[Federal Register Volume 61, Number 231 (Friday, November 29, 1996)]
[Proposed Rules]
[Pages 60637-60639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30318]


 ========================================================================
 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. 61, No. 231 / Friday, November 29, 1996 / 
Proposed Rules  

[[Page 60637]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 735

RIN 0560-AE60


Amendments to the Regulations for Cotton Warehouses Under the 
United States Warehouse Act--Electronic Warehouse Receipts, Insurance 
Requirements, and Other Provisions

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Farm Service Agency (FSA) is proposing to amend 
regulations under the United States Warehouse Act (USWA) to allow 
warehousemen to issue electronic cotton warehouse receipts for more 
than one bale (lots) of cotton and clarify other sections as 
applicable. In 1990 and 1992 the USWA was amended to allow cotton 
warehousemen to issue cotton warehouse receipts in electronic format. 
Presently, the applicable regulations require warehousemen, who elect 
to use electronic warehouse receipts, to issue all receipts as single 
bale.

DATES: Comments must be received by January 28, 1997, in order to be 
assured of consideration.

ADDRESSES: Comments must be submitted to the Director, Warehouse and 
Inventory Division, Farm Service Agency, Stop 0553, P.O. Box 2415, 
5962-South Agriculture Building, Washington, D.C., 20013-2415, 
telephone 202-720-2121, FAX 202-690-3123.
    All submissions will be available for public inspection in room 
5962-South Agriculture Building, U.S. Department of Agriculture, 1400 
Independence Ave., S.W., Washington, D.C., between 8 a.m. and 4:30 
p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Steve Mikkelsen, Chief, Licensing 
Authority Branch, Warehouse and Inventory Division, USDA, FSA, P.O. Box 
2415, Stop 0553, Washington, D.C., 20013-2415; Telephone 202-720-7433 
or FAX 202-690-3123.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant and 
was not reviewed by the Office of Management and Budget (OMB) under 
Executive Order 12866.

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 29115 (June 24, 1983).

Executive Order 12778

    This proposed rule has been reviewed in accordance with Executive 
Order 12778. The provisions of this proposed rule do not preempt State 
laws, are not retroactive, and do not involve administrative appeals.

Paperwork Reduction Act

    The amendments set forth in this proposed rule do not generate any 
new or revised information collection or record keeping requirements on 
the public. The existing information collections were previously 
cleared by OMB and assigned OMB control number 0560-0120.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule, because it has been determined that 
this rule will not have a significant effect on a substantial number of 
small businesses. Licensing under the USWA is strictly voluntary on the 
warehouse operator's part.

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will not have significant impact on the quality of the human 
environment. Therefore, neither an Environmental Assessment nor an 
Environmental Impact Statement is needed.

Background

    Pursuant to the provisions of the USWA, the Secretary has the 
authority to license public warehousemen storing cotton (7 U.S.C. 241 
et seq.). As a part of this licensing authority, the Secretary has the 
responsibility to regulate the issuance of warehouse receipts through 
the cotton warehousemen it licenses (7 U.S.C. 260). The USWA was 
amended in 1990 and 1992. Regulations issued on March 31, 1994, permit 
the Secretary (through FSA) to allow the cotton warehousemen it 
licenses to issue cotton warehouse receipts in electronic format.
    Presently, all multiple-bale warehouse receipts for cotton are 
issued as paper warehouse receipts and must contain between 25 and 200 
bales. This proposed rule contemplates allowing USWA licensed 
warehousemen to issue electronic cotton warehouse receipts for more 
than one bale (lots) of cotton and removes the requirement that all 
EWR's must be issued as single bale receipts.
    Generally, a multiple-bale warehouse receipt consists of 90 bales 
of cotton but may be issued for other-sized lots, at the warehouseman's 
discretion. Cotton is accumulated into lots for varying purposes and 
each region of the cotton belt handles the cotton accumulated into 
these lots in a different fashion. This proposed rule recognizes these 
differences and would modify the method by which each bale and lot must 
be identified and weighed, while still requiring an identification for 
each bale and lot but allowing for multiple-bale warehouse receipts in 
electronic format.

List of Subjects in 7 CFR Part 735

    Administrative practice and procedure, Cotton, Reporting and 
Recordkeeping requirements, Surety bonds, Warehouses.

Proposed Rule

    Accordingly, it is proposed that the provisions of 7 CFR part 735 
be amended as follows:

PART 735--COTTON WAREHOUSES

    1. The authority citation for part 735 is revised to read as 
follows:

    Authority: 7 U.S.C. 268.

    2. Section 735.2 is amended by revising paragraphs (gg), (hh), and 
(ii) to read as follows:


Sec. 735.2  Terms Defined.

* * * * *
    (gg) Provider. An individual or entity that maintains EWR's in a 
CFS, meets

[[Page 60638]]

the requirements of this part, and has a Provider Agreement with the 
Service.
    (hh) Provider Agreement. An agreement entered into between the 
Secretary and a provider that delineates the provider's 
responsibilities and defines the relationship between the provider and 
the Service regarding the provider's maintenance and security of EWR's 
in the CFS and other requirements of this part.
    (ii) User. An individual or entity that uses the provider's CFS, 
but shall not include the Service in its regulatory capacity.
    3. Section 735.16 is amended by revising paragraphs (a)(5), (a)(9), 
(b), and (e) to read as follows:


Sec. 735.16  Form.

    (a) * * *
    (5) The tag identifier given to each bale of cotton in accordance 
with Sec. 735.31;
* * * * *
    (9) A statement to the effect that the weight was determined by a 
weigher licensed under the U.S. Warehouse Act, except that if the 
weight is not so determined at the request of the depositor, or as 
permitted in Sec. 735.38, the receipt shall contain a statement to that 
effect.
    (b) Except when an expiration date authorized by the Department is 
shown on the face of the receipt, every negotiable receipt issued for 
cotton stored in a licensed warehouse shall be effective until 
surrendered for delivery of the cotton, and every non-negotiable 
receipt shall be effective until surrendered for delivery of the cotton 
or until all cotton covered by the receipt has been delivered in 
response to proper delivery orders of the person rightfully entitled to 
the cotton: Provided, That nothing contained in this section shall 
prohibit a warehouseman from legally selling the cotton when his 
accrued storage and other charges approach the current market value of 
the cotton.
* * * * *
    (e) If a warehouseman issues a receipt omitting the statement of 
grade and/or weight on request of the depositor, such receipt shall 
have clearly and conspicuously stamped or written on the face thereof, 
either one or both of the following ``Not graded on request of the 
depositor'' or ``Not weighed on request of the depositor.''
* * * * *
    4. Section 735.19 is revised to read as follows:


Sec. 735.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.
* * * * *
    5. Section 735.21 is amended by revising the first sentence to read 
as follows:


Sec. 735.21  Return of receipts before delivery of cotton.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver cotton for which he has issued a 
negotiable receipt under the USWA until such receipt has been returned 
to him and canceled; and shall not deliver cotton for which he has 
issued a non-negotiable receipt until such receipt has been returned to 
him or he has obtained from the person lawfully entitled to such 
delivery or his authorized agent a written delivery order, properly 
signed, specifying by bale or tag number, mark, or identifier each bale 
to be delivered from any receipt or receipts. * * *
    6. Section 735.31 is amended by revising the section heading and 
the first and last sentence to read as follows:


Sec. 735.31  Tags to be attached to bales.

    Each warehouseman shall, upon acceptance of any bale of cotton for 
storage, unless excepted under Sec. 735.32, immediately attach thereto 
an identification tag of good quality which shall identify the bale. * 
* * These tags will contain a number, mark, or identifier and shall be 
attached in numerical sequence clearly distinguishable from each other.
    7. Section 735.32 is amended by revising paragraph (b) and the 
first two sentences of paragraph (c) to read as follows:


Sec. 735.32  Arrangement of stored cotton.

* * * * *
    (b) If any licensed warehouseman's warehouse receipt is tendered by 
any one depositor for storage cotton of same grade and staple and in 
such quantity by any one depositor that efficiency of operation 
dictates that such cotton should be stored in lots without reference to 
visibility of all tags on all bales within any lot, the warehouseman 
may store such cotton of same grade and staple belonging to the same 
depositor in lots of 1 or more bales as long as the lot originally 
contained 2 or more bales: Provided, however, That each bale entering 
into the lot must bear an individual bale identification, and each lot 
must be so stored that the number of bales within the lot may be 
accurately determined.
    (c) An individual lot identification shall be affixed by the 
warehouseman to each lot of cotton which shall show the lot number and 
the number of bales in the lot. The warehouseman shall also maintain an 
office record showing the bale or tag number, mark, or identifier of 
each bale in the lot and the location of the lot in the warehouse. * * 
*
* * * * *
    8. Section 735.33 is amended by revising the first sentence and 
adding a new sentence after the first sentence to read as follows:


Sec. 735.33  System of accounts.

    Each warehouseman shall use for his licensed warehouse a system of 
accounts, approved for the purpose by the Service, which shall show for 
each bale of cotton the tag number, mark, or identifier mentioned in 
Sec. 735.31, its weight, its class when required or ascertained, its 
location, the dates received for, and delivered out of, storage, and 
the receipts issued and canceled. All such accounts shall include a 
detailed record of all moneys received and disbursed and of all 
effective insurance policies. * * *
    9. Section 735.38 is amended by revising paragraph (a) to read as 
follows:


Sec. 735.38  Weighing of cotton; weighing apparatus.

    (a) Before being stored in a licensed warehouse, all cotton shall 
be weighed at the warehouse by a licensed weigher, and the weight so 
determined shall be stated on the warehouse receipt. Point of origin 
weights may be used for single bale or lot stored cotton by agreement 
with the depositor. Any point of origin weight shown on a warehouse 
receipt will be the official warehouse bale or lot weight. Any lot of 
cotton tendered for storage on which a multiple bale receipt is issued 
must maintain its individual identity and be preserved during storage 
and shipment: Provided, That if such lot is broken at the warehouse, 
each bale shall be weighed at the warehouse by a licensed weigher 
before single bale warehouse receipts are issued.
* * * * *
    10. Section 735.40 is amended by revising the text beginning with 
the first sentence ``The transferring * * * '' and ending with `` * * * 
NOT NEGOTIABLE'' to read as follows:

[[Page 60639]]

Sec. 735.40  Excess storage.

* * * * *
    (b) * * *
    (3) The transferring (shipping) warehouseman must list all 
forwarded bales on a Bill of Lading by receipt number and weight. The 
receiving warehouse shall promptly issue a non-negotiable warehouse 
receipt for each lot of cotton attaching a copy of the corresponding 
Bill of Lading to each receipt and forward the receipt promptly to the 
transferring warehouseman (The receiving warehouseman will store each 
lot intact, attach a header card showing the receipt number, number of 
bales, and a copy of the Bill of Lading with the individual tag 
numbers, marks, or identifiers. Such non-negotiable warehouse receipts 
shall have printed or stamped in large bold outline letters diagonally 
across the face the words ``NOT NEGOTIABLE.'' * * *
* * * * *
    11. Section 735.44 is revised to read as follows:


Sec. 735.44  Fire loss to be reported.

    If at any time a fire occurs at or within any licensed warehouse, 
it shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.
    12. Section 735.47 is revised to read as follows:


Sec. 735.47  Certificates to be filed with warehouseman.

    When a grade or weight certificate has been issued by a licensed 
grader or weigher, a copy of such certificate shall be filed with the 
warehouseman in whose warehouse the cotton covered by such certificate 
is stored, and such certificates shall become a part of the records of 
the licensed warehouseman. All certificates and supporting 
documentation that form a basis of any receipt issued by the 
warehouseman shall be retained in the records of the licensed 
warehouseman until December 31 of the year following the year in which 
the receipt based on such certificates or supporting documentation is 
canceled.
* * * * *
    13. Section 735.49 is amended by revising the second sentence to 
read as follows:


Sec. 735.49  Samples; drawing and marking; how.

    * * * Each sample shall be appropriately marked to show the tag 
number, mark, or identifier of the bale of cotton from which it was 
drawn and the date of sampling. * * *
    14. Section 735.77 is amended by revising paragraph (c) and by 
adding ``and'' to the end of paragraph (f) to read as follows:


Sec. 735.77  Contents of complaint.

* * * * *
    (c) The name and location of the licensed warehouse in which the 
cotton is stored, and the tag number, mark, or identifier assigned to 
each bale of cotton involved in the appeal, the grade or other class 
assigned to such cotton by the licensed warehouseman, and the date of 
the receipt issued therefor,
* * * * *
    15. Section 735.101 is amended by removing paragraph (b), 
redesignating paragraphs (c) through (q) as paragraphs (b) through (p), 
and revising newly redesignated paragraph (j) to read as follows:


Sec. 735.101  Electronic warehouse receipts.

* * * * *
    (j) Prior to issuing EWR's, each warehouseman shall request and 
receive from the Service a range of consecutive warehouse receipt 
numbers which the warehouseman shall use for the EWR's it issues.
* * * * *
    16. Section 735.102 is amended by revising paragraphs (b), (d) (4), 
and (f) to read as follows:


Sec. 735.102  Provider requirements and standards for applicants.

* * * * *
    (b) User fee charges. Providers shall pay to the Service user fees 
set by the Service and announced prior to April of each calendar year.
* * * * *
    (d) * * *
    (4) The provider or the Service may terminate the provider 
agreement without cause solely by giving the other party written notice 
60 calendar days prior to the termination.
* * * * *
    (f) Application form. Application for a provider agreement shall be 
made to the Secretary on forms prescribed and furnished by the Service.

    Signed at Washington, DC, on November 20, 1996.
Grant Buntrock,
Administrator, Farm Service Agency.
[FR Doc. 96-30318 Filed 11-27-96; 8:45 am]
BILLING CODE 3410-05-P