[Federal Register Volume 63, Number 216 (Monday, November 9, 1998)]
[Rules and Regulations]
[Pages 60203-60204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29898]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 216 / Monday, November 9, 1998 / 
Rules and Regulations  

[[Page 60203]]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 737

RIN 0560-AD92


Tobacco Warehouses

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the regulations governing tobacco 
warehouses under the United States Warehouse Act (USWA). A proposed 
rule was published in the July 28, 1995, Federal Register (60 FR 
38766). On June 20, 1997, a final rule covering only administrative 
changes to various commodity regulations was published in the Federal 
Register (62 FR 33539). Included in that final rule were two 
administrative changes which had been included in the tobacco warehouse 
proposed rule. Therefore, this final rule does not address those two 
administrative changes. In the proposed rule the Farm Service Agency 
(FSA) proposed excluding tobacco auction warehouses from USWA licensing 
requirements. This final rule adopts the position taken in the proposed 
rule and excludes those tobacco auction warehouses from licensure under 
the USWA. FSA has determined that it is not necessary to define 
``warehouse'' as suggested in the proposed rule. The USWA, as amended 
(7 U.S.C. 241 et seq.), provides the Secretary of Agriculture with the 
discretion to establish a voluntary licensing program for public 
warehouses that store agricultural commodities under a bailment 
relationship with its depositors. Accordingly, the Secretary will 
exercise this discretion and through FSA will discontinue licensing 
tobacco auction warehouses under the USWA and all licenses issued to 
tobacco auction warehouses covered by this rule will be 
administratively canceled by Secretarial determination on October 31, 
1999. October 31, 1999, was selected as the effective date so as to 
allow the affected tobacco auction warehouses sufficient notice and 
time to seek a State license or changes in State law to the extent that 
this rule may have an effect on warehouse rates. In addition, this 
final rule makes some minor ``housekeeping'' amendments.

EFFECTIVE DATE: November 9, 1998.

FOR FURTHER INFORMATION CONTACT:
Steve Gill, Director, Warehouse and Inventory Division, Farm Service 
Agency, STOP 0553, 1400 Independence Avenue, S.W., Washington, DC 
20250-0553; telephone 202-720-2121 or FAX 202-690-3123, e-mail: 
Steve__G[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988. The provisions of this final rule do not preempt State 
laws, are not retroactive, and do not involve administrative appeals.

Environmental Evaluation

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

Executive Order 12612

    It has been determined that this rule is consistent with the 
Federalism principles espoused in Executive Order 12612, and does not 
warrant the preparation of a Federalism Assessment.

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).

Paperwork Reduction Act

    The amendments set forth in this final rule do not affect 
information collection or recordkeeping requirements.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this final rule because 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.

Unfunded Mandate Reform Act of 1995

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

Background

    The USWA, as amended (7 U.S.C. Sec. 241 et seq.), provides that the 
Secretary of Agriculture may issue a license for the conduct of public 
warehouses that store agricultural commodities. The USWA is 
implemented, as it pertains to tobacco warehouses, by regulations at 7 
CFR part 737 and is administered by FSA. Approximately, 1,500 entities 
hold licenses under the USWA to store one or more of eight different 
agricultural commodities. Presently, there are six tobacco auction 
warehouses licensed under the USWA.

Summary of Comments

    A proposed rule was published in the Federal Register (60 FR 38766) 
on July 28, 1995. The proposed rule excluded tobacco auction warehouse 
from licensure under the USWA. Comments from interested parties were 
due on or before August 28, 1995. A total of 3,242 comments were 
received from 14 different sectors as follows: 2 Cotton Associations; 1 
Chamber of Commerce; 15 Farm Bureaus; 20 Grain Warehouse Associations; 
1 High School (FFA Chapter); 60 Interested Parties; 1 Legal Counsel; 3 
Law Makers (State or Federal); 3,113 Tobacco Producers; 7 State 
Agriculture Departments; 3 Stabilization Corporations; 4 Tobacco 
Producer Associations; 5 Tobacco Warehouse Associations; and 7 Tobacco

[[Page 60204]]

Warehouses. Of the above comments 2,964 were against the proposed rule, 
275 were in favor of the proposed rule and 3 had no opinion. Of the 
comments received in opposition to the proposal, 2,236 were in the form 
of preprinted postcards that were submitted by tobacco producers in 
Virginia.
    Producers not in favor of the proposed rule expressed confidence in 
the security offered by the USWA and therefore, asked that tobacco 
warehouses to which they deliver tobacco be allowed to remain licensed 
under the USWA. Producers in favor of the proposed rule expressed a 
common concern about the charges assessed by warehouses licensed under 
the USWA.
    The primary functions of tobacco auction warehouses are currently 
regulated by several USDA agencies. Tobacco auction warehouses approved 
by the Agricultural Marketing Service (AMS) and FSA may sell producer-
owned and dealer-owned tobacco. AMS strictly regulates the manner in 
which the tobacco must be presented for sale and graded for sale. 
Further, AMS regulations include detailed recordkeeping requirements. 
Further, AMS has representatives on-site during all sales of tobacco.
    In addition, the Agricultural Adjustment Act of 1938, as amended, 
and the Agricultural Act of 1949, as amended, strictly regulate the 
sale of tobacco. The Commodity Credit Corporation (CCC) and FSA 
regulate auction warehouses through the Tobacco Marketing Quota and 
Price Support Programs they administer. These regulations are codified 
at 7 CFR part 723 and 1464. Under these regulations, CCC and FSA 
require that warehouse operators retain detailed records of all tobacco 
handled by them. The tobacco and the transactions associated with it 
must be tracked and recorded from the time the tobacco is brought into 
the warehouse by producers, to the time it leaves the warehouse.
    The type and level of regulation by AMS, CCC, and FSA are unique to 
tobacco auction warehouses. Producers who believe they have not been 
treated fairly by the warehouse operator may seek relief directly from 
the on-site representatives of the various Government Agencies. If such 
allegations are confirmed, under the provisions of 7 CFR parts 723 and 
1464, CCC or FSA has the right to take appropriate actions against the 
tobacco auction warehouse to protect the interests of producers. 
Accordingly, because tobacco auction warehouses are sufficiently 
regulated by other USDA regulations, and involve sales, primarily, 
rather than storage, FSA will discontinue licensing tobacco auction 
warehouses under the USWA. Additionally, those licenses currently held 
by tobacco auction warehouse operators will be administratively 
canceled by Secretarial determination effective October 31, 1999.

 List of Subjects in 7 CFR Part 737

    Administrative practice and procedure, Agricultural Commodities, 
Surety Bonds, Tobacco, Warehouses.
    Accordingly, the provisions of 7 CFR part 737 are amended as 
follows:

PART 737--TOBACCO WAREHOUSES

    1. The authority citation for part 737 continues to read as 
follows:

    Authority: 7 U.S.C. 241 et seq.

    2. Section 737.2 is amended by revising the introductory text and 
paragraph (j) to read as follows:


Sec. 737.2  Terms defined.

    For the purposes of this part, unless otherwise provided, the 
following terms shall mean:
* * * * *
    (j) Warehouseman. Any person lawfully engaged in the business of 
storing tobacco and holding a warehouse license.
* * * * *
    3. Section 737.4 is revised to read as follows:


Sec. 737.4  Grounds for not issuing license.

    A license for the conduct of a warehouse shall not be issued if it 
be found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of tobacco, that the 
warehouseman is insolvent or is incompetent to conduct such warehouse 
in accordance with the act and the regulations in this part, or that 
there is any other sufficient reason within the purposes of the act for 
not issuing such license. Further, a license shall not be issued for 
any place to which tobacco is delivered by the producers or their 
agents for the purposes of obtaining CCC price support advances and for 
the display and auction of tobacco.
    4. Section 737.34 is revised to read as follows:


Sec. 737.34  Package arrangement.

    (a) Each warehouseman shall arrange the packages of tobacco so that 
the identification number thereon as required by Sec. 737.33 is 
visible, readily accessible, and arranged so as to permit an accurate 
check thereof, unless waived in writing by the Administrator.
    (b) If, at any time, a warehouseman shall be offered tobacco in 
such quantity for storage so as to exceed the capacity of this 
warehouse, as shown in his license, he shall not accept such tobacco 
until he has first secured authority through an amended license, and 
after such authority has been granted the warehouseman shall continue 
to arrange the tobacco in accordance with paragraph (a) of this 
section.

    Signed at Washington, DC, on November 3, 1998.
Keith Kelly,
Administrator, Farm Service Agency.
[FR Doc. 98-29898 Filed 11-6-98; 8:45 am]
BILLING CODE 3410-05-M