[Federal Register Volume 61, Number 29 (Monday, February 12, 1996)]
[Proposed Rules]
[Pages 5317-5318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2927]



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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AE41


Tobacco--Tobacco Loan Program

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: This proposed rule clarifies the regulations for price support 
loans for tobacco to specify that a refund will be due on ``nested'' 
tobacco whether or not the producer knew the tobacco was nested. This 
modification is intended to insure that producers take responsibility 
for, and are the insurers of, the quality of the tobacco placed for 
price support and that price support is limited to normal, non-
adulterated lots based on true weights.

DATES: Comments must be received on or before April 12, 1996.

ADDRESSES: Interested persons are invited to submit written comments to 
the Director, Tobacco and Peanuts Division, Farm Service Agency (FSA), 
United States Department of Agriculture (USDA) AG Code 0514, P.O. Box 
2415, Washington, DC 20013-2415, telephone (202) 720-7413. All written 
comments will be available for public inspection in room 5750 South 
Building, USDA, 14th Street and Independence Avenue, SW, Washington, 
DC, between 8 am and 5 pm, Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT:
David W. Anderson, Assistant to the Director, Tobacco and Peanuts 
Division, FSA, at the address listed above, telephone (202) 690-2518.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and therefore has not been reviewed 
by the Office of Management and Budget (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 


[[Page 5318]]
not required by 5 USC 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 the quality of the human 
environment. Therefore, neither an environmental assessment nor 
environment 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 proposed rule has been reviewed in accordance with Executive 
Order 12778. The provisions of this proposed rule are not retroactive 
and preempt State laws to the extent that such laws are inconsistent 
with the provisions of this proposed rule. Before any legal action is 
brought regarding determinations made under provision of 7 CFR Part 
1464, the administrative appeal provisions set forth at 7 CFR Part 780 
must be exhausted.

Paperwork Reduction Act

    This proposed rule does not change the information collection 
requirements that have been approved by OMB and assigned control number 
0560-0058.

Background

    Nested tobacco is tobacco in a lot containing a ``nest'' of 
inferior tobacco or foreign material, presumably, to increase the 
payment of loan weight of the lot. A formal definition of nesting is 
found in regulations codified at 7 CFR Part 29 and that definition is 
incorporated in the rules for the tobacco price support program found 
at 7 CFR Part 1464.
    In some cases, the nesting may not be discovered until later in 
processing, well after a price support loan for the tobacco has been 
disbursed. Under current tobacco program rules n 7 CFR Part 1464.7 
through 9, a producer found to have ``knowingly'' presented nested 
tobacco (i) must refund the price support loan amount for the 
individual lot and (ii) will be declared to be ineligible for any other 
tobacco price support for that year.
    Because of the severity of the consequences, there is sometimes a 
reluctance to make a finding that the violation was knowing and 
producers will sometimes contend that the nesting was the act of 
irresponsible employees or other handlers of tobacco. However, there is 
no apparent reason why a refund should not be demanded for a loan made 
on any adulterated (nested) lot whether it was, as to producer, 
``knowingly'' nested or not. It must be the responsibility of the 
producer to present eligible tobacco. Nesting produces false weights, 
and processing problems, and by producing undue loan disbursements can 
cause losses that ultimately are born by the tobacco producer because 
of the ``no net-cost'' nature of the tobacco program.
    The proposed rule would make explicit that a refund wi8ll be due 
from the loan recipient on the individual nested lot in all cases of 
nesting (``knowing'' or not). However, the rules would allow the Farm 
Service Agency (FSA) county committee, with the concurrence of the FSA 
State committee, to reduce the amount of the refund demanded, in 
accordance with guidelines of the FSA Deputy Administrator for Farm 
Programs. This allowance will permit adjustments to avoid undue 
hardships to producers.
    This rule would not adjust the terms under which a producer can 
lose eligibility for the entire crop year, for all lots, as a result of 
a nesting violation. For that, a ``knowing'' violation will still be 
required. The proposed rule is, instead, addressed to the accounting 
for the individual lot that is actually nested. This result would be 
accomplished by modifying Part 1464.8 to make more explicit that nested 
tobacco is per se ineligible for price support. Also, Part 1464.9 would 
be amended to remove the reference to ``knowing'' violations with 
regard to demands for refunds on individual lots.
    Comments on this proposed rule are welcomed and should be submitted 
by the date indicated in this notice.

List of Subjects in 7 CFR Part 1464

    Agriculture, Assessments, Loan program, Price support program, 
Tobacco, Warehouses.
    Accordingly, it is proposed that 7 CFR Part 1464 be 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 1464.8 is amended by revising the introductory text to 
read as follows:


Sec. 1464.8  Eligible tobacco.

    Eligible tobacco for the purpose of pledging such tobacco as 
collateral for a price support loan is any tobacco of a kind for which 
price support is available, as provided in Sec. 1464.2, that is in 
sound and merchantable condition, is not nested as defined in 7 CFR 
Part 29, and:
* * * * *
    3. Section 1464.9 is amended by revising paragraph (a) to read as 
follows:


Sec. 1464.9  Refund of price support advance.

* * * * *
    (a) Received a price support advance on tobacco that was nested, as 
defined in part 29 of this title or otherwise not eligible for price 
support. The county committee, with concurrence of a State committee 
representative, may reduce the refund with respect to tobacco otherwise 
required in this part, in accordance with guidelines issued by the 
Deputy Administrator for Farm Programs.
* * * * *
    Signed at Washington, D.C., on February 5, 1996.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 96-2927 Filed 2-9-96; 8:45 am]
BILLING CODE 3410-05-M