[Federal Register Volume 59, Number 168 (Wednesday, August 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21509]


[[Page Unknown]]

[Federal Register: August 31, 1994]


      
  
  
  
  
                                                   VOL. 59, NO. 168

                                         Wednesday, August 31, 1994

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR part 1425

RIN 0560-AD70

 

Cooperative Marketing Associations; Eligibility Requirements for 
Price Support

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Commodity Credit Corporation (CCC) is proposing to amend 
the regulations governing the participation of cooperative marketing 
associations (CMA) in CCC price support programs to ensure: the 
equitable treatment of CMA members and individual producers; the 
Government does not accept undue risk in providing CMA price support 
program benefits; and the efficient delivery of CMA price support 
program benefits. This proposed rule: changes CMA bylaw requirements to 
reflect current CMA organizational and operational procedures; requires 
approved cotton CMA retention of services provided by servicing agent 
banks; requires approved CMA monitoring of payments they receive on 
behalf of their members to ensure that member payments do not exceed 
payment limits; and makes other administrative changes.

DATES: Written comments must be received on or before September 30, 
1994 in order to be assured of consideration.

ADDRESSES: Send comments to Director, Cotton, Grain, and Rice Price 
Support Division, Agricultural Stabilization and Conservation Service 
(ASCS), U.S. Department of Agriculture (USDA), P.O. Box 2415, 
Washington, DC 20013-2415.

FOR FURTHER INFORMATION CONTACT: Richard M. Ackley, Chief, Cooperative 
and Analysis Branch; Cotton, Grain, and Rice Price Support Division, 
ASCS, USDA, P.O. Box 2415, Washington, DC 20013-2415.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be significant for 
purposes of Executive Order 12866 and, therefore, has 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 have no 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, 
into Federal Register at 48 FR 29115 (June 24, 1983).

Executive Order 12778

    This proposed 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. Prior to any judicial action in a court of 
competent jurisdiction, administrative review under 7 CFR part 780 must 
be exhausted.

Paperwork Reduction Act

    The information collection requirements for CMA participation in 
the price support program on behalf of their members have been approved 
for use by the Office of Management and Budget (OMB) through March 31, 
1996, and assigned OMB No. 0560-0040. The amendments to 7 CFR part 1425 
set forth in this proposed rule impose new or revised information 
collection requirements in monitoring the application of statutory 
payment limitation provisions to members of CMA when the CMA 
participates in CCC price support program on behalf of their members. 
ASCS will submit an addendum to OMB to revise the information 
collection supporting statement for OMB No. 0560-0040.
    Public reporting burden for all collections is estimated to average 
from 1 to 2 hours per response, including time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and competing and reviewing the collection 
of information. Send comments regarding this burden estimate or any 
other aspect of this collection, including suggestions for reducing the 
burden, to the Department of Agriculture, Clearance Officer, OIRM, P.O. 
Box 7630, Washington, DC 20250-0001; and to the Office of Management 
and Budget, Paperwork Reduction Project (OMB No. 0560-0040), 
Washington, DC 20503.

Background

    CMA participation in CCC price support programs on behalf of their 
members must be approved by CCC. When approved, a CMA may participate 
in price support programs in much the same way as individual producers. 
The regulations at 7 CFR part 1425 contain the requirements for CMA 
participation. This proposed rule amends those requirements.
    In a previous amendment, canola, flaxseed, mustard seed, rapeseed, 
safflower, and sunflower seed were added to the list of authorized 
commodities for which a CMA may apply for price support. However, these 
additional commodities were inadvertently omitted from Sec. 1425.3(d). 
This proposed rule revises Sec. 1425.3(d) by adding these commodities 
to the list of authorized commodities.
    Regulations are being prepared to authorize price support for shorn 
mohair and shorn wool to individual producers. This proposed rule adds 
these commodities to the list of authorized commodities for an approved 
CMA in Sec. 1425.3(d).
    This proposed rule adds a new Sec. 1425.3(i) to provide that an 
approved CMA may receive loan deficiency payments, when applicable, on 
behalf of its members. This reflects an earlier decision to allow an 
approved CMA to obtain loan deficiency payments on behalf of its 
members in the same way individual producers participate in price 
support.
    This proposed rule defines, by reference, the terms ``person'' and 
``producer'' by amending redesignated Sec. 1425.3(j) and (k) using the 
definitions contained in part 1413 of this title. These are the same 
definitions used for individual producers participating in various 
price support programs.
    This proposed rule revises Sec. 1425.4(a) to indicate that a CMA 
must apply to ``participate in a price support program'' as defined in 
added Sec. 1425.3(i).
    This proposed rule revises Sec. 1425.4(b)(7) to change the 
reference from Sec. 1425.17 to Sec. 1425.18.
    The CMA annual recertification requirement is currently contained 
in the title to Sec. 1425.5(c). This proposed rule places that 
requirement in the text of Sec. 1425.4(c). An approved CMA may alter 
its organizational structure or operations after its initial approval 
in such a way to affect compliance with this regulation. This proposed 
rule adds Sec. 1425.4(e) to require an approved CMA to resubmit 
complete ``initial'' applications every 5 years, or more often, as 
required by CCC. The information submitted will be used to evaluate the 
continued compliance with these regulations by each approved CMA.
    An approved cotton CMA may enter into a Form CCC-Cotton G, Cotton 
Cooperative Loan Agreement, with CCC that allows the CMA to obtain 
cotton price support through servicing agent banks that are agents of 
CCC. This proposed rule adds Sec. 1425.4(f) to require the execution of 
this agreement before a CMA can participate in the cotton price support 
program.
    A CMA requesting approval to participate in the price support 
program on behalf of their members must comply with this regulation. 
However, on occasion, a CMA may not be able to fully comply with the 
all regulations for reasons beyond the control of the CMA, or because 
the CMA articles of incorporation or bylaws may require amending. This 
proposed rule revises Sec. 1425.6(b)(2) to authorize CCC to grant 
conditional approval for a CMA that substantially meet all requirements 
of this regulation to participate in a price support program:
    (1) When failure to comply with the regulations is determined to be 
beyond the control and not due to the negligence of a CMA, or
    (2) When the articles of incorporation or bylaws of a CMA do not 
comply with the regulations and the board of directors provide 
resolutions agreeing to recommend the necessary revision of the 
articles of incorporation or bylaws to the membership at the next 
membership meeting.
    An approved CMA may have members that are also a CMA. CMA members 
must also abide with the provisions of this regulation. This proposed 
rule revises Sec. 1425.7(a) to provide that CCC approval of a CMA to 
participate in a price support program may be withdrawn if any member 
CMA does not operate in accordance with representations made in the 
application for approval.
    The regulation provides that an approved CMA must be owned and 
controlled by its active members to help ensure that the CMA is 
operated for the benefit of its active members. Determinations of 
active member ownership are based on a requirement that active members 
must own more than 50 percent of an approved CMA allocated equity. 
However, the amount of equity allocated to active members must not 
include equity a member obtains as a result of a loan that is not 
repaid within a reasonable time. Because the term ``reasonable time'' 
may be subject to varying interpretations, this proposed rule revises 
Sec. 1425.8(b)(2) to require that any such loans not repaid in one year 
shall be excluded from the amount of equity owned by active members of 
the CMA.
    This proposed rule revises Sec. 1425.8(e) to correct a 
typographical error.
    On occasion, a CMA requests for approval to participate in the 
price support program on behalf of members and the CMA has amended its 
articles of incorporation or bylaws to contain the verbatim article of 
incorporation and bylaw provisions contained in this regulation. This 
proposed rule amends Sec. 1425.9 to provide that approved CMA need not 
amend their articles of incorporation and bylaws to contain the same 
wording as the regulation. The articles of incorporation and bylaws 
must only contain provisions that comply with the regulation.
    The regulation provides that an approved CMA may only allow elected 
directors to make nominations to fill officer positions. This is unduly 
restrictive and more CMA's are now allowing members to make nominations 
to fill officer positions. In addition, member nominations allow 
individual members a more direct role in selecting officers. This 
proposed rule revises Sec. 1425.9(d) to allow members to make 
nominations to fill officer positions when the articles of 
incorporation or bylaws of a CMA authorize the action.
    The regulation, with one exception, prohibits voting by proxy or 
under a power of attorney in the affairs of an approved CMA. Because 
the limited prohibition of voting by proxy is also sufficient to 
prohibit voting under a power of attorney, the specific prohibition of 
voting under a power of attorney is redundant. Accordingly, this 
proposed rule revises Sec. 1425.9(g) to remove the specific prohibition 
against voting under a power of attorney.
    The regulation provides that a CMA requesting approval to 
participate in the price support program must have net worth that 
exceeds a minimum amount based on the amounts of authorized commodities 
handled by the CMA. The minimum calculated equity amount may exceed the 
amount necessary because most approved CMA's handle authorized 
commodities that are not included in their approval requests. For 
example, a CMA may request approval to participate only in the price 
support program for wheat and also handle corn and sorghum. The minimum 
net worth would be based on the volume of wheat, corn, and sorghum 
handled and not based solely on the volume of wheat.
    This proposed rule revises Sec. 1425.10(b)(3)(i) to provide that 
the minimum net worth requirement is based only on the authorized 
commodities for which CMA is requesting approval.
    This proposed rule also revises Sec. 1425.10(b)(3)(ii) to provide 
the unit rates used to determine the minimum equity of a CMA requesting 
approval to participate in the price support programs for shorn mohair 
or shorn wool. This proposed rule revises Sec. 1425.11(c)(3) to change 
the reference from Sec. 1425.17 to Sec. 1425.18 The regulation provides 
that at least 80 percent of a crop of a commodity that an approved CMA 
acquires for marketing must be produced by its members. However, CCC 
may, for a period not to exceed two years, waive such requirement for a 
CMA, if the CMA satisfy specific criteria. One of the criteria is that 
a CMA must have a plan, approved by CCC, which will ensure that the CMA 
is in compliance with this provision. This proposed rule revises 
Sec. 1425.14(c) to provide that the plan must be in the CMA members' 
best interests. This will prevent the CMA from taking action that would 
be detrimental to their membership to satisfy this requirement.
    The amount of payments producers may receive from participation in 
the price support program is limited. This limitation also applies to 
payments (marketing gains and loan deficiency payments) that an 
approved CMA may receive on behalf of their member producers. Because 
members of an approved CMA may obtain payments as individuals through a 
county ASCS office and as members of an approved CMA, the CMA is 
responsible for ensuring that maximum statutory payment limitations are 
not exceeded by its members. This proposed rule adds a new Sec. 1425.16 
to provide that an approved CMA must monitor the payments they receive 
on behalf of members to ensure that the sum of such payments does not 
exceed the assigned amount.
    Individual producers must maintain beneficial interest in a 
commodity for the commodity to remain eligible for price support. If 
beneficial interest is lost, the commodity is immediately ineligible 
for price support. This proposed rule amends the redesignated 
Sec. 1425.17(a)(2) to provide that an approved CMA and their members 
must maintain continued and uninterrupted beneficial interest in all 
commodities included in an eligible pool. This action will allow 
individual producers and CMA members to more equally participate in the 
price support program.
    An approved CMA may on occasion inadvertently include ineligible 
commodity in their otherwise eligible pools. This may be the result of 
receiving incorrect information, clerical errors, or other infrequent, 
inadvertent actions. When this happens, it is inappropriate to 
determine that the whole pool is ineligible for price support. This 
proposed rule revises redesignated Sec. 1425.17(b)(2) to provide that 
when CCC determines a quantity of ineligible commodity has been 
inadvertently included in an eligible pool, it does not make the 
remaining quantity of commodity in the pool ineligible for price 
support.
    This proposed rule revises redesignated Sec. 1425.17(b)(1)(ii)(B) 
to change the reference from Sec. 1425.17 to Sec. 1425.18.
    This proposed rule revises redesignated Sec. 1425.17(b)(1)(iii) to 
indicate that the time limit is 15 workdays and change the reference 
from Sec. 1425.17(a) to Sec. 1425.18(a).
    Individual producers are allowed, with respect to some commodities, 
to participate in the price support program with the eligible commodity 
stored on the farm. To ensure that individual producers and CMA members 
may participate in the price support program on an equal basis, this 
proposed rule revises redesignated Sec. 1425.17(c)(2) to allow members 
to deliver farm-stored commodity, except when prohibited for individual 
producers not participating in a price support program as CMA members, 
to an eligible pool. This will allow the efficient use of member farm 
storage until the commodity is marketed or moved to other storage 
facilities. Any unauthorized removal of farm-stored loan collateral 
would be a violation of the regulations and subject the CMA to the same 
sanctions applied to individual producers for unauthorized removal of 
loan collateral.
    Individual producers may only pledge otherwise eligible commodity 
as collateral for a CCC loan that is free and clear of all liens and 
encumbrances, or the producer must obtain a lien waiver where any lien 
or encumbrance exists. While minimum financial requirements that an 
approved CMA must maintain are sufficient to protect CCC's interest 
from outstanding liens or encumbrances based on a CMA's member's 
actions, the risk from liens and encumbrances resulting from the CMA 
actions could be more severe. Therefore, this proposed rule adds 
paragraph (c)(5) to redesignated Sec. 1425.17 to provide that a 
commodity offered as collateral for a CCC loan shall be free and clear 
of all liens and encumbrances based on the actions of the CMA or the 
CMA shall obtain lien waivers for such liens. In addition, the CMA 
shall not take any action that would create a lien or encumbrance on 
the commodity while it is pledged as collateral for a CCC loan.
    The regulation provides that net loan proceeds, less authorized 
charges, from loans not repaid within 15 days must be distributed to 
eligible pool members within 15 days. This is to ensure that members 
promptly benefit from loans not redeemed within the time period. 
However, this provision has not been extended to loan deficiency 
payments. As a result, an approved CMA is under no obligation to 
distribute loan deficiency payments to members in a timely manner. This 
proposed rule revises redesignated Sec. 1425.18(a) to require that 
proceeds from loan deficiency payments must be distributed within 15 
days. In addition, the proposed rule clarifies that 15 days means 15 
work days.
    As a result of a producer's failure to fully comply with price 
support regulations, disbursements to individual producers are not made 
until such obligations are satisfied. This proposed rule extends this 
procedure to CMA members by adding paragraph (b)(5) to redesignated 
Sec. 1425.18 to require an approved CMA, when notified by CCC, to 
refrain from making pool disbursements, based on the commodity 
delivered to an eligible pool, to a member and to reimburse such funds 
to CCC, as directed.
    The regulation prohibits an approved CMA from discriminating 
against or otherwise denying any producer's participation with respect 
to any benefits resulting from its approval to obtain price support as 
provided in applicable nondiscrimination statutes. The current 
regulation does not specifically identify marital status, physical 
disability, and mental disability as grounds for discrimination. This 
proposed rule revises redesignated Sec. 1425.20 to prohibit 
discrimination of an approved CMA member based on marital status, 
physical disability, or mental disability.
    Producers who participate in CCC price support program through an 
approved CMA also may participate in the price support programs through 
county ASCS offices. As a result, CCC must obtain member information 
from an approved CMA that can be combined with information in county 
ASCS offices to monitor a member's overall activity. Accordingly, this 
proposed rule adds a new Sec. 1425.23 to provide that an approved CMA 
shall:
    1. Annually provide a report of the amount of commodity received 
from members by farm numbers, and
    2. At least annually, report by crop year and commodity the sum of 
marketing loan gains and loan deficiency payments received on behalf of 
each producer member. This information will help CCC monitor the amount 
of the commodity delivered from a farm to an approved CMA in order to, 
among other things, evaluate individual producer requests for commodity 
disaster payments and to monitor producer payments.

List of Subjects in 7 CFR Part 1425

    Cooperatives, Price support programs, Reporting and recordkeeping 
requirements.

    Accordingly, it is proposed that 7 CFR part 1425 be amended as 
follows:

PART 1425--COOPERATIVE MARKETING ASSOCIATIONS

    1. The authority citations for 7 CFR part 1425 is revised to read 
as follows:

    Authority: 7 U.S.C. 1421(a), 1441, 1444(a), 1446(d), and 1447; 
15 U.S.C. 714b, 714c, and 714j.

    2. Section 1425.3 is amended by:
    A. Revising paragraph (d),
    B. Redesignating paragraphs (i) and (j) as paragraphs (j) and (k) 
respectively,
    C. Adding a new paragraph (i), and
    D. Revising newly redesignated paragraphs (j) and (k) to read as 
follows:


Sec. 1425.3   Definitions.

* * * * *
    (d) Authorized commodity means those commodities for which an 
approved cooperative may apply for price support, including barley, 
canola, corn, cotton, flaxseed, honey, shorn mohair, mustard seed, 
oats, rapeseed, rice, rye, safflower, seed cotton, shorn wool, sorghum, 
soybeans, sunflower seed, and wheat.
* * * * *
    (i) Participate in a Price Support Program means the pledging, on 
behalf of members, of an eligible commodity as collateral for CCC price 
support loans, entering into purchase agreements, and, when applicable, 
obtaining loan deficiency payments.
    (j) Person means an individual, joint stock company, corporation, 
estate or trust, association, or other legal entity, except that two or 
more entities shall be combined as one person in accordance with:
    (1) The regulations found at part 1497 of the chapter for the 
purpose of administering maximum payment limitation provisions of the 
Food Security Act of 1985;
    (2) The regulations found at part 796 of this title for the purpose 
of administering the provisions of the Food Security Act of 1985 with 
respect to the production of controlled substances; and
    (3) The regulations found at part 12 of this title pertaining to 
the highly erodible land and wetland provisions (commonly know as 
``sodbuster and swampbuster'' provisions) of the Food Security Act of 
1985.
    (k) Producer means a person who, as owner, landlord, tenant, or 
sharecropper, shares in the risk of producing the crop, and is entitled 
to share in the crops available for marketing from the farm, or would 
have shared had the crops been produced.
    3. In Sec. 1425.4, paragraphs (a), (b)(7), and the introductory 
text of paragraph (c) are revised and paragraphs (e) and (f) are added 
to read as follows:


Sec. 1425.4   Approval.

    (a) Application. In order for a cooperative to participate in a 
price support program with respect to the 1994 and subsequent crops of 
authorized commodities, a cooperative must submit an application for 
approval with respect to such authorized commodities to CCC.
    (b) * * *
    (7) A detailed description of the method by which proceeds from a 
pool of eligible commodities for which price support is obtained will 
be distributed as provided for in Sec. 1425.18.
* * * * *
    (c) Annual recertification. An approved cooperative must submit, on 
an annual basis, the following information to CCC:
* * * * *
    (e) Reapplication. Approved cooperatives must submit revised 
applications as required by this section instead of an annual 
recertification every 5 years, or more often if CCC determines that 
such application is necessary to determine if a cooperative has 
implemented an organizational or operational change that would affect 
compliance with the provisions of this part.
    (f) Form CCC-Cotton G. Cooperative marketing associations applying 
for approval to participate in the price support program for cotton 
shall execute Form CCC-Cotton G, Cotton Cooperative Loan Agreement, 
with CCC.
    4. Section 1425.6 (b)(2) is revised to read as follows:


Sec. 1425.6   Approved cooperatives.

* * * * *
    (b) * * *
    (2) Conditionally approved. (i) A cooperative may be conditionally 
approved if CCC determines that it has substantially met all the 
requirements of this part, and the failure to meet the remaining 
requirements is due to reasons beyond the control of the cooperative 
and not due to the cooperative's negligence; and
    (ii) Such cooperative must agree in writing to meet all 
requirements for approval set forth in this part within the time period 
specified by CCC. When a cooperative can only comply with the 
regulations by amending its articles of incorporation or bylaws at a 
membership meeting, CCC may accept a board of directors resolution 
agreeing to recommend to the members at the next meeting of the members 
the required changes to the articles of incorporation or bylaws as 
compliance with the requirements for approval for purposes of this 
section. Board resolutions in which the cooperative agrees to comply 
with other provisions of this part may be accepted by CCC as compliance 
with the requirements for approval for purposes of this section.
* * * * *
    5. Section 1425.7 (a) is revised to read as follows:


Sec. 1425.7   Suspension and termination of approval.

    (a) Suspension. An approved cooperative may be suspended by CCC 
from further participation in a price support program if CCC determines 
that the cooperative or a member cooperative, as specified in 
Sec. 1425.19:
    (1) Has not operated in accordance with the conditions specified in 
such cooperative's application for approval;
    (2) Has not complied with applicable regulations; or
    (3) Has failed to correct deficiencies noted during an 
administrative review or an audit of the cooperative's operations with 
respect to a price support program. Such suspension may be lifted upon 
the receipt of documents indicating that the cooperative has complied 
with all requirements for approval. If such documents are not received 
within one year from the date of the suspension, the cooperative's 
approval for participation in a price support program shall be 
terminated.
* * * * *
    6. In Sec. 1425.8, paragraphs (b)(2) and (e) are revised to read as 
follows:


Sec. 1425.8   Ownership and control.

* * * * *
    (b) * * *
    (2) The allocated equity of any active member that has acquired 
equity as a result of a loan from the cooperative unless such member is 
obligated to repay the loan within one year.
* * * * *
    (e) Approved plan. An applicant or an approved cooperative not 
under the ownership or control, or both, of its active members, may be 
approved by CCC to participate in a price support program if the 
cooperative is able to establish that, by retiring the equity of its 
inactive members or by obtaining new members, the cooperative can vest 
ownership and control in its active members, as required by this 
section, by a date specified by CCC.
    7. Section 1425.9 is amended by revising the introductory text and 
paragraphs (d) and (g) to read as follows:


Sec. 1425.9   Charter and bylaw provisions.

    The articles of incorporation, articles of association, or the 
bylaws of the cooperative shall comply with each of the following 
requirements:
* * * * *
    (d) Nominations. (1) Nominations for election of delegates and 
directors shall be made by members.
    (2) Nominations for officers shall be made by elected directors or 
by members when nomination by members is authorized in the 
cooperative's articles of incorporation or bylaws.
    (3) Nominations may be made by balloting, nominating committee, 
petition of members, or from the floor, provided that nominations from 
the floor shall be requested in addition to nominations made by a 
nominating committee or by petition.
* * * * *
    (g) Proxy. (1) Except as provided in paragraph (g)(2) of this 
section, voting by proxy shall be prohibited.
    (2) Voting by proxy may be permitted if a cooperative:
    (i) Determines that it is necessary to amend the cooperative's 
articles of incorporation, articles of association, or bylaws, and
    (ii) Establishes to the satisfaction of CCC that the law of the 
State in which the cooperative is incorporated permits voting by proxy, 
but does not permit members to vote by mail, with respect to such 
issue.
* * * * *
    8. In Sec. 1425.10, paragraph (b)(3) is revised to read as follows:


Sec. 1425.10   Financial condition.

* * * * *
    (b) * * *
    (3)(i) The net worth of the cooperative. The cooperative shall be 
considered to have a sufficient net worth if such net worth is equal to 
the product of an amount per unit for a commodity (as set forth in 
table 1) multiplied by the total number of such units of commodity for 
which the cooperative is approved, or requesting approval, to 
participate in price support and handled by the cooperative during the 
preceding marketing year, or, if the cooperative is in its first full 
marketing year of operations, the estimated quantity of such commodity 
that it will handle during such year.
    (ii) (A) If the amount of the net worth of the cooperative is 
between 34 and 99 percent of the amount computed in accordance with 
paragraph (b)(3)(i) of this section and the cooperative is determined 
by CCC to be otherwise financially sound, CCC may determine that such 
cooperative meets the requirements of this section. Such a 
determination by CCC may be made if:
    (1) The board of directors of the cooperative agrees to make a 
capital retain in the amount set forth in table 2 with respect to each 
unit of the commodity delivered to the cooperative until the net worth 
of the cooperative is at least equal to the amount computed in 
accordance with paragraph (b)(3)(i) of this section, and
    (2) The cooperative agrees to deduct from pool proceeds the full 
amount of the estimated expenses of handling the commodities received 
by the cooperative.
    (B) The failure to carry out such agreements shall be grounds for 
suspending a cooperative's approval.

                                Table 1                                 
------------------------------------------------------------------------
                                                              Amount per
          Commodity                        Unit                  unit   
------------------------------------------------------------------------
Barley.......................  Bushel.......................       0.13 
Canola.......................  Hundredweight................       0.62 
Corn.........................  Bushel.......................       0.13 
Cotton.......................  Bale.........................       6.40 
Flaxseed.....................  Hundredweight................       0.62 
Honey........................  Hundredweight................       1.90 
Mustard Seed.................  Hundredweight................       0.62 
Oats.........................  Bushel.......................       0.13 
Rapeseed.....................  Hundredweight................       0.62 
Rice.........................  Hundredweight................       0.52 
Rye..........................  Bushel.......................       0.13 
Safflower....................  Hundredweight................       0.62 
Seed Cotton (lint basis).....  Pound........................       0.008
Shorn Mohair.................  Pound........................       0.16 
Shorn Wool...................  Pound........................       0.38 
Sorghum......................  Hundredweight................       0.19 
Soybeans.....................  Bushel.......................       0.43 
Sunflower Seed...............  Hundredweight................       0.62 
Wheat........................  Bushel.......................       0.15 
------------------------------------------------------------------------


                                 Table 2                                
------------------------------------------------------------------------
                                                              Amount per
          Commodity                        Unit                  unit   
------------------------------------------------------------------------
Barley.......................  Bushel.......................       0.07 
Canola.......................  Hundredweight................       0.32 
Corn.........................  Bushel.......................       0.07 
Cotton.......................  Bale.........................       3.20 
Flaxseed.....................  Hundredweight................       0.32 
Honey........................  Hundredweight................       0.95 
Mustard Seed.................  Hundredweight................       0.32 
Oats.........................  Bushel.......................       0.07 
Rapeseed.....................  Hundredweight................       0.32 
Rice.........................  Hundredweight................       0.26 
Rye..........................  Bushel.......................       0.07 
Safflower....................  Hundredweight................       0.32 
Seed Cotton (lint basis).....  Pound........................       0.004
Shorn Mohair.................  Pound........................       0.08 
Shorn Wool...................  Pound........................       0.19 
Sorghum......................  Hundredweight................       0.10 
Soybeans.....................  Bushel.......................       0.22 
Sunflower Seed...............  Hundredweight................       0.32 
Wheat........................  Bushel.......................       0.08 
------------------------------------------------------------------------

* * * * *
    9. In Sec. 1425.11, paragraph (c)(3) is revised to read as follows:


Sec. 1425.11   Operations.

* * * * *
    (c) * * *
    (3) Require that all proceeds from the marketing operation be 
distributed as provided in Sec. 1425.18.
    10. In Sec. 1425.14, paragraph (c) is revised to read as follows:


Sec. 1425.14  Member business.

* * * * *
    (c) The cooperative has a plan, approved by CCC, which CCC 
determines to be in the cooperative members' best interest and will 
bring the cooperative into compliance with the provisions of this 
section. Commodities purchased or acquired from CCC and processed 
products acquired from other processors or merchandisers shall not be 
considered in determining the volume of member or nonmember business.
    11. Sections 1425.16 through 1425.21 and Secs. 1425.22 and 1425.23 
are redesignated as Secs. 1425.17 through 1425.22 and Secs. 1425.24 and 
1425.25, respectively, and a new Sec. 1425.16 is added to read as 
follows:


Sec. 1425.16  Payment limitation.

    Approved cooperatives shall monitor marketing loan gains, loan 
deficiency payments, and other payments they receive from CCC on behalf 
of their members and ensure that the sum of the amounts received for 
each member does not exceed the member's payment limitation determined 
in accordance with part 1497 of this title that, for purposes of 
administrating such part, is assigned by CCC to the cooperative.
    12. Newly redesignated Sec. 1425.17 is amended by revising 
paragraphs (a)(2), (b)(1)(i), (b)(1)(ii), (b)(1)(iii), (c)(2), and 
adding paragraph (c)(5) to read as follows:


Sec. 1425.17  Eligible commodity and pooling.

    (a) * * *


 (2) PRICE SUPPORT WILL BE MADE AVAILABLE TO APPROVED COOPERATIVES 
WITH RESPECT TO A QUANTITY OF AN ELIGIBLE COMMODITY INCLUDED IN AN 
ELIGIBLE POOL AS PROVIDED IN PARAGRAPH (C) OF THIS SECTION AND THE 
BENEFICIAL INTEREST PROVISIONS OF PARTS 1421, 1427, 1435, AND 1468 
                                                   OF THIS CHAPTER.

    (b) * * *
    (1) * * *
    (i) All of the commodity included in the pool is eligible for price 
support, except as provided in paragraph (b)(2) of this section;
    (ii) The eligible commodity in such pool was:
    (A) Delivered to the cooperative for marketing for the benefit of 
the members of the cooperative, and
    (B) Delivered by members who retain the right to share in the 
proceeds from the marketing of the commodity in accordance with 
Sec. 1425.18.
    (iii) Except with respect to a quantity of a commodity pledged as 
collateral for a price support loan and which is redeemed within 15 
work days from the date the cooperative receives the proceeds from CCC, 
all of the commodity placed in such pool was delivered by members who 
have agreed to accept a payment of the initial advances made available 
to such producers by the cooperative with respect to such commodity in 
accordance with Sec. 1425.18(a).
    (2) If CCC determines that a cooperative has inadvertently included 
in a pool a quantity of commodity which is ineligible for price support 
because of grade, quality, bale weight or repacking in the case of 
cotton, or other factors, the remaining quantity of commodity shall 
remain eligible for price support.
* * * * *
    (c) * * *
    (2) Price support will be available to the cooperative for the 
quantity of a farm-stored commodity that is, pursuant to such 
cooperative's marketing agreement with a member, part of the 
cooperative's pool.
* * * * *
    (5) Commodities pledged as collateral for CCC price support loans 
shall be free and clear of all liens and encumbrances based on an 
approved cooperative's financial agreements or the cooperative shall 
obtain a completed Form CCC-679, Lien Waiver. Approved cooperatives 
shall not take any action to cause a lien or encumbrance to be placed 
on a commodity after a loan is approved.
* * * * *
    13. Newly redesignated Sec. 1425.18 is amended by revising 
paragraphs (a) and (a)(1) and adding paragraph (b)(5) to read as 
follows:


Sec. 1425.18  Distribution of proceeds.

    (a) CCC loans, purchases, and loan deficiency payments. (1) If CCC 
makes available price support loans, purchases, or loan deficiency 
payments with respect to any quantity of the eligible commodity in a 
pool, the proceeds from such loans, purchases, or loan deficiency 
payments shall be distributed to members participating in such pool on 
the basis of the quantity and quality of the commodity delivered by 
each member which is included in the pool less any authorized charges 
for services performed or paid by the cooperative which are necessary 
to condition the commodity or otherwise make the commodity eligible for 
price support. Except with respect to commodities which are pledged as 
collateral for a price support loan and which are redeemed within 15 
work days from the date the cooperative receives the loan proceeds from 
CCC, such proceeds shall be distributed within 15 work days from such 
date. Loan deficiency payments received from CCC shall be distributed 
within 15 work days of receipt from CCC.
* * * * *
    (b) * * *
    (5) When notified by CCC that pool distributions to a member of any 
eligible pool must be reduced for a program year, farm, or crop, 
cooperatives shall refrain from making such pool distributions and 
shall, if appropriate, reimburse CCC for such distributions.
* * * * *
    14. Newly redesignated Sec. 1425.20 is revised to read as follows:


Sec. 1425.20  Nondiscrimination.

    The cooperative shall not, on the basis of race, color, age, sex, 
religion, marital status, national origin, physical disability, or 
mental disability, deny any producer participation in, or otherwise 
subject any producer to discrimination with respect to any benefits 
resulting from its approval to obtain price support and shall comply 
with the provisions of Title VI of the Civil Rights Act of 1964 and the 
Secretary's regulations issued thereunder, appearing in Secs. 15.1-
15.12 of this title (29 FR 16274 and 29 FR 16966), and any amendments 
thereto; section 504 of the Rehabilitation Act of 1973, as amended by 
the Rehabilitation Comprehensive Services and Developmental 
Disabilities Amendments of 1978; and provisions of the Age 
Discrimination Act of 1975, as amended. The cooperative shall not 
discriminate against employees under Title VII of the Civil Rights Act 
of 1964, as amended, or the Equal Pay Act of 1963 or Title VI of the 
Civil Rights Act of 1964 as administered by the Equal Employment 
Opportunity Commission, and shall handle employee discrimination 
complaints as provided for in 28 CFR part 42 and 29 CFR part 1691. The 
United States shall have the right to enforce compliance with such 
statutes and regulations by suit or by any other action authorized by 
law. The cooperative shall submit a certification with its application 
that the above cited regulations and rules have been read and 
understood and that the cooperative will abide by them.
    15. A new Sec. 1425.23 is added to read as follows:


Sec. 1425.23   Reports.

    (a) Approved cooperatives shall annually provide CCC with a PSL-86R 
report to applicable county ASCS offices. The report shall include all 
eligible and ineligible commodity receipts by ASCS farm number for each 
member.
    (b) Approved cooperatives shall at least annually, report by 
commodity and by crop the marketing loan gains, loan deficiency 
payments, and any other payments received on behalf of each producer 
member.

    Signed at Washington, DC, on August 23, 1994.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 94-21509 Filed 8-30-94; 8:45 am]
BILLING CODE 3410-05-P