[Federal Register Volume 60, Number 76 (Thursday, April 20, 1995)]
[Rules and Regulations]
[Pages 19665-19668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9454]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 76 / Thursday, April 20, 1995 / Rules 
and Regulations  
[[Page 19665]]

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AD943


Tobacco; Importer Assessments

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Interim rule with request for comments:

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SUMMARY: This rule provides, with respect to tobacco, authority to 
implement changes for the budget deficit marketing assessment (BDMA), 
sometimes referred to as a ``nonrefundable marketing assessment,'' 
which is provided for in 7 CFR 1464.11 and 7 CFR 1464.102. The rule is 
needed because of the enactment of Section 422 of the Uruguay Round 
Agreements Act (P.L. No. 103-465). That section provides for 
modifications to the BDMA in the event that the President should issue 
a proclamation establishing a tariff-rate quota (TRQ) pursuant to 
Article 28 of the General Agreement on Tariffs and Trade (GATT). As 
yet, no such quota has been issued. However, this rule will allow for 
rapid implementation of the Section 422 modifications if a TRQ is 
issued. The modifications provided for in Section 422 are, with respect 
to imported tobacco, a restriction of the BDMA to certain tobaccos and 
a change in the BDMA rate. For covered domestic tobaccos, Section 422 
would extend the term of coverage through the 1998 crops; otherwise, 
Section 422 would not change the application of the BDMA to domestic 
tobacco.

DATES: Effective Date: April 20, 1995.
    Comment Date: Comments must be received on or before May 22, 1995, 
in order to be assured of consideration.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Tobacco and Peanuts Division, Consolidated Farm Service 
Agency (CFSA), United States Department of Agriculture (USDA), P.O. Box 
2415, Washington, D.C. 20013-2415, telephone 202-720-7413. All written 
comments will be available for public inspection in room 5750, South 
Building, U.S. Department of Agriculture, 14th St. and Independence 
Avenue SW., Washington, DC, between 8 a.m. and 5 p.m., Monday through 
Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Gary Wheeler, Tobacco Marketing 
Specialist, Tobacco and Peanuts Division, CFSA, at the address listed 
above, telephone 202-720-7562.

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.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule since the Commodity Credit Corporation (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 
this rule.

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.

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will have no significant impact on quality of the human 
environment. Therefore, neither an environmental assessment nor an 
environmental impact statement is needed.

Executive Order 12372

    This program/activity 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 2915 (June 24, 1983).

Executive Order 12778

    This interim rule has been reviewed in accordance with Executive 
Order 12778. The provisions of this interim rule are not retroactive 
and preempt state laws to the extent that such laws are inconsistent 
with the provisions of this interim rule. Before any legal action is 
brought regarding determinations made under provisions of 7 CFR part 
1464, the administrative appeal provisions set forth at 7 CFR part 780 
must be exhausted.

Paperwork Reduction Act

    The information collection requirements contained in these 
regulations (7 CFR part 1464) have been previously approved by the 
Office of Management and Budget (OMB) and assigned OMB No. 0560-0148.

Background

A. Pre-1993 Coverage of Domestic Tobacco

    The BDMAs for tobacco are also known as ``nonrefundable marketing 
assessment'' and are provided for in 7 CFR part 1464 and in particular 
in 7 CFR 1464.11 and 7 CFR 1464.102.
    The BDMAs, for tobacco, are provided for in current law in Sections 
106(g) and 106(h) of the Agricultural Act of 1949, as amended (1949 
Act). Before 1993, only domestic tobacco was covered and only those 
domestic tobaccos for which price support was in effect by reason of 
the approval by producers of production controls.
    The per pound BDMA rate that applies to domestic tobacco is the 
amount which equals 1% of the per pound national price support level 
for each kind of tobacco. For domestic tobacco, half of the BDMA is 
paid by the producer; the other half is paid by the first purchaser of 
the tobacco. The first purchaser either purchases the tobacco from the 
producer or obtains the tobacco by a purchase from the price support 
loan inventory.
    Tobacco crops are divided into crop years based on the year of 
production. There is likewise assigned a marketing year for each crop. 
The marketing year for all but flue-cured tobacco runs from October 1 
of the calendar year in which the crop is produced through September 30 
of the following year. For flue-cured tobacco, the crop year runs for 
the 12-month period that begins on July 1 of the year of production. 
[[Page 19666]] 

B. 1993 Extension of BDMAs to Imported Tobacco

    In 1993, Congress enacted the Omnibus Budget Reconciliation Act of 
1993, Pub. L. 103-66 (1993 Act). The 1993 Act extended the BDMA to all 
imported tobacco. Implementing rules were published in 7 CFR part 1464. 
Pursuant to the statute, the rules set the per pound BDMA rate on 
imported tobacco at a uniform amount equal to the average per pound 
total (producer and purchaser) BDMA for domestic burley and flue-cured 
tobacco applicable at the time of the entry of the imported tobacco 
into the commerce of the United States. The 1993 Act also extended ``no 
net cost assessments'' (NNCAs) to imported tobacco. However, the 
imported tobacco NNCAs apply only to imported flue-cured and imported 
burley tobacco.

C. Remittances of BDMAs

    By law, BDMA payments are remitted to the CCC of USDA.

D. Coverage of Crop Years

    But for new statutory law, described below, the term of the 
domestic BDMA ends with the 1995 crops. That for the imported tobacco 
ends with the 1998 crops.

E. Provisions of the Uruguay Round Agreements Act (URAA)

    The 1993 Act measures described above and the other 1993 measures 
led to a challenge under GATT by countries that export tobacco to the 
United States. This led to on-going negotiations to establish a TRQ 
under Article 28 of GATT.
    Countries have operated for many years under longstanding GATT 
provisions sometimes referred to as ``GATT 1947.'' However, recent 
negotiations among many nations on new, broad-based ``Uruguay Round 
Agreements'' were completed. The GATT, as so modified, is sometimes 
referred to as ``GATT 1994.'' This development led in turn to enactment 
by Congress of the ``Uruguay Round Agreements Act'' (URAA).
    URAA Sections 421-423 contain tobacco provisions. Section 422 
contains provisions dealing with the BDMA. However, those provisions 
are not effective unless and until a tobacco TRQ should be proclaimed 
by the President.
    Specifically, Section 422 would revise Section 106 of the 1949 Act 
to provide that effective for each of the 1994 through 1998 crops of 
tobacco for which price support is made available under the 1949 Act, 
each producer and purchaser of such tobacco, and each importer of the 
same kind of tobacco shall remit to the CCC a non-refundable marketing 
assessment (BDMA). Section 106(g), as it would be revised by Section 
422, provides further that the non-refundable marketing assessment 
(that is, the BDMA) would be an amount equal to:
    (1) in the case of a producer or purchaser of domestic tobacco, .5% 
of the national price support level for each such crop; and
    (2) in the case of an importer of tobacco, 1 percent of the 
national price support level for the same kind of tobacco.
    Accordingly, Section 422, if and when it becomes effective, would 
limit the imported BDMA to imports with the same or similar 
characteristics as a price-supported (and BDMA-subject) domestic kind. 
Also, the rate for imported tobacco would change to that equal to the 
full amount of the BDMA for the corresponding domestic kind rather than 
be equal to a burley and flue-cured average.
    Further, Section 422(c) allows the President to waive the 
application to imported tobacco of the BDMA or the NNCA if the 
President determines that the waiver is necessary or appropriate 
pursuant to an international agreement entered into by the United 
States.
    As indicated, however, the provisions of Section 422 are not yet 
effective. That lack of current effectiveness is set out in Section 
422(e). That section provides that Section 422 and the amendments made 
by it will be effective only beginning on the effective date of the 
Presidential proclamation establishing a TRQ pursuant to Article 28 of 
the GATT 1947 or the GATT 1994 with respect to tobacco. There is no 
such TRQ at this time.

F. Need for a Currently Effective Rule

    It has been determined that an interim rule should be issued at 
this time so that there may be an immediate effectiveness under 7 CFR 
part 1464 of the BDMA modifications upon the proclamation by the 
President of a triggering TRQ.

G. Current Coverage of the Domestic BDMA

    As indicated, Section 422 would tie the imported tobacco BDMA to 
domestic kinds that pay a BDMA. Those domestic kinds are those that are 
subject to price support. They are listed below. In the parentheses 
following each kind are three figures separated by slashes. The first 
figure is the current per pound national price support level. The 
second is the amount which would constitute 1% of the support level and 
thus the full per pound imported BDMA rate for the same kind or that 
having similar characteristics of a domestic quota kind. The third 
figure is the second figure expressed as an amount per kilogram. The 
list of price supported domestic tobaccos, with those three figures for 
each, is as follows:

(1) flue-cured tobacco ($1.583/$0.015830/$0.034899);
(2) burley ($1.714/$0.017140/$0.037787);
(3) Virginia fire-cured ($1.407/$0.014070/$0.031019);
(4) Kentucky-Tennessee fire-cured ($1.483/$0.014830/$0.032694);
(5) dark air-cured ($1.273/$0.012730/$0.028065);
(6) Virginia sun-cured ($1.245/$0.012450/$0.027447);
(7) cigar filler and binder ($1.084/$0.010840/$0.023899); and
(8) Puerto Rico cigar filler ($0.844/$0.008440/$0.018607).

H. Description of Provisions and Effect of The Interim Rule

    Under the interim rule:
    (1) Effectiveness of the new regime. The new BDMA provisions would 
be effective only upon: (i) the proclamation by the President of a 
triggering TRQ and (ii) a determination and announcement by the 
Executive Vice President of CCC (Executive Vice President) that the TRQ 
had been proclaimed and that the new BDMA provisions are in effect.
    (2) Timing of calculation of amount due. The amount due under the 
new regime would be determined based on the date of entry of the 
tobacco into the commerce of the United States as determined in 
accordance with existing rules.
    (3) Effect on prior importations. Any tobacco entered prior to the 
effective date of the new regime would be subject to the old regime. 
The inauguration of the new regime will not effect liabilities under 
the old regime.
    (4) Waivers. The rule allows adjustments to be made as might be 
required due to an exercise of the President's Section 422(c) waiver 
authority.
    (5) Mixed lots. Mixed lots (containing differing kinds of tobacco) 
would be handled as they are for the NNCA. The importer would be 
responsible for establishing and certifying to the composition of the 
lot. To the extent that the lot's composition could not be determined, 
the lot would be considered to be assessable in its entirety at the 
highest applicable rate.
    (6) Exemption of certain tobaccos. Tobaccos which have distinct 
characteristics such as oriental tobacco and are commonly treated in 
the trade as a different ``kind'' of tobacco would [[Page 19667]] be, 
in the new regime, free of the BDMA.
    (7) Burden of proof. Unlike the old regime, the new regime does not 
cover all imported tobacco. The importer would have the burden of 
establishing that the tobacco was not subject to the BDMA or is subject 
to a lower rate. Importers of all kinds of tobacco, including exempt 
tobaccos, would be required to maintain all records relevant to the 
application of the assessments and its exemptions. Such records would 
be subject to inspection as under the old regime. As under the old 
regime, failures to keep proper records could be considered as evidence 
of a failure to make proper payments.
    (8) Authority of the Director of the Tobacco and Peanuts Division. 
The Director of the Tobacco and Peanuts Division (Director), CFSA, 
would have the authority to resolve disputes, request information, and 
establish additional accounting procedures if needed.
    (9) Rate on imported tobacco. In accordance with the Section 422, 
the BDMA rate on imported tobacco would be the lowest rate for a 
domestic tobacco which is the same kind.
    (10) Kinds of tobacco. Tobacco could be considered the same kind 
if, discounting for the place of production, it is classified as the 
same kind for customs purposes, has similar characteristics, or is 
treated as the same kind of tobacco in the industry.
    (11) Extension of the domestic BDMA. The domestic BDMA would be 
extended through the 1998 crops if a TRQ is issued.
    (12) Changes in coverage of the imported BDMA. If the list of 
domestic tobaccos subject to the BDMA changes, the coverage of the 
imported BDMA would also change accordingly. In any case, the BDMA rate 
for imported tobacco will change based on changes in the price support 
level for relevant domestic tobaccos. The applicable rate will, as 
indicated above, be based on the time of the entry of the tobacco into 
the commerce of the United States.
    (13) Additional rule changes. It is anticipated that if and when a 
TRQ is issued, the rules would be revised to reflect the new regime 
only. However, as indicated, this will not affect liabilities under the 
old regime.

I. Current Effectiveness and Comments

    This rule is being issued as an interim rule without prior public 
comment as the change in the BDMA is mandated by law and a delay in 
implementation would be contrary to the public interest, including the 
public interest in the administration of foreign trade policy.
    Comments both favorable and unfavorable to the rule are solicited. 
Further consideration of the rule, upon the receipt of the comments, 
could lead to modifications in the rule.

List of Subjects in 7 CFR Part 1464

    Assessments, Loan program, Agriculture, Price support program, 
Tobacco, Warehouses.

    For the reasons set forth in the preamble, 7 CFR part 1464 is 
amended as follows:

PART 1464--TOBACCO

    1. The authority citation for part 1464 continues to read as 
follows:

    Authority: 7 U.S.C. 1421, 1423, 1441, 1445, 1445-1, and 1445-2; 
15 U.S.C. 714b, 714c.

    2. Section 1464.11 is amended by adding a new paragraph (f) to read 
as follows:


Sec. 1464.11  Nonrefundable marketing assessment.

* * * * *
    (f) The term for the application of the assessment provided for in 
this section shall be extended through the 1998 crops if the President 
issues a Presidential proclamation establishing a tariff-rate quota 
pursuant to Article XXVIII of the GATT 1947 or GATT 1994 with respect 
to tobacco. Accordingly, in the event that such a proclamation is 
issued all obligations which otherwise would terminate with the 1995 
crop under this section shall apply equally for subsequent crops 
through the 1998 crops.
    3. Section 1464.102 is amended by adding new paragraphs (c) and (d) 
to read as follows:


Sec. 1464.102  Budget deficit marketing assessment.

* * * * *
    (c) Modification of the coverage and rate for imported tobacco. (1) 
Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, the coverage, rates and obligations applicable to imported 
tobacco under this section shall be as provided in paragraph (d) of 
this section if:
    (i) the President establishes a tariff-rate quota for tobacco; and
    (ii) it is determined and announced by the Executive Vice President 
that a modification of the assessments is being made accordingly 
pursuant to Section 422 of Pub. L. 103-465.
    (2) The effective date of the modification provided for in 
paragraph (c)(1) of this section shall be the date announced by the 
Executive Vice President consistent with the provisions of Pub. L. 103-
465.
    (3) (i) For entries of imported tobacco into the United States 
prior to the effective date for assessment modifications announced by 
the Executive Vice President under this paragraph, the rates and 
coverage of the assessment shall be as provided for in paragraphs (a) 
and (b) of this section.
    (ii) For entries of imported tobacco into the United States after 
the effective date for assessment modifications announced by the 
Executive Vice President under this paragraph, the rates and coverage 
of the assessment shall be as provided for in paragraph (d) of this 
section.
    (d) Rates and coverage of the modified assessment. If a 
modification of the assessments otherwise provided for in this section 
is announced by the Executive Vice President as provided for in 
paragraph (c) of this section then:
    (1) Imports of tobacco under this section shall apply only to the 
same kind or tobacco having similar characteristics to a price-
supported domestic kind, or considered in the trade to be the same or 
similar ``kind'', as a domestic tobacco which is, at the time the 
tobacco is entered into the commerce of the United States, currently 
subject to an assessment under Sec. 1464.11.
    (2) If the tobacco is subject to an assessment under paragraph 
(d)(1) of this section, then the assessment shall be paid by the 
importer and remitted to CCC. The amount due for each pound of subject 
tobacco, shall be the amount equal to 1% of the national price support 
level that applies for the current marketing year for the corresponding 
domestic kind of tobacco.
    (3) It shall be the responsibility of all importers to establish 
that imported tobacco is not covered by the BDMA or not subject to a 
higher BDMA rate than that which is assessed or paid.
    (4) In the case of the entry of mixed lots (containing tobacco of 
different kinds) the importer shall be required to certify to the 
composition of the lot. In the absence of such certification or in the 
absence of sufficient evidence to indicate the relevant kind of tobacco 
for purposes of administration of this section, then the importer shall 
be liable for the assessment as the highest possible relevant rate for 
all such tobacco.
    (5) Importers of all tobacco, including those which are not subject 
to the modified BDMA, shall maintain sufficient records to demonstrate 
compliance with the obligations of this section.
    (6) Disputes involving the application of the assessment shall be 
resolved by the Director.

     [[Page 19668]] Signed at Washington, D.C. on April 10, 1995.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 95-9454 Filed 4-19-95; 8:45 am]
BILLING CODE 3410-05-P