terms or conditions of Form CCC-Cotton A, Form CCC-Cotton
AA, or Form CCC-709, as applicable, liquidated damages shall be
assessed on the quantity of the commodity which is involved in the
violation. If CCC determines the producer:
(1) Acted in good faith when the violation occurred, liquidated
damages will be assessed by multiplying the quantity involved in the
violation by:
(i) 10 percent of the loan rate applicable to the loan note or the
loan deficiency payment rate for the first offense; or
(ii) 25 percent of the loan rate applicable the loan note or the
loan deficiency payment rate for the second offense; or
(2) Did not act in good faith with regard to the violation, or for
cases other than first or second offense, liquidated damages will be
assessed by multiplying the quantity involved in the violation by 25
percent of the loan rate applicable to the loan note or the loan
deficiency payment rate.
(f) * * *
(2) Assess liquidated damages in accordance with paragraph (e) of
this section.
(3) If the producer fails to pay such amounts within 30 calendar
days from the date of notification, the county committee shall call the
applicable loan involved in the violation and require repayment of any
market gain previously realized for the applicable loan, or for loan
deficiency payment, require repayment of the loan deficiency payment
and charges plus interest.
(g) * * *
(2) Call the applicable loan involved in the violation and require
repayment of any market gain previously realized for the applicable
loan, and with respect to a loan deficiency payment, require repayment
of the loan deficiency payment and charges plus interest.
* * * * *
(j) Any or all of the liquidated damages assessed in accordance
with the provisions of paragraph (e) of this section may be waived as
determined by CCC.
10. Section 1427.23 is amended by:
A. Removing paragraph (f)
B. Redesignating paragraph (g) as paragraph (f), and revising
redesignated paragraph (f), and
C. Redesignating paragraph (h) as paragraph (g) and revising
redesignated paragraph (g) to read as follows:
Sec. 1427.23 Cotton loan deficiency payments.
* * * * *
(f) If the producer enters into an agreement with CCC on or before
the date of ginning a quantity of eligible cotton, and the producer has
the beneficial interest in such quantity as specified in accordance
with Sec. 1427.5(c) on the date the cotton was ginned, the loan
deficiency payment rate applicable to such cotton will be the loan
deficiency payment rate based on the date the cotton was ginned. In
such cases, the producer must meet all the other requirements in
paragraph (b) of this section on or before the final date to apply for
a loan deficiency payment in accordance with Sec. 1427.5.
(g) Notwithstanding any other provision of this section, CCC will
not accept applications for loan deficiency payments that specify the
payment rate beginning at 4 p.m. eastern time each Thursday until an
announcement of the adjusted world price for the succeeding weekly
period has been made in accordance with Sec. 1427.25(e). In the event
that Thursday is a nonworkday, such applications for loan deficiency
payments will not be accepted beginning at 7 a.m. eastern time the next
workday until an announcement of the adjusted world price for the
succeeding weekly period has been made in accordance with
Sec. 1427.25(e).
Sec. 1427.168 [Removed and Reserved]
11. Section 1427.168 is removed and reserved.
12. Section 1427.171 is amended by revising the first sentence to
read as follows:
Sec. 1427.171 Approved storage.
Approved storage shall consist of storage located on or off the
producer's farm (excluding public warehouses) which is determined by a
county committee representative to afford adequate protection against
loss or damage and which is located within a reasonable distance, as
determined by CCC, of an approved gin. * * *
13. Section 1427.174 is revised to read as follows:
Sec. 1427.174 Maturity of loans.
Seed cotton loans mature on demand by CCC but no later than May 31
following the calendar year in which such crop is normally harvested.
14. Section 1427.175 is amended by:
A. Revising paragraph (a)(1),
B. Revising paragraph (e),
C. Revising paragraph (f)(2),
D. Adding paragraph (f)(3), and
E. Adding paragraph (i) to read as follows:
Sec. 1427.175 Liability of the producer.
* * * * *
(a)(1) If a producer makes any fraudulent representation in
obtaining a loan, maintaining a loan, or settling a loan or if the
producer disposes of or moves the loan collateral without the prior
approval of CCC, such loan shall be refunded upon demand by CCC.
* * * * *
(e) The producer and CCC agree that it will be difficult, if not
impossible, to prove the amount of damages to CCC for if a producer
makes any fraudulent representation in obtaining a loan or in
maintaining, or settling a loan or disposing of or moving the loan
collateral without the prior approval of CCC. Accordingly, if the
county committee determines that the producer has violated the terms or
conditions of the note and security agreement, liquidated damages shall
be assessed on the quantity of the commodity which is involved in the
violation. If CCC determines the producer:
(1) Acted in good faith when the violation occurred, liquidated
damages will be assessed by multiplying the quantity involved in the
violation by:
(i) 10 percent of the loan rate applicable to the loan note for the
first offense;
(ii) 25 percent of the loan rate applicable to the loan note for
the second offense; or
(2) Did not act in good faith with regard to the violation, or for
cases other than first or second offense, liquidated damages will be
assessed by multiplying the quantity involved in the violation by 25
percent of the loan rate applicable to the loan note.
(f) * * *
(2) Assess liquidated damages in accordance with paragraph (e) of
this section.
(3) If the producer fails to pay such amount within 30 calendar
days from the date of notification, the county committee shall call the
applicable loan involved in the violation.
* * * * *
(i) Any or all of the liquidated damages assessed in accordance
with the provision of paragraph (e) of this section may be waived as
determined by CCC.
Signed in Washington, DC, on July 25, 1994.
Alan King,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 94-18694 Filed 8-1-94; 8:45 am]
BILLING CODE 3410-05-P